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Introduction to B2B Markets Hello everyone. This is week 5

and today we are going to talk about something different.
What different? Until now we have been talking about B2C
market, that is direct consumers or end consumers. People
like you and me, we go to buy chips, soap, detergent, coke.
And how do you develop strategy for that? We have been
talking about those things. Today, we are going to talk
about B2B market. B2B market multiple types. I will start up
with giving you a few examples where you understand
what is this B2B market. So, say products like, cement, iron,
steel, plastic, rubber, electric chip, electronic chips now
these products we all know that it goes into making some
other products. So this kind of products most often end
consumers do not buy directly. They buy the products
where this iron, steel, plastic, rubber, chips, cloths, those
kind of things are used. Those are the products which we
buy, we do not buy them directly. So the business of
dealing with such kind of products is called B2B. Let me
take the example through. Say that somebody is Tisco.
Tisco makes iron and steel. Now iron and steel is used to
make cars. So say Maruti, Maruti buys iron and steel from
Tisco to make cars. So the business between Tisco and
Maruti is B2B. Now Maruti also would be using rubber, they
would be using aluminum, they would be using plastics,
they would be using electronic chips. So they procure these
things from multiple sources. So the relationship between
them is again B2B. Now Maruti once they make the cars,
then they sell it, then they send it to the showrooms which
are different franchises. The relationship between or the
business between Maruti as a manufacturer and this
showrooms, this franchises, that is again B2B market. The
business is B2B business. Now from the showrooms, from
the franchises, we guys go and buy the car. Now this is B2C.
So, from the manufacturer or from the supplier, vendor, all
the way till the Maruti service center or Maruti showroom
and from that to the consumer, there are multiple levels in
which business happens. So, in a way, you can say B2B to
B2C. Now, B2C part, until now we have been discussing. for
listening. So, how do this B2B part happens? What kind of

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strategies are involved over there?
Marketing Fundamentals
Prof. Ashis Mishra Module 5 © All
Rights Reserved. This document has been authored by Prof.
Ashis Mishra and is permitted for use only within the
course "Marketing Fundamentals" delivered in the online
course format by IIM Bangalore. No part of this document,
including any logo, data, illustrations, pictures, scripts, may
be reproduced, or stored in a retrieval system or
transmitted in any form or by any means – electronic,
mechanical, photocopying, recording or otherwise –
without the prior permission of the author. That is what
we are going to do in this week 5, where we are going to do
the B2B business and how does the B2B business strategy
works. And, this is not the only B2B. Say that, the farmers
who produce rice, pulses, Other legume, so these things
sugar, salt, those who make. Now these things are
purchased by the retailers, something like the Reliance,
something like the Big Basket and then they sell it to the
end consumers. Now from the farmers to the retailer, this is
also a B2B business. From the retailer to the consumer, it is
a B2C business. So and then there is other kind of things
also we should be part of B2B which would be like the
equipments, like the machinery, the movie cameras, the
medical equipments like the x rays. One of the case that we
will be discussing as part of this. This is also a CT scan
machines. Now here a manufacturer like a GM or
somebody, they make this equipments and then they sell it
to the hospitals and the hospitals use it to do the diagnosis
of the patients. This is also a B2B. How does this heavy
equipments, machinery and all that is purchased? Trucks.
Mahindra makes trucks. Tata makes trucks, Tata Motors
they make trucks. Now those trucks are purchased by
probably the fleet owners who do the logistics from one
place to another. Now this is also a B2B business. So
actually if you look around you will find as many B2B
businesses as B2C businesses. And, with every B2C
business there is always a logistics and supply chain that is
involved and that is typically B2B business is part of this. So
today we are going to talk about this B2B business and how
this B2B business strategy and how to, how the B2B
business buying behavior and how the B2B business

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 segmentation, targeting, positioning, how these things are
done. So these are the few of the things. Of course, we are
not going to cover everything under it. This is itself is a full
course like marketing. We will be covering some basic ideas
about what is B2B business and how it is useful for you.
give main points

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Main Points of B2B Markets Lecture (Week 5)

1. Introduction to B2B Markets

Shift from B2C (Business-to-Consumer) to B2B (Business-to-Business) market

discussion.

B2C involves selling directly to end consumers (e.g., chips, soap, detergent).

B2B involves selling products that are used to make other products.

