Supply Chain Strategies: B2B Versus

Supply Chain Strategies: B2B versus B2C

Logistically, the different strategies employed by a B2B (Business to Business) versus a B2C (Business to Consumer) in managing their supply chain strategies stem from the nature of the customers of the different entities. B2B businesses are usually marketing to fellow businesses within the same industry, government buyers, or institutions that are purchasing products for resale. B2Bs must focus on the value they are offering to the potential consumer, so the business they are dealing with will wish to engage in a transaction with the supplying B2B business.

Customers on the personal, retail level in B2C have more diffuse needs. Yes, the B2C customers may wish to maximize their value in their business transactions, but the B2C customers may also have more difficult-to-define needs, like looking or feeling good. (Marketingprofs.com, 2005) In general, this means that marketers to B2B companies focus on fewer customers within the same industry as their own, and with a more focused 'advertising approach.' In contrast, because B2C businesses are approaching a wide customer base, especially in the Internet age of international customer opportunities and breath, B2Cs must deal with a huge amount of potential buyers.

Even a relatively targeted or segmented B2C market will be larger than a B2B market in most situations. Thus, in calculating the costs of shipping to customers, the B2C chain will perhaps invariably have higher costs. B2Cs will probably not be able to rely upon shipping large orders to the same address. (Marketingprofs.com, 2005) Also, excess inventory is more likely to accumulate in B2C transactions, given unreliable consumer whims that cannot be defined by value maximization alone. This is known as the "bullwhip" effect. Inaccurate information is more likely to whip through a B2C market supply chain, causing a buildup of unwanted or unnecessary inventory. (Davidson, 2005)

The variables studied in B2B marketing segmentation also tend to be more concentrated than the many different kinds and levels segmentation methods used for B2Cmarket segmentation. This does not mean that the B2B supply chain does not have its own challenges. B2B businesses often deal with longer more complex sales cycles.

Additionally, the statistical and quantitative research strategies that work well in consumer marketing are often not as insightful in B2B marketing. Because the customer base for B2B is typically smaller, the amount of research needed to achieve statistically significant input may be less than a B2C, but also may be less accurate, helpful, and difficult to obtain. (Davidson, 2005) This may mean that B2B businesses may need to make initially more conservative sales purchases of items that they think will be desirable in their market.

Also, when pitching products B2B marketers need to understand their B2B client's end customer and market the value-desirable features and financial end benefits their B2B client's customer wishes to receive. Determining the value of a business customer is not always easy, even if it may be easier than quantifying customer desires in a B2C market. In both B2B and B2C research, value must be determined, even though a B2C in a retail-based field might be coping with issues of value and customer desire less immediately familiar to the owner of the B2B that deals with entities in its same industry, with a similar profile to itself. (Marketingprofs.com, 2005)

One potential positive in B2B marketing lies determining how value is maximized amongst the supply chain. The transactions usually occur between and within the value chains of the same industry. Thus, even without research, there is a commonality of knowledge amongst the business entities of B2Bs -- everyone knows one another's 'name.' Value is primarily determined by business economic use and can be quantitatively measured. But the small numbers of customers, depending on the B2B industry, may actually require more personalized maintenance marketing, including customized products and prices.

This familiarity between B2B sellers and buyers may also mean that customers and competitors often compete later on in the sales cycle for the same goods, causing friction between valuable partners. Also, B2B's larger unit transactions mean that more may be loss if a competitor is alienated. Alienating a competitor with whom one has deep and long-standing relationships can be dangerous in B2B, since there are often more complex and lengthy selling processes involving many players in B2B. This is why B2B sales are so focused on maintaining key accounts, often with long-negotiated contracts.

Multiple purchasing influences in an ever-shifting market can mean alienating a valuable customer, and losing a key buyer can spell the end to the business. (Marketingprofs.com, 2005) In B2B there must be more precise records of large shipping orders (such as shipping documents and funds orders) that add to costs. (Davidson, 2005)

Integration within and along the value chain can still be more easily maintained between individuals B2B, as all wish to maximize value. Despite competition, sharing sales forecasts in is more likely in B2B, in a way that is not feasible between businesses in the more immediately cutthroat world of B2C. (Davidson, 2005) B2B e-commerce is one way that the value chain has become particularly condensed in recent years, bringing together many international buyers in one area, and shortening the selling process that still requires less advertising than B2C, although the added 'bidding' advantage to see the different prices that are offered can favor buyers rather than sellers. However, Global Health Exchange, a medical supply company, founded in 2000 by Johnson & Johnson, Abbott Labs, Medtronic, GE Medsystems, and Baxter Healthcare, has flourished online in its purveying of medical supplies to businesses, because it reduces costs for the buying entities by shipping in bulk of a large, necessary, yet relatively anonymous product. (Davidson, 2005)

In contrast, B2C entities must conduct transactions with many more potential, but smaller customers, thus making it more difficult to please and know how to market to such individuals, but less dangerous to alienate the end of the supply chain. Value in B2C is determined by end-consumer perception, and thus there is a focus on brand management when dealing with a larger number of generally private consumers, in these series of small transactions. The selling process, usually of short duration, rather than through the sustained contracts of B2C requires efficient supply channel management to ensure inventory is kept low.