B2B2C marketing is one of the most challenging marketing environments. B2B2C entails a company selling to another company (let’s call this entity “the customer”) that is not the consumer of the product. The consumer is an individual requiring the help of the customer to make the best purchase decision. The key difference between B2B2C and B2C is that the decision maker in the purchase choice is the customer, who adds significant value in the consumer’s choice. Pharmaceuticals and financial services are two examples of B2B2C markets.
In B2B2C, the delivery channel may be separate from the purchase decision channel. For example, even though a physician is the primary decision maker for pharmaceutical drugs, the pharmacy plays a much-subordinated role in the purchase decision and mostly acts as a point of distribution. In financial services, the insurance provider sells through a financial advisor who develops specific investment recommendations. From a marketing perspective, it’s critical to determine the impact and interrelationships of marketing to the customer versus selling to the customer and marketing to the consumer and selling to the consumer by the customer.
On the other hand, in B2B marketing, the business is the consumer. The business consumer may purchase virus protection software for their own use rather than reselling it to an individual consumer. This is very different from B2B2C, where the business customer may be purchasing the product, but, coupled with their recommendation and value-add, they are selling it to an individual consumer. Let’s call this “the recommendation channel.” In B2B, it’s critical to determine the impact as well as the inter-relationships of marketing to the business consumer and selling to the consumer.
Alternatively, B2C marketing (when a company’s end market is an individual or family purchaser) is relatively simple:
• Products and services are manufactured and sold directly or through a multi-tier distribution channel. A good example is consumer packaged goods (CPG) or fast-moving consumer goods (FMCG), such as selling deodorant or detergent through retail stores.
• Marketing budgets are often large enough to measure ROI from marketing efforts, without salesperson influence to muddy the calculation. There is one single step in the marketing value flow.
Nevertheless, in both B2B, B2C and B2B2C scenarios, a distribution channel may be required. Often, distribution is defined as providing physical access to the product, where the customer or consumer can pay for the product. The customer/consumer pays for and takes possession of the goods from the manufacturer, or from a wholesaler or retailer. This doesn’t mean that the distribution channel is diminished in importance. On the contrary, the distribution channel is critical and requires a whole different marketing and selling function, typically separate from the marketing and selling to the customer and the consumer. A strong distribution channel is always a critical component of any marketing formula. For B2B2C, the customer is often the same as the distribution channel. In others (financial planning and pharmaceuticals), the customer (financial advisor or physician) is only the recommender. The product is purchased directly from the manufacturer or through another channel.
B2B2C marketing is very different from B2B and B2C. Here, there are strong decision drivers on both sides of the equation. The B2B component of B2B2C has its own challenges: The customer must believe that they can sell your product to the consumer — and the customer wants that activity to be as simple, easy and inexpensive as possible. If the customer has to do all the selling, they will either not sell your product but sell the competition’s or they will demand a higher margin. This will either increase your price to the consumer or it will decrease your profit margin.
The marketing and selling functions have to generate demand at both the customer level and the consumer level. Otherwise, overall sales volumes or product margins will be low. Demand generation can include brand building at the customer and consumer levels as well as generating inbound leads or website visits. Sales activities can include outbound selling activities, such as outbound calls to the customer, outbound email, outbound direct mail and face-to-face meetings. Marketing activities can be mass media and online media to build awareness, purchase intent and brand relevance.
The marketing challenge is how to optimize the media mix for both target audiences: customer and consumer. It’s important to ensure that:
• The recommendation channel wants to recommend the product because they believe they can make more money on it than they could from your competitors’ products. In this case, it’s important to generate demand with the consumers so they’ll want to purchase your offering — that way, your recommendation channel will proactively ask to recommend the product.
• The consumer wants to purchase this product instead of competing brands because of its performance, its value/price or its perceived brand image.
To successfully engage in B2B2C marketing, marketers must properly balance marketing and selling activities as well as realize and optimize the synergies between them. For example, in the insurance industry, there are distributors (such as Raymond James or Protective Life) with thousands of advisors recommending and selling investment products manufactured by insurance companies (MetLife, Prudential or others). In some cases, the insurance manufacturers have dedicated teams selling directly to investors. In this case, the manufacturer has a great deal of influence and control over the products their advisors recommend and sell. Overall, these advisors are similar to CPG/FMCG retailers, providing “shelf space” for insurance products. If the advisor doesn’t have access to (or doesn’t carry) a particular product, the investor can’t purchase it.
Nowadays, marketers have developed unique approaches to handling complex B2B2C businesses. Some focus only on gaining recommendations at the customer level. Others focus on generating strong pull from consumers, while others take a more balanced approach, building the brand and driving demand at both the customer and consumer levels. Each method has its advantages and disadvantages — but those who can navigate the unique challenges of B2B2C marketing with intention and foresight will find themselves ahead of the competition.