2. Examples of B2B Products

Cement, iron, steel, plastic, rubber, electronic chips, machinery, medical equipment.

These products are typically not bought directly by consumers but used in
manufacturing.

3. B2B Market Relationships

Example: Tisco (Tata Steel) → Maruti (Car Manufacturer) → Showrooms →

Consumers.

Tisco to Maruti – B2B (Steel supply for car production).

Maruti to Showrooms – B2B (Car distribution).

Showroom to Consumers – B2C (Final sale).

4. Other B2B Examples

Farmers supplying crops to retailers like Reliance or Big Basket → B2B.

Medical equipment manufacturers selling to hospitals → B2B.

Truck manufacturers selling to logistics companies → B2B.

Machinery and equipment purchases in industries → B2B.

5. B2B and Supply Chain

Every B2C business has an underlying B2B supply chain (logistics, manufacturing,
wholesale).

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6. Key Aspects of B2B Marketing Strategy

Buying Behavior – How businesses make purchasing decisions.

Segmentation, Targeting, and Positioning (STP) – Strategies used to market

products in B2B.

Understanding Business Needs – Customization, bulk purchases, relationship

management.

7. Conclusion

B2B is as common as B2C and plays a crucial role in supply chains.

The course will focus on foundational B2B strategies, though it's a vast subject.

Differences Between B2B and B2C So, the major difference

between B2B and B2C, let us talk about that. Some of them
are quite intuitive, some of them you have to think a little
bit more. Intuitive, B2C means lot many customers, B2B
less number of customers, obviously, because it is only the
business owners who will be the customers. So, B2C, many
customers means, they will, the value of transaction will be
much lower. Each of us, whatever we buy, much smaller
items. One bottle of shampoo, one toothpaste, but if a
hospital or a school or a hostel, if they buy, they will be
buying in bulk, maybe in terms of quintals, in terms of
thousands of kgs. You will be buying rice 1 kg, 2 kg, but
those who take rice and make rice flour out of it and sell it
or make idli dosa batter out of it and sell it. Now they will be
purchasing the rice in terms of hundreds of kgs, so that will
be the major difference between the B2B and B2C. B2B
large value of transaction, B2C smaller value of
transactions. Another thing that is not so intuitive is
because B2C, because it is mass produced, the items are
not customized, but when we are talking about B2B,
because you have got few large customers, if they will be
having specific requirements, you will customize it. Here
the example will be, say somebody is taking ERP systems.
So, either it is Oracle or any other guy who is giving the ERP
package to any organization. So then, every organization
business is different. Every organization's organization
structure and the systems and processes, it is different. So,
if Oracle is supplying ERP package to any organization, it is
part of the deal that they will have to customize it. It is not a

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standardized product. But if Sunsilk is selling shampoo, anti
dandruff shampoo, now it is not going to be customized for
you and me. We have a choice of taking anti-dandruff
shampoo or anti-hair fall shampoo there are two different
shampoos. But, for anti-dandruff it is the same sample,
anti-hair fall it is the same sample. So, there is no real
difference between these two for individual customers.
Similarly, because it is B2C is mass produced, price is fixed.
Whatever is the MRP, you buy it at that price. But if
Marketing Fundamentals
Prof. Ashis Mishra Module 5 © All
Rights Reserved. This document has been authored by Prof.
Ashis Mishra and is permitted for use only within the
course "Marketing Fundamentals" delivered in the online
course format by IIM Bangalore. No part of this document,
including any logo, data, illustrations, pictures, scripts, may
be reproduced, or stored in a retrieval system or
transmitted in any form or by any means – electronic,
mechanical, photocopying, recording or otherwise –
without the prior permission of the author. it is B2B,
because it is a large transaction and because there is
customization, price is always negotiated. There is a base
price, always there is a base price. But, price is typically
always negotiated. Then the next difference would be B2B,
it is the buying process is pretty large, it is pretty lengthy
and it is a complex buying process. Where as in B2C, it is
much smaller, quick. You want salt, you will go buy salt. But
if a hotel is trying to buy salt, then they will be dealing with
the manufacturers, they will be dealing with the wholesaler,
they will be dealing with the vendors, and then they will be
talking about where they are going to, which brand they
are going to get. And whether they'll be looking at pink salt
or iodized salt or whatever is the type of salt, or it is black
salt. And then in what kgs and how many kgs that they'll be
buying, where it'll be coming from, where it'll be delivered.
Now, there is a complex buying process, and if you're
talking about ERP, again, the ERP purchase and
implementation process is a long process. Somebody's
selling machines. Like the CT scanners or x ray machines to
the hospital, again a long and complex buying process
because one machine could go up to crores. So if
somebody is spending that kind of money, then obviously

