Characteristics of a B2B company
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Characteristics of a B2B company
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Background of the Company
Intel Company is an American technology company based in Santa Clara, California. It is the second-largest company in the world after Samsung that deals with manufacturing semiconductor chips. The company recently manufactured the x86 series of microprocessors that are found on personal computers. Intel Company supplies processors that are used by the manufacturers of computer systems such as Lenovo, Apple, Dell, and HP. This company as well manufactures motherboard chipsets flash memory, integrated circuits, embedded processors, and graphics chips. They then sell their products to other companies that deal with manufacturing devices that use the products of the company. The company was founded in the year 1968 by Gordon Moore and Robert Noyce, who were semiconductors pioneer. Since then, the company has been supplying its products to computer manufacturing companies such as Apple, Lenovo, and Dell (Raisch, 2012).
Characteristics of a B2B company
The first characteristic of this company is that it gives bulk discounts to other businesses that purchase the products that they are selling. The Intel Company usually offers a bulk discount to Apple, Lenovo, Dell, and HP companies when they purchase the microprocessors that they are manufacturing. A bulk discount is a very common characteristic in B2B businesses. This is because it helps in building customer loyalty and as well helps in encouraging higher order value. Secondly, the Intel Company usually operates in minimum order quantities. This is a characteristic of a B2B business. This company usually sells its products to the computer business on minimum order quantity. This ensures that the company can make more profit. The computer companies that usually buy products produced by the B2B Companies usually register. Customer registration is another feature of a B2B business. When other business registers, the company will exactly know the number of products to produce within a certain period. For instance, the customers of these businesses are other businesses, and hence, when the other businesses have not registered, it will bring challenges to the company as it will lack customers for the products that they are producing into the market. Another characteristic of this company is that business buyers usually have challenges when it comes to making buying decisions from different businesses. This is because the purchases of businesses usually involve a large amount of money, complex economic and technical considerations. This makes the decision making process of a B2B Company to be more complex compared to the B2C market type of businesses. The first decision making a step in his kind businesses is to recognize the problem, then come up with the specification of the product to solve the problem, look for the possible products and its suppliers, order the product and finally, evaluate the supplier and the product performance. Lastly, the Intel Company has made its payment to be flexible to the business buyers of the product that they are producing. Flexible payments are another characteristic of a B2B market type. They have flexible payment methods because the businesses involve a considerable amount of money and also, bulky orders. In summary, the characteristics that have been discussed are; lengthy decision making process, bulky discounts, flexible payments, minimum order quantities, and finally, customer registration.
As mentioned in the introduction part, the B2B businesses are the businesses that sell their products to other businesses. For instance, the Intel Company is a company that deals with the manufacturing of microprocessors that are used in personal computers. The microprocessors that are manufactured by the Intel Company are not bought by individual customers but are bought by companies that produce or manufacture devices that use the microprocessors, in this case, the Apple Company, Lenovo Company, HP and Dell. The supply chain of a B2B business involves two businesses. One of the businesses is the producer business, and the other business is the consumer business. When the Intel Company produces the microprocessors, it becomes the business producers, and the microprocessors are bought by Apple Company, which is the business consumer. The supply chain of a B2B company is usually shorter than the supply chain of a B2C company. This is because, in B2B, the chain only involves the two companies that interact with each other, one being the buyer and the other on being the seller. When comparing this supply chain with B2C companies, the B2C companies have a longer chain because they involve different clients. When different clients are involved, it is obvious that the supply chain becomes very long. However, the supply chain of businesses that are not in the chain may be a bit complex as it is hard for a business to get new customers of the products that they are producing. In a B2B supply chain, the two businesses involved in the transaction can negotiate and get into an agreed price. Still, on the other hand, it is not easy for price negotiation and bargaining to take place in B2C businesses. For instance, when Intel Company sells the microprocessors that they produce to Lenovo and Dell, then the Intel Company and the Lenovo Company can come into an agreement concerning the price of the commodities that they are selling and buying respectively.
Consequently, the number of customers in the B2B business is smaller compared to B2C businesses. The customers of the B2B business are only comprised of the business buyers, and the latter comprises of everyone who is willing and able to buy the product at its indicated price. In a B2B supply chain, the volume of sales products is always higher compared to that of B2C businesses. This is because the consumers in the B2B supply chain are only the buyer business, unlike the other business, which involves everyone as long as they are willing and able to buy the products. In summary, the supply chain of B2B businesses is shorter compared to the B2C businesses, there is room for negotiation in this kind of business, and number of customers is smaller compare to B2C business, the businesses deal with high volume of sales and finally, the transactions only involves the two businesses that are transacting.
