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Business to Business (B2B)

Last updated: Jul 20, 2022

B2B Meaning

B2B (Business to Business) is a business model that describes transactions between one company and another. If most companies offer products or services to individual consumers, consumers targeted in the Business to Business (B2B) model are other business entities.

B2B companies are parties that act as producers and are in charge of supplying the operational needs of other companies. It is very likely that this kind of company do not reach end consumers directly, because the targeted consumers are other companies.

 

Characteristics of Business to Business

This model has characteristics that distinguish it from other business models. Some of the characteristics of the Business to the Business concept are as follows:

  • There is a demand for a company to meet the needs of other companies.
  • Other companies offer goods or services to support the production process or operational activities of the requesting company.
  • There is a negotiation process to contract approval as a form of cooperation between producers and consumers.
  • The relationship or cooperation between business partners is established in the long term.

 

B2B Example

Basically, examples of B2B companies are parties who need the help of other companies to carry out their business production activities. The examples of Business to Business are:

Automotive Industry

The automotive industry is an example of a Business to Business company. This is because the company requires spare parts and other machine components to support production activities. Automotive companies will work with suppliers to meet the needs of car manufacturers such as glass, tires, and others.

Raw Material Supplier

Most companies cannot meet their own raw material needs. Therefore, a company needs another company as a provider of raw materials so that their business can run.

Marketing Services

In offering products to customers, companies need a skillful person in the field of marketing. Companies that do not have experts in this field, they can take advantage of other companies that provide content marketing services, digital marketing, and so on.

Web Development Services

Website has become a basic need that a company needs to have to increase their sales. However, not all companies have the ability to develop their own websites.

It then encourages the emergence of businesses that offer website development services. This business model is one of the example, where there are companies that offer services and the customers are other companies.

Financial Services

In supporting the company's business processes, of course, cannot be separated from financial calculations. However, in reality, the company may not have financial expertise. In this case, the company can take advantage of other companies as financial service providers in order to optimize their business.

 

Difference between B2B and B2C

In addition to the Business to Business model, there is a B2C or Business to Customer model, which is a business model that involves the company as a producer of products or services and the final consumer is the customer who uses the product.

From the above understanding, it is known that the difference between B2B and B2C lies in their target customers. The customers targeted by B2B companies are other companies. In opposite, B2C targets consumers directly. 

The difference between B2B and B2C is the approach used in offering products or services. The Business to Business concept needs to create ads that focus on the needs of the targeted industry, while Business-to-Customer (B2C) requires ads that are based on the needs of individual consumers.

Transactions in Business to Business usually occur on the basis of a binding agreement or contract for a certain period of time so that customers cannot change producers freely. This does not happen in the Business to Customer (B2C) concept, so consumers are very likely to switch manufacturers.

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