Consumer and business purchase behavior

There are two groups of customers, consumers and organizations. So there is consumer market (B2C – Business to Customer) and business market (B2B – Business to Business). While the purpose of buying products in business market is for selling and making money, consumers buy products for using. Thus, the way buyers evaluate products are different. Marketers must understand the differences to have appropriate strategies. The differences between B2C and B2B market can be seen in Table 8.

Table 8. B2B and B2C comparison (Kotler, 2009)

Factor B2C market B2B market

Nature of markets Unlimited, smaller buyers Fewer, larger buyers Buyer behavior Emotional Rational, direct buying;

long purchase process Buyer-seller

relationships

Spot buying Close relationship

Market demand Price sensitive, fluctuating Derived, inelastic demand First, B2B market is dominated by few large buyers while in B2C market, number of buyers is uncountable. Additionally, organizational buyers purchase large quantities while consumers usually purchase one or few items at one time. For examples, one

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can know only a few names of computer manufacturers while there are millions of computer users. Some popular brands are Intel, Dell, IBM, NEC, and Asus.

Computer manufacturers are customers of chip manufacturers and both of them are in B2B market. In contrast, computer users are consumers in B2C market. This nature influences other characteristics of B2B market.

Second, consumer buyers are impacted by emotion while organizational buyers are rational. The purpose of buying in business market is to make money; therefore the purchase process in B2B market is quite long and goes through many steps. For examples, Kotler (2009, p.188) listed seven actors that influence a purchase decision;

they are initiators, users, influencers, deciders, approvers, buyers and gatekeepers. A decision is made after it goes through those seven gates. In addition, Ellis (2010, p.39) argued that B2C purchases are influenced by three emotional factors which are social, ego and utility; while B2B purchases focus in price, value and utility.

The third difference is the relationship between buyers and sellers. As in B2B buying, the purchase size is usually large and the buyers are few, firms must maintain close relationship with buyers so that they can take advantages of the purchase. Recursive purchases from larger buyers worth investments in maintaining such relationship. In contrast, buyers in B2C market have less close relationship with sellers because they are driven by emotion. As a result, future purchases are not guaranteed.

Finally, the demand in business market is derived from consumer market and inelastic (Kotler 2009). When consumer demand increases, B2B purchases would have to be increased to meet the demand. In addition, B2B demand is not affected by price changes as a small increase in market price cannot make firms to produce more products shortly. They also cannot easily change the supplier because of the price decrease. In contrast, consumers are quite price-sensitive. They can switch to other sellers if they find a similar but cheaper product from them.

As mentioned above, the buying decision process in B2B is usually longer and more complex than in B2C market. Figure 15 illustrates this difference. In general, the process in B2B context is more technical oriented. It requires steps of need description, product specification and order-routine specification in order to evaluate the buying products comprehensively. The figure also indicates that to influence the buying decision, marketers have to consider not only the purchase step but the whole marketing process.

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Figure 15. B2C vs. B2B decision making process (Kotler, 2009)

However, there is a common factor that changes market behavior, including B2B and B2C market; it is the Internet (Figure 16). In the age of e-commerce and e-service, Internet plays a more critical role. A study conducted by Chong et al. (2010) shows that five major strategies for marketing in B2B market are internet advertising, outsourcing marketing, public relations/publicity, sales promotion and trade shows.

Of which, internet marketing stays at the second place in term of marketing effectiveness, follows outsourcing marketing. The framework suggested by Chong et al. (2010) indicates that participating in B2B marketplace is a critical phase in e-marketing.

Figure 16. B2B & B2C purchase decision process using Internet

Figure 16 indicates that the searching function of the Internet is a major source of information for both organizations and consumers. Internet is also an effective tool for post-purchase services as firms are able to follow up their customers using Internet-based applications such as email marketing, support forum or customer relationship management (CRM) systems. As a matter of fact, great post-purchase services increase the re-purchase intention. Therefore, firms should be aware of the changes in customer behavior under the Internet’s influences.

In the context of consumer market, website’s attributes are the most important factors that influence purchase intention of consumers. The functionality, design and content of the website should be carefully considered (Gounaris et al., 2010). Word-Of-Mouth (WOM) activities are also emphasized in attaining customers (Gounaris et al., 2010). WOM activities are inspired from trust and experience with the website

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which positively affect purchase intention (Dennis et al., 2009). Thus, the adoption of internet in business process is a success factor for firms operating in both B2B and B2C markets.

To conclude, there are significant differences between B2B and B2C market. Going further in this topic is far beyond this study’s limit. However, in online environment, these differences are eliminated by integrating electronic tools in business. Website is considered as an important media to connect buyers and sellers. In other words, consumers and organizations easily find each other in e-marketplace environment.

Nevertheless, understanding customer buying behavior is the critical task for marketers and managers. And of course, differences between organizational purchase and consumer purchase must be understood.