Things You Need To Be Aware Of Before Entering the B2B Segment

We all know that any commercial activity that takes place between two companies is known as B2B. But fewer people know that when it comes to choosing a business segment to work in, entrepreneurs need to analyze various factors such as the nature of target consumer, number of competitors in the market, stage of industry lifecycle, availability of funding, personal expertise and knowledge in the area to name a few. All these can make a distinct impact on the way business is done in each segment.

There are various differences between the B2C market and the B2B market. B2C is the ‘Business to Consumer’ segment where companies directly sell to the end consumer. Companies need to be aware of how each segment works, before starting operations. This is especially imperative when it comes to the B2B segment. Some of the things to keep in mind about the Business to Business market are:

There are typically many people involved in decision making

From raw materials to logistics, decisions regarding every aspect of the business tend to be extremely complicated in the B2B segment. Companies have a lot to lose if decisions are taken frivolously. They may lose out on customers themselves if they compromise on any aspect. Additionally, there are multiple divisions involved in decision making — R&D, finance, marketing, sales — to name a few. The larger the organization is, the more elaborate the decision making process will be.

Your customer may be the supplier for another company

It isn’t always necessary that your customer will sell products to the end consumer. Many B2B companies tend to be middlemen themselves. From assembling units to wholesalers, there are various kinds of companies who you may interact with.

The business process is rational

There is no place for emotions or personal preferences and biases in B2B operations. Every decision taken is for the benefit of the company. Additionally, decisions aren’t taken on a whim. Thorough research and analysis is done before companies decide what to do and what not to.

Number of customer segments is limited

In a B2C market you will see customers being segmented based on a number of factors. In a B2B market on the other hand, market segments are based on minimal number of characteristics. This is predominantly because of the small size of the overall customer base and the expectations of the customer. The B2B market is usually segmented based on price, product specifications, quality, after-sale service and partnership agreements.

B2B relationships are long-term

Unlike an individual consumer who may easily switch brands, a player in the B2B market will look for long-term association. Working with a company for extended periods of time instills trust between parties. This is why maintaining personal relationships are so important for everyone who works within this segment. Additionally, the time and money involved in finding new partners in B2B is extremely high; encouraging companies to stick to a single partner for the long run.