Many companies sell products that work as both components within larger products and as stand-alone final products. For example, audio manufacturers sell electronic radios to car manufacturers that are built-in components, and they also sell end products that consumers buy in the retail market. But selling to manufacturers often requires a different marketing strategy than selling to consumers since these markets are fundamentally different and each will seek different benefits.
Differences in what impacts purchase decisions are not limited to just industrial and consumer markets. For instance, consider the market that exists between the manufacturer and the consumer – the reseller market. Resellers, such as retailers and wholesalers, purchase products from suppliers, such as manufacturers, and then market these to consumers or to other resellers. A marketer selling to resellers should recognize that, like industrial and consumer buyers, resellers seek different benefits. And, consequently, must be approached with a distinct marketing strategy. To see this, we offer a comparison of significant differences between selling to industrial customers and selling to resellers.
1. Buyer’s Main Objectives
The primary function of most industrial buyers is to investigate and negotiate with suppliers with the aim of making sure what they are buying will fit the needs of their company. But buyers for resellers often have additional responsibilities. Not only do they engage in purchasing tasks but many, such as retail buyers, are also tasked with merchandising responsibilities involved in selling products to consumers. Consequently, for resellers, considering a purchase is not only about evaluating the merits of the product, but it also includes an evaluation of the promotional support (i.e., advertising, sales promotions) a supplier will offer that will help stimulate demand among consumers.
2. Key Benefits Sought
As noted, when making a purchase, the primary benefits sought by industrial buyers concern how the product itself will perform. The reseller buyer, however, is much less concerned with whether a product works as advertised since they are not the user of the product. Rather, the reseller is more interested in whether the product is helping to achieve organizational goals. Consequently, key benefits for resellers rest more with issues of customer satisfaction, service, promotional assistance and financial gains.
3. Number of Decision Makers
Purchasing by industrial buyers typically requires marketers deal with a buying center consisting of many members representing several functional areas. Besides being a time-consuming process, dealing with a buying center situation means marketers must tailor their message to appeal to each member. By comparison, far fewer members of a reseller’s organization are involved in purchase decisions. Even when many are involved, in most cases those participating are primarily from the same functional area. Thus, the requirement for the marketer to tailor their message to each member is not as difficult.
4. Design of Products
As mentioned, industrial buyers are highly focused on product issues when making purchase decisions. So much so, that many industrial purchases require suppliers to design products to meet specifications set by the buyer so that how a product looks to one industrial buyer may be different than how it looks to another buyer. In some cases, resellers also negotiate with supplying firms on certain product matters but invariably these negotiations do not affect the product itself. Rather, the changes affect other product issues such as packaging, where a large reseller may require the product be provided in certain package sizes or designs. But in most cases, resellers are not in a position to request the supplier change the makeup of the product itself.
5. Supplier’s Reputation
If an industrial buyer is not satisfied with a supplier’s reputation, there is a good chance a sale will not take place. A supplier’s reputation is evaluated in many ways including the quality of products produced and service reliability. For supplier’s whose reputation is held in low esteem by industrial buyers, the chance for success is not very high. Resellers may also have issues with a supplier’s reputation, though their take on the reputation of a supplier may be of secondary importance if the product is in demand by the reseller’s customers. That is, the reseller can often look past issues with a supplier’s reputation if their products will still sell.
6. Importance of Price
Surely it is not possible that manufacturers and resellers differ on their interest in getting the best price? Well, actually they do. Manufacturers work long and hard to get the best deal for products that are used in the manufacturing process. This includes playing one supplier off against another who may offer a similar product. The reseller is also highly concerned about getting the best price since lower prices help improve their margins. But what option does a reseller have if a supplier’s price increases but consumers still demand a particular brand? While the reseller may complain or even reduce their order, the order is likely placed nonetheless.
7. Promotional Approach
Whether selling to manufacturers or resellers, sellers are most likely to spend a considerable amount to support face-to-face selling efforts. However, while the majority of promotional spending that occurs when marketing to manufacturers is directed to personal selling, marketing to resellers requires more. Resellers expect a seller to help stimulate consumer demand for the product by investing in efforts that build product awareness (e.g., advertising, social media). Additionally, the reseller may want to see that incentives are available, such as trade promotions, designed to encourage the reseller to sell more or consumer sales promotions designed to build reseller traffic.
These are just a few reasons why marketers should be ready to adjust their strategy when selling to different business markets. Naturally, these differences could extend to other business markets as well, such as government and not-for-profits. The lesson to be learned is a fundamental principle of marketing – know your customers well.