How the decision process in the business market and consumer market differ?

Businesses and consumers use different decision-making processes when buying goods and services, with businesses using more planning and guidelines and consumers often acting on impulse.

Understanding how businesses and consumers make purchasing decisions will help you create better distribution, marketing and checkout decisions.

Needs vs. Wants

Businesses buy what they need, while consumers often buy discretionary items. If you sell to businesses, you will need to focus your marketing messages on benefits and values. If your product is a discretionary purchase for most consumers, you can send messages that appeal to desires. You might create an aspirational brand for your product, or you might associate your product with health, status, beauty, fun or youth.

Planning vs. Impulse

Businesses are more likely to plan their purchases ahead of time — they usually operate on monthly, quarterly or annual budgets. Consumers are more likely to make spur-of-the-moment (impulse) purchases, or make reactive purchases (“I’m out of detergent”). Consumers also use the recommendations and referrals of others in the absence of product knowledge, according to ABC of Marketing.

Try to learn when your business customers make their choices during the purchasing decision process, which can be weeks or months ahead of their orders. Survey your customers to find out when they usually make the decision to purchase your product. This will help you time your marketing messages better.

You can also spur impulse purchasing by putting certain items at or near your checkout counter in your brick-and-mortar location, or serving pop-up offers on your website during the shopping or checkout process.

Businesses Use Procurement

Many business set up a procurement process that must be followed by all employees before they make a purchase. Some companies require employees to use only pre-approved vendors. If you are a B2B business, find out which of your customers or potential customers use procurement processes, find out who the purchasing agent is and find out what you need to do to get into their purchasing system.

Number of Decision Makers

Both businesses and consumers often make purchases in coordination with multiple people. In households, children often need to get permission from parents to make a purchase, or ask the parent to buy something they want. Partners often buy items that the whole family will use, and they need input.

Managers at businesses might need permission from their directors or the accounting department. At some businesses, everyone needs to go through the procurement agent.

If you determine that people buy your product or service using multiple decision makers, craft your marketing messages not only to motivate the final purchaser, but also to help them persuade their partner or boss.

Product Knowledge

Businesses will usually do more research and have more expertise about your product or service, especially if it's an expensive purchase, according to business consultant Ronald Brauner, writing at LinkedIn. Make sure business buyers can easily find technical information on your website.

Consumers who buy on impulse or because of aspiration will need more education as to your product’s benefits. Make sure you stress the perceived benefits of your products with these types of buyers.

The Purchasing Funnel

Just because a consumer has clicked on the “order” button on your website doesn’t mean you’re even close to making the sale, according to e-commerce experts Bolt. There are several steps to complete, and your potential customer can back out any time.

The customer must confirm their shipping address, choose a shipping option, enter a credit card, validate the cost (including shipping and taxes) and possibly consider another offer you put in front of them during the process.

Analyze your website traffic to learn about sales funnel characteristics that apply to your business — and to see at which stage you lose most of your customers. This will help you see where you can make changes to your shopping cart checkout process.

The marketing and marketing efforts are focused on the individual customer in case of business market than on customers as a group. That is, marketing approach is based on organization and individual customers.

Each customer requires a study to identify his buying behaviour and he himself is the focus of attention. As opposed to this, in consumer market, the marketing approach is mass-based or group or segment based and not individually focused.

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It can be segmental based on urban and rural or male-female youngsters and old people. The marketing study is based on segmentation targeting and positioning.

2. Segmentation:

In both consumer and business markets, customer segmentation is essential to get best results and to optimize resources. However, the bases of segmentation in both the markets are different. In consumer markets, the basic-segmentation parameter are factors like, urban, rural, male, female, age groups, regional location, habits and the like.

In case of business markets needs do not show any market change based on regional location and the requirements remain the same irrespective of factors like age and sex. The needs can show some similarity if they are coming from the same industry.

In business markets the industry becomes the focal point. The factors that make difference are naturally not related to human beings but are project specific.

3. Financing:

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Finance is the oil of business lamp and a great magnetic power converting desire into demand. In consumer markets, the individual purchases can afford it while those who need finance, the financial institutions have standard evaluation criteria and loans are easily available because the quantum of finance involved is very small.

As opposed to this, in business markets and marketing, the financial requirements are very large and are needed for a petty longer time. This is basically investment finance with a purpose of business growth and higher return unlike the consumer market. Where a wrong purchase decision has no or negligible effect on the activities of the purchaser.

However, in case of business buyer or marketing, such decisions are having disastrous effect on the operations of the purchaser. Because of this, arranging finance is an up heal task.