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you are looking at a complex buying process. Lot of
stakeholders will be there, lot of discussion will be there, lot
of presentations will be there. So that is what I am talking
about that is the major difference. Next would be, there will
be different features, different different parameters,
different characteristics of B2C product which we have seen
before in terms of value and those determine the value of
the B2C products. But in case of B2B, product features are
there, but the focus, the value of the product is
predominantly based on how useful the product is in the
business of the customer. So, it is not really that what
quality of the product that you are. I mean I am not telling
quality is not important. Quality is of course, important, but
how that quality is useful for the organization, business
organization who is purchasing the product, how that
quality is going to make a difference That decides the value
of the product. I will talk about it, hold on at this point of
time, I will talk about the benefits and values in B2B a little
while later. Then a couple of more differences, let me
elaborate that. In case of B2C,
Marketing Fundamentals
Prof. Ashis Mishra Module 5 © All
Rights Reserved. This document has been authored by Prof.
Ashis Mishra and is permitted for use only within the
course "Marketing Fundamentals" delivered in the online
course format by IIM Bangalore. No part of this document,
including any logo, data, illustrations, pictures, scripts, may
be reproduced, or stored in a retrieval system or
transmitted in any form or by any means – electronic,
mechanical, photocopying, recording or otherwise –
without the prior permission of the author. normally the
decision maker is one person or maybe one family, one
business unit, one unit, again the same example buying
toothpaste, salt or Cocacola, or shirt, trouser, shoes
typically one person is decision maker. If you are talking
about B2B, the decision maker will be a bunch of guys,
multiple people will be the decision makers. Because if you
are talking about an ERP system implementation in a large
organization like Relance or a Tata group. Or even
government of India, some department or even IIMB. So
there'll be so many different people involved in this. It's not
that one guy decides and then the system gets

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implemented because the system has to be integrated with
each and every activity that the organization does. So there
will be lot, many stakeholders who will be involved in this
lot, many decision makers. And hence it is complex and
hence it is time consuming. And the last significant
difference between B2B and B2C is, in case of B2C, the
demand is direct from the customers. Whatever the
customers say, are talking about, that is what, whatever the
customer needs, that is what is the demand. But in case of
B2B, the demand is a derived demand. So, the demand for,
say, I, if I take the first example that I spoke about, the
Tata's Steel, iron and steel to Maruti. Now the demand of
iron and steel will depend upon the demand of Maruti.
Now, if Maruti vehicles are not selling, then the demand of
iron and steel will fall. Say the same Tata group sell iron and
steel bars to the construction industry who are building
apartments. Then demand of iron and steel, the bars and
plates and all that thing will depend upon the demand for
apartments. So if the demand for apartment increases,
then the demand for iron and steel increases. And vice
versa. So, the demand in case of B2B is a derived demand.
It is not a direct demand, whereas demand for B2C is a
direct demand, whatever the customer looks for. So these
are the major differences between B2B and B2C. As I told
you earlier, that now I am going to talk about the values. in
B2B. And this is something is really significant because we
have spoken about the values in B to C business where do
you recall four different type of values that I spoke about.
Marketing Fundamentals
Prof. Ashis Mishra Module 5 © All
Rights Reserved. This document has been authored by Prof.
Ashis Mishra and is permitted for use only within the
course "Marketing Fundamentals" delivered in the online
course format by IIM Bangalore. No part of this document,
including any logo, data, illustrations, pictures, scripts, may
be reproduced, or stored in a retrieval system or
transmitted in any form or by any means – electronic,
mechanical, photocopying, recording or otherwise –
without the prior permission of the author. What are the
values that we spoke about? The values are utility per cost.
What are the different utilities and what are the different
costs that you are spending for? And what will be the value,

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 what, what are the values in B2C? You have got functional
values, you have got economic values, you have got social
values, and you have got experiential values, the four major
values that I spoke about. Now I'm going to talk about the
value in the B2B market. And this is where you will
understand that how the usage of the product decides the
value rather than only the characteristics or features.

