Consumer and business markets present a different set of challenges and opportunities for businesses. Some products can be sold to only one market while others can be sold to both. For example, equipment manufacturers generally sell to industrial businesses and restaurants cater mainly to consumers, while technology companies tend to sell to both consumers and businesses. The needs and characteristics of these markets are different; therefore, the marketing strategies for each are also different.
Service Needs of Consumers and Businesses
Businesses usually purchase capital equipment and raw materials to make products which they resell to consumers or other businesses. Consumers purchase products such as grocery items, microwaves and computers for personal or household use.
Service needs of the consumer and of businesses are also different. For example, businesses may use management consultants and business outsourcing services, while consumers use investment advice and fitness training services.
Characteristics of Purchasing Decisions
Businesses typically make purchasing decisions after a formal process involving two or more people. Consumer buying decisions can be made by one person, usually at a place of business or online, and the process is more informal. Businesses are often the integrators of products and services while consumers are the end users.
Consumer demand usually influences business demand. For example, an auto manufacturer is not going to run its shifts at 100 percent capacity if the auto dealerships are filled with unsold cars. Demand also affects price. Consumers are more likely to react to changes in price by buying fewer quantities or switching to comparable lower-priced products. Businesses may not object to price increases as long as there is sufficient demand to either absorb the increases or pass them along to customers.
Differing Marketing Strategies
Different buyers' needs and characteristics require different marketing strategies. Consumer segmentation is usually based on geographic factors, such as region and population density; demographic factors, such as age, gender and family status; and behavioral factors, such as brand loyalty and price sensitivity.
Business segmentation is usually done on industry factors, such as market concentration and growth rate; customer characteristics, such as size and market share; and the procurement process, including purchasing criteria and key decision maker preferences.
There can be millions of buyers in consumer markets, while there may be a relatively small number in business markets. Therefore, mass communications is a more efficient way of reaching consumers, while focused and tailored approaches, including personal contacts, tend to work better for businesses.
Similarities Between Consumer and Business Markets
Although there are many differences between the two markets, there are some similarities. For example, product quality and customer service are important to both consumers and businesses. The overall macro-economic conditions affect both markets: a strong economy generally increases demand, while a weak economy lowers it.