Although a normal person might consider the consumer market much larger than the business-to-business market. The B2B is much more important than the B2C market. Whether it concerns the retail markets, the retail industry, government organizations, or institutions, they are all directly or indirectly involved in B2B transactions.
Some companies focus only on the business market, others sell to the consumer and business market. Infosys, Satyam, TATA, IBM, WIPRO, Logitech, Epson, HP, Canon, LG, Samsung for example. The business-to-business market is the purchase of commercial goods and services to support or facilitate the production of other goods and services, either to facilitate the day-to-day operations of a business or for resale.
According to Reeder et al. (1991), all marketing strategies must begin with a thorough understanding of organizational purchasing behavior as this requires a different understanding of purchasing situations, purchasing decision processes, and criteria. Insight into the purchasing behavior of organizations is also important for suppliers of an industrial company to optimally respond to customer demand (Baptista, Forsberg, 1997).
Moreover, Haas (1995) discovered that purchasing by an organization is not just an action that a person undertakes. It is, in fact, the result of interactions between procurement professionals. And the people involved in the process can somehow influence what is bought and delivered. Advances in technology have changed the traditional way of shopping for businesses. New tools have opened up new eras and new opportunities in every part of the market. The emergence of the Internet as a versatile tool continues to transform organizational performance. (Smith, Berry & Pulford, 1998)
Reason for the business market
Like consumers, procurement/sourcing is performed by business actors to meet the needs. The most important requirement, that H meets the customer’s wishes, is the same for all organizations.
Organizational buying is very different from consumer buying. One of the key features of organizational procurement is that it is essentially a rational procurement process. that is, based only on utilitarian concepts. Hedonic buying does not exist. Essentially, buyers from organizations do not bring emotion into their buying process and therefore emotional attraction does not affect their buying process.
Apart from this, other distinctions can be made as follows:
- geographical concentration
- Fewer buyers but bigger
- Vertical or horizontal market
- Derived Demand: Derived from consumer demand
- Price inelasticity: unaffected by short-term price changes
- Demand fluctuates
Just like manufacturers buy raw materials, machines, etc. to manufacture the company’s products while wholesalers or retailers purchase products for resale. Likewise, institutional buyers such as government agencies and non-profit organizations purchase goods to meet the needs of their constituents.
The business market is quite rational and there is no room for impulse buying. All of this is caused by environmental, organizational, interpersonal, and shopping center factors influencing the B2B market. In addition, budget, cost, and profit considerations play a role in the company’s purchasing decisions. In addition, the process of buying a business usually involves complex interactions between many people.
Today, the B2B market is diverse, with transactions ranging from small orders such as a box of paper clips to workshop-sized parts for car manufacturers.