Differences Between B2B and B2C

1. Number of Customers & Transaction Value

B2C: Large number of customers, but smaller transaction values (e.g., buying a
single shampoo bottle or toothpaste).

B2B: Fewer customers, but large transaction values (e.g., bulk purchases of raw
materials like rice, steel, or medical equipment).

2. Customization

B2C: Products are mass-produced and standardized (e.g., a shampoo brand offers
fixed variants like anti-dandruff or anti-hair fall).

B2B: Products/services are often customized to meet specific business needs (e.g.,
ERP software is tailored for each organization).

3. Pricing

B2C: Fixed pricing (e.g., MRP on consumer goods).

B2B: Negotiated pricing due to large transactions and customization.

4. Buying Process

B2C: Quick and simple (e.g., buying salt from a store).

B2B: Lengthy and complex (e.g., purchasing ERP systems, CT scanners, or logistics
fleets involves negotiations, approvals, and multiple stakeholders).

5. Decision-Making

B2C: Individual or family decision (e.g., buying toothpaste or a T-shirt).

B2B: Multiple stakeholders involved (e.g., ERP software decisions in a large company
require IT, finance, and operations teams).

6. Demand Type

B2C: Direct demand—driven by individual consumer needs.

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 B2B: Derived demand—dependent on B2C demand (e.g., demand for steel depends
on car or construction industry demand).

7. Value Consideration

B2C: Value is based on product features, price, brand, and consumer experience.

B2B: Value is determined by how the product improves business efficiency,

productivity, and profitability rather than just product features.

These differences highlight why B2B and B2C markets require different marketing and sales
strategies.

Value Proposition Okay, so let me start talking about the

value proposition. So in business market, the value
propositions are three, three types of value proposition.
The first one is all benefits. As the name suggests, it lists all
the benefits that one can think of that the offering can
provide to the target market. So essentially what you are
talking about is all your characteristics and features. All the
quality, all the characteristics, features, price, everything
whatever you have. So the problem with this is you have
least knowledge of the customer and also the competition.
Now this kind of value proposition is the easiest to develop.
But you are not sure that the benefit that you are providing
whether it is adding value to the customer or not. Of
course, there is no clarity on the POP and POD because you
do not know the value proposition of the competitor. So
eventually, if you are going for all benefits, it will go to a, it
might go to a price competition. So whoever pays the,
whoever agrees to the least price will win the contract. So
let me give you an example. So, there is a company that
sold gas chromatographs to R&D labs at large companies,
universities and government agencies also. It had a feature
to maintain high degree of sample integrity. Now for
growth, the company started selling this chromatograph to
commercial labs who routinely test soil and water samples
while maintaining high degree of sample integrity. So, the
most significant, so the, you understand what I am talking
about here is that when you are talking about this
commercial labs, they anyway maintain high level of sample
integrity. So, when this company started selling, start, was
trying to sell the chromatographs to the commercial labs

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who test, routinely test soil. The most significant USP which
was high degree of sample integrity was a non-issue. So
the most significant USP for this company that was selling
gas chromatograph was non issue for a new segment
which is the commercial labs. Similarly, an international
engineering company bidding for a light rail project.
Enumerated a chart giving 10 reasons to the city admin to
give the project to them. As it turned out, both the other
finalists had exactly each of those 10 reasons. So you can
understand over
Marketing Fundamentals
Prof. Ashis Mishra Module 5 © All
Rights Reserved. This document has been authored by Prof.
Ashis Mishra and is permitted for use only within the
course "Marketing Fundamentals" delivered in the online
course format by IIM Bangalore. No part of this document,
including any logo, data, illustrations, pictures, scripts, may
be reproduced, or stored in a retrieval system or
transmitted in any form or by any means – electronic,
mechanical, photocopying, recording or otherwise –
without the prior permission of the author. here why I told
you in the beginning when I was differentiating between
B2B and B2C. That in B2B it is the value of the product most
often is not based on the features or the characteristics or
even the quality. The value is based on what problem it
solves or how it is useful for the target group. So this
example says all benefit characteristics are there, features
are there, even good quality is there, but it is not really that
useful because of the context that I told you. Let us go to
the next one. The next one is favorable POD, point of
difference. So here the customer asks why should our firm
purchase your offering instead of your competitors. Now
this needs detailed knowledge of the alternatives. Also, it
needs the exact requirement of the customer. So if you are
using favorable POD as your value proposition, then you
know about your customer's requirements and you know
about what your competitor is offering. So knowing that an
element of an offering is a POD relative to the next best
alternative does not however, convey the value of the
difference to the target customers. So, this is better than
the previous one which is all benefits. In all benefits, you
only knew about yourself. You are only talking about your

