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"Understanding B2B and B2C Businesses"

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The term B2C and B2B have been so often heard on business lectures, and we can read it all the time on business articles and news. However, many people even business practitioners failed to understand the basic concept behind those abbreviations, thus failing to put it to good use.

In this article, we will learn a bit deeper about the two, the differences between them, and how it may affect your business.

Without further ado, we'll start with the first one.

1. B2B

B2B stands for Business to Business, Which, as the name suggests, refers to businesses where their main customers are other business.

For example, a business might supply milk to a cheese and butter factory. Or advertising agencies selling their services to other business that needs advertising.

Typically, a B2B business's main customer is a B2C business (more on that later), although it's not impossible for B2Bs to cater to other B2B's needs.

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Some notable characteristics found on B2B businesses are:

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- Longer sales cycle

Typically B2B businesses have ongoing and developed relationships with their customers. They sell in bulk and can have a term-of-payment deal negotiated up-front.

- Longer sales process

A B2B business might have to deal with several decision-making processes before the deal is through. For example, a salesperson first meet with a manager, which then would need an approval from the business owner before the purchase can be made.

- Generally more sustainable

Because the relationship to customer tends to be longer-term, the business is generally more sustainable. However, cash-flow must be maintained carefully because the business may often deal with outstandings and debts.

2. B2C

B2C then stands for Business To Consumer, which is a business that caters to the needs of final customers. For example, a grocery store is a B2C business, as well as a bookstore.

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Some notable characteristics found in this type of businesses are:

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- Shorter Sales Cycle

You meet with a customer which will then make the purchase decision almost immediately, and pay by cash or credit card.

- Marketing Heavy

Because the business caters to the public market, more marketing efforts are needed to introduce the business's value to customers.

- Faster Cash-Flow

Because customers mostly pay by cash and there's generally no term-of-payment option, the business can have faster cash-flow movement.

Different Marketing Strategies

As mentioned, B2C businesses tend to be more marketing heavy. However, that doesn't mean that B2B businesses won't need some form of marketing, it's just that the approaches needed are different.

In a B2B business, marketing through general advertising won't help increase sales. Thus, marketing is commonly done through medias more common for the business customers such as industry publications, trade shows, and business magazines. Active salespersons approaching potential customers are often the most effective strategy in this business.

In a B2C business, however, the marketing strategies involved can be more varied. From advertisements in televisions, magazines, and nowadays in YouTube channels and social medias, to giving discounts, and many other forms.

In general, B2B marketing is more focused on value, giving best service, and trust building while B2C marketing is generally more focused on pricing strategy and giving best customer experience.

Which business type do you think will be more suited for your taste, managerial style, and passion? We'll let you be the judge.