M RahmanDifferences between business market and consumer market
This article examines some of the differences between business market and consumer market. Some people may assume that there is no difference between the two; however, this is a common misconception. These markets have contrasting characteristics clearly showing that they are two different things and need to be approached differently by both marketing students and professionals.
Definition of business market
According to Kotler et al. (2020) the business market refers to all the organisations that acquire goods and services used in the production of the other products or services that are sold, rented, or supplied to others.
Types of business market
The business market includes all the individuals and companies who buy products and services for some use other than personal consumption. According to Kotler et al. (2020) the key industries comprising the business market are agriculture, forestry and fisheries, mining, manufacturing, construction, transportation, communication, public utilities, banking, finance and insurance, distribution, and services.
Definition of consumer market
Consumer market is defined as the activity of selling goods or services to people for their own use (Cambridge Dictionary, 2023). Individual customers buy products or services for their personal use, not to sell them to others.
Types of consumer market
The consumer market consists of three major sectors i.e. fast-moving consumer goods (FMCG), consumer durables, and consumer nondurables. Personal care products, jewellery, and food are examples of these three sectors respectively.
Differences between business market and consumer market
Business markets are very different from consumer markets. A business market has fewer customers, and transactions tend to be larger. On the other hand, a consumer market has large numbers of buyers and transactions are usually small in value.
While discussing the topic of the business market versus the consumer market, Kotler et al. (2020) have identified several characteristics of the business market that are in sharp contrast with the characteristics of the consumer market. The discussion that follows is mostly in line with their position.
Number of buyers
The business market deals with a small number of buyers. However, these buyers are far larger than those in the consumer market. Imagine the size of buyers in airline or defence industry!
Customer relationship management (CRM)
As the business market has a small number of customers, organisations are often expected to customise their products and services to address the needs of the individual business. However, this has an advantage in terms of communication.
For instance, Business A sells computers Business B. An employee from Business A usually deals with the representative from Business B. On the other hand, businesses that have offerings for consumers need to interact with every individual who is a potential end-user.
Derived demand
Business market derives demand from the demand for consumer products and services. Business organisations determine the quantity of items they purchase based on the anticipated demand from the final consumers for those items.
Elasticity of demand
Individual consumers are often sensitive to price changes. Therefore, they may increase or decrease the buying quantity of a particular product/service should the price goes up or down.
On the other hand, the demand for many products/services in the business market is inelastic. In other words, a business usually will not increase or decrease the buying quantity of a particular product/service should the price goes up or down.
Number of decision makers
The last point to make in the topic of the business market versus the consumer market is the number of decision makers. Business decisions are usually made by several people who are often experts in their fields. On the other, consumers mostly make their purchase decisions individually, though some of the decisions may be made collectively.
Marketing strategies for business market
Relationship marketing
Building and maintaining strong relationships with customers, suppliers, and other stakeholders is crucial in the business market. This can be achieved through regular communication, personalised service, and a commitment to understanding and meeting the needs of each partner.
Content marketing
By providing valuable and informative content, such as whitepapers, case studies, and industry research, businesses can establish themselves as thought leaders and trusted partners.
Account-based marketing
Account-based marketing is a targeted approach to marketing that involves identifying high-value accounts and tailoring marketing efforts specifically to those accounts.
Trade shows and industry events
Participating in trade shows and industry events can help businesses build their network, showcase their products and services, and stay up to date with the latest trends and developments in their industry.
Strategic partnerships
Forming strategic partnerships with complementary businesses can help companies in the business market expand their reach, access new customers, and leverage the expertise and resources of their partners.
Marketing strategies for consumer market
Emotional branding
Creating an emotional connection with consumers is essential in the consumer market. This can be achieved through storytelling, appealing to consumers’ values and aspirations, and building a strong brand identity.
Influencer marketing
Leveraging the power of influencers and social media can help businesses reach a larger audience, increase brand awareness, and drive sales.
Omnichannel marketing
Omnichannel marketing is a customer-centric approach in which all channels are integrated so the customer has a unified and consistent experience (McKinsey & Company, 2022).
Consumers today expect a seamless and consistent experience across all touchpoints, both online and offline. An omnichannel marketing strategy ensures that businesses deliver this experience by integrating their marketing efforts across multiple channels and platforms.
Data-driven marketing
Harnessing the power of data and analytics can help businesses in the consumer market better understand their customers, identify trends and opportunities, and optimise their marketing efforts for the maximum impact.
Summary of differences between business market and consumer market
Understanding the differences between the business market and consumer market is crucial for developing effective marketing strategies and achieving success in today’s competitive business landscape. By recognizing the unique characteristics, challenges, and opportunities presented by each market, businesses can tailor their marketing efforts to best meet the needs of their target audience and maximise their return on investment.
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Last update: 30 April 2023
References:
Cambridge Dictionary (2023) Consumer market, available at: https://dictionary.cambridge.org/dictionary/english/consumer-market (accessed 30 April 2023)
Kotler, P, Keller, K., Brady, M., Goodman, M, and Hansen, T. (2020) Marketing Management, 4th European edition, England: Pearson Education Limited
McKinsey & Company (2022) What is omnichannel marketing, available at: https://www.mckinsey.com/featured-insights/mckinsey-explainers/what-is-omnichannel-marketing (accessed 30 April 2023)
Author: M Rahman
M Rahman writes extensively online and offline with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.