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characteristics and your features. In favorable POD, you
know about your competitor, you know about the customer
requirement and you are telling that how you are better
than the competitor. But still, that does not solve the
problem of how much it is useful for the target or for the
customer that we are talking about here. Let me give you
an example, an IC, the integrated circuit maker, it hoped to
sell 5 million of ICs to an electronic device manufacturer for
its next gen product. So, during negotiation, the
salesperson came to know that the competitor price is 10
cents lower while he has based on POD, on superior and
personalized service. So this is something, you know about
your competitor and you know about your own product
and product features and characteristics. He promptly
reduced the price of his IC by 10 cents. So, I told you also
the price is always negotiated over here, there is no fixed
price. So, this guy who was selling the IC, he promptly
reduced the price of his IC by 10 cents to back the contract
Marketing Fundamentals
Prof. Ashis Mishra Module 5 © All
Rights Reserved. This document has been authored by Prof.
Ashis Mishra and is permitted for use only within the
course "Marketing Fundamentals" delivered in the online
course format by IIM Bangalore. No part of this document,
including any logo, data, illustrations, pictures, scripts, may
be reproduced, or stored in a retrieval system or
transmitted in any form or by any means – electronic,
mechanical, photocopying, recording or otherwise –
without the prior permission of the author. and eventually
losing half a million dollar in the contract. Now the
customer, if you look at the customer point of view over
here, the customer had already built a value model which
realized. That the IC maker's offering, even though it was
costly by 10 cents, it helped him to sell, it, it helped the
customer to sell 15. 9 cents by value. If this is something
that was known by the company, when I am talking about
that you want to solve the problem, you want to see the
usage, you want to know the value, what is the value to the
customer. Then actually you could have increased the price
till further rather than reducing the price by 10 cents. So in
his value model, the service was worth just 0. 2 cents and
the salesperson had completely overlooked two of the most

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important elements that was valuable to the customer. So,
the development team has recommended to purchase the
that the development team had recommended to the
purchase team to procure thus IC even at a higher price,
but because you are comparing against your competitor
and you are trying to match the competitor, you actually
ended up reducing the price by 10 cents. So, the superior
and personalized service that you are focusing upon. That
was again your characteristic and the price which was the
characteristic of the competitor, but you did not know what
was the requirement of the customer. If you knew that, you
actually could have increased the price. Now this is an
example in which the favorable POD, even though it is
better than all benefits, but it does not actually, solve all
your problem. It is not the best value proposition. So, what
is the best value proposition? The best value proposition in
business market is resonating focus. This is called the gold
standard in B2B marketing. Here the supplier fully grasp
the critical issues in the manufacturer's business. The
supplier delivers the customer value proposition that is
simple yet captivating. It essentially demonstrates that how
your offer can improve or develop the manufacturer's
business. Essentially, how it will solve the problem. So if I
tell you in very simple words, you just do not, as a B2B
vendor or a B2B supplier, you just do not know your
features and your competitor's features. You also know the
business of your customer and your offering is not just to
sell the product or the service.
Marketing Fundamentals
Prof. Ashis Mishra Module 5 © All
Rights Reserved. This document has been authored by Prof.
Ashis Mishra and is permitted for use only within the
course "Marketing Fundamentals" delivered in the online
course format by IIM Bangalore. No part of this document,
including any logo, data, illustrations, pictures, scripts, may
be reproduced, or stored in a retrieval system or
transmitted in any form or by any means – electronic,
mechanical, photocopying, recording or otherwise –
without the prior permission of the author. Your offering
should be that how you can, how you can improve the
business of your customer. So essentially, treat the business
as not just B2B, but B to B to C. You think about So,

