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Business-to-business marketing (often referred to as B2B) is the development and marketing of services and products to business, governmental, and institutional markets at the local, national or international level, rather than private retail consumers. The vehicles of business-to-business marketing are fundamentally the same as those that are used to reach the consumer market. They range from traditional methodologies such as the newspaper and magazine advertisements, direct mail, catalogs, television and radio marketing, radio marketing, outdoor advertising, sales promotions, and other long-established public relations/advertising media to the relatively new business avenue of the internet.

Business-to business selling is much different than business-to-consumer marketing in several important aspects. The average business buyer, for instance, is more knowledgeable about the merits (price value, ability to meet business needs, etc.) of products and/or services under consideration.

Business buyers are also governed by organizational buying behaviour, whereas consumer purchases are typically made by individuals or small groups (such as married couples or room mates). Major business purchases, whether bulk shipments of office suppliers, a single piece of manufacturing equipment, or an ongoing business service (from security and maintenance to accounting and graphic art services) require far more research on the part of the buyer than do retail purchases by individual consumers, both because of their complexity and price tag.

Most importantly, business-to-business marketing is based on the knowledge-shared by both seller and buyer – that the buyer needs to purchase goods and services merely to keep its operations going. The question is whether the buyer chooses to utilize your company’s goods and /or services or those of your competitors.

B2B Marketing on the Internet

Traditional means of reaching business customers such as catalogs, direct mail and convention booths remain an important element of marketing for many companies, and they will continue to be valuable tools. But the business-to- business marketing was fundamentally transformed by the growth of the Internet in the late 1990s, and e-commerce is widely expected to drive the expansion of of the B2B world as is currently done by several e-commerce companies like Amazon in America and Alibaba in China.

Marketing exchanges are an important facet of this explosion in business-to-business activity on the Internet. B2B marketing exchanges are electronic market places that allow companies to place goods and/or services out for bid on the Internet. Any qualified supplier can then bid on the job order. Some online exchanges allow businesses to search for particular products or suppliers and agree on the terms of transactions online (with actual transactions being conducted offline). Other exchanges allow complete transactions to take place online. Either way, B2B exchanges make it easy for for buyers and sellers worldwide to come together on the web to do business.

Whatever their form, Internet marketing exchanges can be beneficial in businesses in several specific ways such as process cost savings and unit cost reductions as key bottom-line benefits. Process costs include developing supplier relationships, handling proposals and quotations, and processing purchase orders. To the extent a company can automate procurement, it saves time, needs fewer people, and makes fewer errors. Unit cost arise when a company solicits bids from multiple suppliers, rather than repeatedly awarding the contract to the same one or two companies.

If a company can attract bids from 25 suppliers rather than 5 and, if suppliers can see the biding real time, the market appears to to approach the economists’ ideal of perfect competition. Many experts, however, urge B2B buyers to consider more than the bid price when evaluating suppliers as exchanges can be used to put supplier against one another. A company could restrict the number of bidders or reserve a portion of the volume for select suppliers, even if their prices are slightly higher. The biding information could be a basis for discussions about price reduction, but it is important that purchasers use exchanges to support their strategy, not to undermine supplier relationships.

Managers should take care not to employ the B2B products in ways that disrupt existing, successful relationships or that create unnecessary confusion in the supply chain. Besides, dropping transaction costs on B2B sites have made it easier for many buyers to avoid making a bid price the sole consideration in awarding business.

Others point to other advantages that can be gained from involvement in B2B exchanges, from exposure to suppliers/buyers that they might not otherwise meet through traditional channels (because of distant location, limited visibility of other marketing media, etc.) to general networking operation.

Using B2B Exchanges

Before selecting an exchange on which to do business (as either a buyer or seller of business goods and/or services), small business owners and managers should first conduct extensive research to make that they are dealing with a reputable exchange that can satisfy their business needs. Industry publications are a source of information in this regard.

Characteristics of good, reliable B2B exchanges include the following:

It can and does integrate full product catalogs onto the site. According to a business analyst, “Suppliers don’t want to be a line item in a catalog, rather, they want rich systems to differentiate themselves, profile customers, and segment prospects.”

It is a well-known site that targets your industry. Suppliers who establish their presence on a B2B marketplace site that sees heavy traffic can save money on advertising and may be able to forgo the expense of establishing and maintaining their own internet website. Conversely, buyers want to frequent exchanges that have a variety of suppliers to choose from so that they can better their chances of securing the goods/services they require at an advantageous price.

It is an innovative site that is responsible to rapidly changing business dynamics, both in your industry and in the larger business world. According to another analyst, “The ongoing challenge is to have the people and processes in place to cope with any crisis or development, whether a new trend , market fluctuation, security issue, product shortage, or other situation as they arise. These cannot be dealt on an ad hoc basis. However, the more layers put into a trading exchange, the less efficient they can be. In other words, the trading exchange must achieve a delicate balance between efficiency and security to become a viable part of the supply chain.

Usage is compatible with other current business practices and dovetails with desired buyer/supplier relationships. A company can concurrently use many different B2B product with many different suppliers that range from close partners to distant sellers. As the B2B industry consolidates, companies will be able to use one product to support multiple styles of relationship.

Other services provided on the site have value to your company . Many B2B market places provide valuable information to participating companies, including current marketing information and data, industry news, and customer feedback. In addition, technically sophisticated exchanges can provide valuable assistance in closing the sale.

Today’s business-to-business marketing practices continue to evolve, driven by the current power and future potential of the internet Experts insist the future lies in the B2B-exchange business model because the internet is secure and open to the worldwide community, companies can work more efficiently via faster and less expensive business processes.

These basic fundamental advantages seem destined to cement the Internet’s reputation as the primary vehicle for business-to-business marketing for the foreseeable future.

Bernard Taiwo
I am Management strategist, Editor and Publisher.

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