Most consumer market-ships that promote finance do so as a “one- stop” service rather than as a marketing tool.

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The mode or kind of financing being provided by the seller barely plays a role in decision making in consumer marketing. On the contrary, the type and mode of financing play a major role in decision making process and selection of a vendor in the business markets.

4. Commitment:

Vendor commitment is yet another point of difference. In consumer market the purchase is one-time phenomenon. A customer selects the item of purchase with analysing the variables.

The delivery is made and payment is cleared. This happening within a course of a few days. Contrary to this, the contract extension time is much lengthier in case of business market though decision is taken much earlier. That is why vendor commitment is a must in case of business marketing which is very much absent in consumer marketing.

5. Differing Decision-making Parameters:

The basic parameters or variables that influence the decisions of the buyer are very much different in case of business and consumer marketing. In case of consumer buying, the decisions are ware driven by the family needs and are affected by the purchase made by friends, relations, neighbours and peers. The Critical factors are price, comforts, social status, fashion attractiveness and the price in addition to family needs.

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As opposed to this in business purchasing the critical factors that influence the decisions are business growth, competitive advantage, cost reduction, operational convenience, internal rate of return on pay-back, survival, service facility and life cycle. That is, to a greater extent, consumer buyer decisions are emotional while business buyer decisions are more rational.

6. Spares and Services:

In case of manufactured durable goods, there is need for spare part and, services of maintain the gadgets and equipment in a running condition. In case of business purchases, the product is so sophisticated that is needs well-trained man power to operate it.

That needs vendor support to extend source and servicing. In case of consumer purchasing, it is not that important as gadget appliances are simple and consumer friendly. The vendor has contract for preventive maintenance while it may not be the case of consumer goods in each case.

7. Deciding Authority and procedure:

In case of consumer marketing, there is no any formal decision making process. The family is the decision­-maker. There are no hard and fast rules to be followed. It is quick and momentary as there no vested interest or manoeuvring.

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However in case of business purchases, the decision is taken by appropriate authority or group of people as per the administrative set up. There is formal procedure to be followed strictly. As a result, the decisions are delayed and at times tedius. There are pulls and counter-pulls leading to slow moving.

8. Statutory Approach:

In case of business purchases, the products to be purchased are to meet statutory requirements. This is especially pollution and environmental impacts or results. These norms are decided by the state with experts to protect the interests of the society at large. These norms differ from place to place and time to time.

In addition to the meeting of differing norms there is need for getting approvals that are specific to a given project which are to be complied with getting all sorts of clearances in common. They are not generally so stringent in case of consumer marketing. These are meant for personal consumptions. They are to meet safety of life of the users.

9. Consumer Loyalty:

One of the essentials of successful marketing is not only to create, increase and maintain the consumer close, but to retain them, for longer period the role of consumer loyalty is much more important in case of business marketing. The customers are to be hunted and maintained through loyalty programs.

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Each customer being big and valuable is to be monitored because a loss of one is having greater loss. As opposed to this, in case of consumer markets, loyalty is not an individual effort. They are addressed segment wise or as a group. It is measured on the basis of market share or segment.

10. Customer Supplier Relationship:

In consumer marketing the customer and supplier do not come in direct contact with each other. As a result, there is no personal bond of relationship. As opposed to this, in case of business marketing, customer and supplier are in direct contact. This relationship starts prior to purchase extends during the contract period and continues even after the purchase.

This personal bond of consumer relation is quite unique to business buying. As opposed to this, the relationship in case of consumer markets barely goes beyond purchase, except in certain categories of products. However, relationship is a must, though it is much differing.

11. Market Research:

In case of consumer marketing, the focus on segment study like rural urban males and females, young and old, rich and poor, educated and uneducated and so on. Hence, it involves collection, analysis and interpretation of data on cultural, economic, social variables. It also concentrates on communication mix, product and price mix.

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These policies that are designed are for a given group. As opposed to this, in case of business marketing the focus is on individual customer where segmentation is misleading. The customers for a same industry show different perceptions perspectives where perceptions are governed by technology cost, maintenance, environmental factors and past experience. That is critical success factors differ widely from customer to customer in the same industrial segment.

12. Nature of Demand for Products:

In case of consumer goods the market demand is direct unlike in case of industrial products where it is derived. They are also subject to reverse price elasticity of demand in contrast to consumer goods.

In addition, there is no direct a single relationship between fluctuation in demand for the end products and some of the industrial goods that are used for producing other end products.

The fluctuation in business goods is dependent upon both macro and micro economic co-factors. It is not so in case of consumer goods. Demand fluctuation is abrupt, fast and unpredictable in case of business goods unlike consumer goods.

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