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 customers, customer and see that what kind of problems or
what kind of improvements that can happen in your
customer's business and then through your offering you
offer to solve that. Now, that is resonating focus. Let me
give you an example, Sonoco, a global packaging supplier,
which is headquartered in South Carolina. It wanted to
supply packaging solution to a large European Company
manufacturing consumer package goods. So, here instead
of focusing on six different, six favorable PODs, Sonoco
chose to emphasize on two PODs and one POP, which it
called DVP, Distinctive Value Proposition. What were the
PODs? It redesigned the packaging, the packing it
redesigned. So, which will deliver significantly greater
manufacturing efficiency and how it will do? It will move,
from a 7 day 3 shift schedule to a 5 day 2 shift schedule for
the consumer packaged good industry. Now, immediate
benefit over here is you will reduce the labor cost. You will
reduce the manpower cost. Second, it provided a distinctive
look to the packaging supply that the customer will find
more appealing. So, helping the customer to grow in the
revenue and hence profit. And the POP was at the same
price at the present packaging competitors. Now, So, if you
look into this, in order to arrive at this PODs, you need to
understand the business of your customer, who is the
consumer packaged goods industry. So, you would not say
that my quality of the packaging material is so good or the
quality of the packaging sealant and all that things is so
good. You are actually telling that by using this packaging,
this is the way how you can reduce your cost and increase
your profit. So essentially you are solving the business
problem of your customer and this is what is called
resonating focus which is considered the gold standard in
B2B market. So this is essentially are the value propositions
in business market

It looks like you've shared a transcript or a lecture on B2B vs. B2C differences and value
propositions. How can I assist you with it? Would you like a summary, rephrasing, key
takeaways, or something else?

give main points

2/2

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Main Points: Differences Between B2B and B2C
1. Customer Base & Transaction Size

B2C: Many customers, smaller transaction values (e.g., buying a single shampoo
bottle).

B2B: Fewer customers, larger transaction values (e.g., hospitals buying medical
supplies in bulk).

2. Customization vs. Standardization

B2C: Products are mass-produced and standardized (e.g., same shampoo for all
customers).

B2B: Products/services are often customized to fit specific business needs (e.g., ERP
systems).

3. Pricing

B2C: Fixed pricing (MRP).

B2B: Negotiated pricing based on transaction size and customization.

4. Buying Process

B2C: Simple, quick, individual decision-making (e.g., buying toothpaste).

B2B: Long, complex decision-making involving multiple stakeholders (e.g., buying

machinery for a factory).

5. Decision Makers

B2C: Typically one person or a small group (individual or family).

B2B: Multiple decision-makers and departments involved.

6. Demand Type

B2C: Direct demand (based on individual consumer needs).

B2B: Derived demand (dependent on end consumer demand, e.g., steel demand
depends on car sales).

Main Points: Value Propositions in B2B

1. Types of Value Propositions

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 All Benefits: Listing all features/qualities of a product but without considering
customer needs or competitors.

Favorable POD (Point of Difference): Highlighting advantages over competitors but

may still overlook actual customer needs.

Resonating Focus: The gold standard—focusing on solving customer business

problems and improving their profitability.

2. Key Example of Resonating Focus

Sonoco’s Packaging Solution: Instead of emphasizing material quality, it focused on

reducing labor costs and enhancing product appeal, directly improving the
customer's business outcomes.

Would you like me to refine any section further?

© All Rights Reserved. This document has been authored

by Prof. Ashis Mishra and is permitted for use only within
the course "Marketing Fundamentals" delivered in the
online course format by IIM Bangalore. No part of this
document, including any logo, data, illustrations, pictures,
scripts, may be reproduced, or stored in a retrieval system
or transmitted in any form or by any means – electronic,
mechanical, photocopying, recording or otherwise –
without the prior permission of the author. Segmentation
Next, I will talk to you about segmentation. So, we have
spoken about segmentation, targeting and positioning as
the basis of marketing and I have told you about the
segmentation, targeting, positioning in B2C market. Now, I
am going to tell you the segmentation in B2B market. The
concept is the same, but the major difference over here is,
tell me why do we do segmentation in B2C market, do you
recall, to identify the customer, because marketing is
providing value to the target customer. In B2C market, we
do not know who is the target customer, so we do a
segmentation to identify the target customer. Now, this is
where the B2B differs. Because, there are few customers,
identifying the target customer is not really a difficult thing.
In fact, anybody who is there in the B2B market knows who
is the target customer. So, what is important over here, to
see that how do you solve the problem for the target
customer. Which means, here, the objective of