The target audience of B2B businesses is different from that of B2C businesses in many ways. Firstly, B2B businesses follow the 80/20 rules. This is where 205 of the customer’s population dominate 80% of the business sales. Secondly, in B2B businesses, the personal relationships among the businesses carrying transactions matter a lot since the business transactions usually involve very lengthy contracts. The audience of the B2B businesses is supposed to be known very well by their names, and they should as well have met. For instance, the collaboration between the Intel Company and the Apple Company has existed for ages, and therefore, the two transacting companies know each other very well. Lastly, the target buyers of B2B businesses are the long term buyers. This is because the B2B businesses usually make a high volume of sales, and hence they require updates and maintenance. Intel Company has been dealing with manufacturing microprocessors, and hence, their target audience in the long term buyer such as Lenovo, Apple, HP, and Dell. These are long term customers as the companies have been dealing with the manufacturing of computers ever since, and hence, they will keep demanding for the microprocessors. In summary, the target audience of the B2B companies are; long term buyers, the customers that they know, and the customers that will require a high volume of products (Moon & Darwall, 2012).
There are six stages that are involved in the purchasing process of products of the Intel Company. The first process is awareness. The Apple Company, Lenovo Company, Dell Company, and HP Company usually realize that they have a certain problem. The companies then become aware of their business needs. For instance, these computer companies knew that they need microprocessors for their computers to sell, and therefore, they try and fix that problem. The second step is that the companies becomes committed to change. After the computer companies have realized the problem, they now become willing to fix the problem by now looking at the solutions or the alternatives available. The next step is that computer companies now start to consider options. There are different options available, of course. Still, the companies analyze the options based on the amount of money that the company is willing to spend on the solution of the problem, the quality of the alternative problems, and also the quantity that the companies need. Through that, they will be able to select the best option that they can use to fix their problems. The company will then commit itself to cater to the expense of the solutions to their problems. This is when the companies will decide the business to get the solutions to their problems and hence, be committed to pay the relevant amount needed. Lastly, the customer will decide on the product to buy and hence will buy them. This is the purchasing process of the B2B business.
Recently, the use of credit cards has increased in B2B transactions. Earlier on, the business buyers used to make purchases by making orders in person through the telephone or the mail. The business producers would then deliver the products to those who have placed the order and then send an invoice for the payment of the products. The business producer would then wait for like a week or two for the payment of the products to be made. Nowadays, the transaction process of the B2B business is simpler and shorter. There are special cards that are designed to be used by business buyers when purchasing the products from the business sellers. Through this, instant payment can be made on the products that have been purchased. The B2B transactions also use the credit cards, which enables the buyer company to pay for the products that they purchase form business producers. Typically, a B2B transaction is where the customer of a product is another business and not the consumers. A common example of a B2B transaction is when another company purchases supplies for its everyday operations. In this case, the Lenovo, Apple, HP, and Dell companies make the transaction with the Intel Company concerning the microprocessors (Webster, 2014).
The distribution channel of B2B involves the movement of goods from business producers to business consumers. In B2B businesses, the distribution involves business product manufacturers to business consumers. When the Intel Company produces the microprocessors, they then sell their products either directly to the business consumers who are the Apple Company, Lenovo Company, and HP Company (Rodgers & Pepper, 2011). They can as well distribute their products indirectly using intermediaries. When the intermediaries are used, the prices of the products that are produced by the company is likely to go high in order to cater for the expenses of the intermediaries such as storage cost, transportation cost, and other costs. In summary, the distribution channel of B2B businesses can either be a direct channel or indirect channel.
Differences between buyer behavior of B2B and B2C businesses
The first difference in the buying behavior of the two is that the buying behavior of B2B is not affected by things like advertisements and marketing techniques, but the buying behaviors of B2Cis affected by the same. For instance, if the consumers of Apple computers see other computers being advertised, they can change their mind and start using the computers of the other companies. Consequently, in B2B, business customers are likely to be purchasing from one producer as long they are producing goods to expected standards. Secondly, the B2B consumers are usually very keen when it comes to the specification of the product in contrast to the B2C consumers (Hutt & Spech, 2012). Thirdly, business is less liable when making impulse purchases than consumers. This is because, in businesses, the buying decision is made by a committee, but in consumers, the buying decision is just made by the person who is willing and able to buy from the business. Those are the major differences between the two types.
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