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segmentation is a little different than that of the B2C
market. So, the traditional marketing approach in
consumer market does not work here. How the STP works
over here? The few large consumers and typically one
segment will consist of only one or two consumers, a few
consumers. Here, each consumer wants specific
customization. In terms of quantity as well as price, maybe
in terms of quality also. It is not about these are the
features of my product and this is better than competitors
which is typically what in B2C. This is more about how can
we solve your specific problem. How can we help you solve
your problem? So, the benefit to the consumers. Need to be
highlighted and that need to be communicated
appropriately. And of course, managing the individual
consumers is the biggest challenge because each customer
is a large customer. It purchases big volumes from you and
provides big revenue to you. So actually, the personal
relationships also matter a lot, which we'll get to know as
we go along with this week. So, the objective of
segmentation over here is to know the customer more to
identify the requirements of the customer and then try to
figure out that what is the best way how you can solve the
problem.
Marketing Fundamentals
Prof. Ashis Mishra Module 5 © All
Rights Reserved. This document has been authored by Prof.
Ashis Mishra and is permitted for use only within the
course "Marketing Fundamentals" delivered in the online
course format by IIM Bangalore. No part of this document,
including any logo, data, illustrations, pictures, scripts, may
be reproduced, or stored in a retrieval system or
transmitted in any form or by any means – electronic,
mechanical, photocopying, recording or otherwise –
without the prior permission of the author. So, what will be
the segmentation variables? I will go through the same
approach, geographic, demographic, psychographic and
add a couple of more things also in this. Geographic
definitely any B2B can be done because there is just a place
of operations. The geographic will be country, region, city,
whether urban or rural. So these will be where the scale of,
where is the operation for the target group, for the
customer that you are talking about. Then demographic

16/42
will otherwise also be called firmographic here. So, vital and
measurable information about the firm. Something like
what, what industry it is, whether it is a construction
industry, manufacturing industry, technology industry,
service industry, what type of industry it is, size of industry.
The size of industry in terms of revenue, in terms of
turnover, in terms of manpower, number of employees. So,
that could be the firmographic variable over here and firm
type, the ownership type government, private, non profit,
NGO. So, what type of firm ownership type it is? Then you
could also be looking at whether it is the individual
ownership or corporate ownership or cooperative
ownership or franchisee. And then, of course. You could
look into the fact that whether it is a global player or it is a
regional player, or it is a local player. So this kind of
information about the firm could be a firmographic
demographic or firmographic variable by which you know
more about the firm, the scale of operations, and what
could be the possible problems that you can solve. The
third factor over here will be psychographic, which we
discussed earlier also in terms of B2C market. So here the
psychography will be relative importance to the buyer. So
the kind of product or service that you are selling to the
target group over here to the target customer over here,
how important it is to the target group. If it is more
important, then you have a better chance of creating a
positive imagery. If it is less important, then probably it
could be anybody price probably will be the differentiator.
Let me give you an example over here. Something that I
spoke earlier. If you are talking about an ERP solution, now
this is very important for the company. So, if it is very
important for the company. Then, if you can convert this
customer, then you will be having lot of opportunities to
continue with this customer. In contrast, say that you are
Marketing Fundamentals
Prof. Ashis Mishra Module 5 © All
Rights Reserved. This document has been authored by Prof.
Ashis Mishra and is permitted for use only within the
course "Marketing Fundamentals" delivered in the online
course format by IIM Bangalore. No part of this document,
including any logo, data, illustrations, pictures, scripts, may
be reproduced, or stored in a retrieval system or

17/42
transmitted in any form or by any means – electronic,
mechanical, photocopying, recording or otherwise –
without the prior permission of the author. selling paper,
the paper for printing or the paper for photocopying and of
those kind of things. Now, obviously, it is a bulk purchase,
but it is a regular consumable. Probably, lot of people are
using. The same lot of lot of customers can, provide a lot of
suppliers can provide the same product or service to here it
is product to the target group. So, which means your
quality, durability, blah, blah, all other things is not really
that significant. It is that whoever is going to give the lower
price customer will go for it. So, the relative importance to
the buyer. That, is the members of the buying center. I will, I
will talk to you about the buying center a little while, in a
little while. The price, product features, technical, service,
purchase convenience, product availability, assurance of
supply. So these are the different parameters that
differentiates you from your competitor. But how important
is, are these parameters. To the stakeholder, to the buyer, to
the people who are involved in the buying process. I told
you earlier that is the complex buying process and lot of
people will be involved over here unlike purchasing a soap
or shampoo. So if 10 people are involved in the purchase of
a machine or 10 people are involved in the purchase of an
ERP package. Then what is the relative importance of your
offering to each one of them? It could be, this would be the
psychographic parameter over here. You will get to know
more, it will be more clearer when we discuss the case over
here. The case will clarify that how these things apply in
real life. Then the fourth equivalent to the B2C behavioral
segmentation. We are talking about volume, purchase
frequency, attitude towards risk, loyalty, urgency of the
purchase. So this kind of variables will be the behavioral
variables in B2B segmentation. The next thing that which is
different in B2B which is not traditionally there in B2C that
is one of them will be benefit sort. So what is it that the
customer is looking for? Price, quality, service, relationship,
what is it that the customer is looking for from the
purchase. And the other thing also would be which is very
specific to B2B would be the buying approach of the
customer. How does the customer buy the product?
Marketing Fundamentals

18/42
 Prof. Ashis Mishra Module 5 © All
Rights Reserved. This document has been authored by Prof.
Ashis Mishra and is permitted for use only within the
course "Marketing Fundamentals" delivered in the online
course format by IIM Bangalore. No part of this document,
including any logo, data, illustrations, pictures, scripts, may
be reproduced, or stored in a retrieval system or
transmitted in any form or by any means – electronic,
mechanical, photocopying, recording or otherwise –
without the prior permission of the author. Is it centralized
or is it decentralized? Assume that the customer has office
all over the country. So, if they are buying clothes or
apparels or vehicles for, the organization, then is it that the
vehicle is centrally approved and it is supplied everywhere
or everywhere there are different, different vehicles, they
have the authority to buy their own vehicles. If you are
supplying machine parts or electronic chips to a company
and company has offices all over the country or even all
over the world. Then it is centrally decided that which chips
and it is given to the company or, it is regionally locally they
decide what kind chips that they would be taking. So,
centralized vs & decentralized buying approach. Then the
purchase policies, the involvement of the decision makers,
is it that it is a standard template and everybody signs over
there, but, or they actually get involved in the nitty gries
and they go through the process of bidding and go through
the process of vendor selection. So these are the kind of
things which are called buying approach. Now this is not
exhaustive. This is only illustrative. These are some of the
significant segmentation variables that we use in B2B
market. .

Main Points: B2B Segmentation

1. Difference Between B2C and B2B Segmentation

B2C: Segmentation helps identify the target customer.

B2B: Target customers are already known; segmentation helps understand their
needs and solve their problems.

2. Challenges in B2B Segmentation

Fewer customers, each with large orders and specific needs.

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 Strong personal relationships are crucial.

Customization in quantity, price, and quality is expected.

3. Key B2B Segmentation Variables

a) Geographic Segmentation

Based on location: country, region, city, urban vs. rural.

Helps determine scale and logistics of operations.

b) Firmographic (Demographic) Segmentation

Industry type (e.g., construction, manufacturing, technology).

Company size (revenue, number of employees).

Ownership type (government, private, nonprofit).

Global vs. regional vs. local presence.

c) Psychographic Segmentation

Importance of the product to the buyer (e.g., ERP software vs. photocopy paper).

Buying center involvement (how many decision-makers are involved).

Differentiation factors: price, product features, service, convenience, etc.

d) Behavioral Segmentation

Purchase volume and frequency.

Risk attitude, brand loyalty.

Urgency of purchase.

e) Benefit Sought Segmentation

Customers prioritize different factors: price, quality, service, relationship.

f) Buying Approach Segmentation

Centralized buying: Decisions made at HQ and implemented company-wide.

Decentralized buying: Regional/local offices make independent purchasing

decisions.

Purchase policies, decision-making processes, and vendor selection criteria.

4. Conclusion

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 Unlike B2C, B2B segmentation focuses on understanding business needs rather
than just identifying customers.

Customization and relationship management are critical in B2B segmentation.

Would you like me to refine any part further?

© All Rights Reserved. This document has been authored

by Prof. Ashis Mishra and is permitted for use only within
the course "Marketing Fundamentals" delivered in the
online course format by IIM Bangalore. No part of this
document, including any logo, data, illustrations, pictures,
scripts, may be reproduced, or stored in a retrieval system
or transmitted in any form or by any means – electronic,
mechanical, photocopying, recording or otherwise –
without the prior permission of the author. Buying
Strategy Next, of course, I am going to talk to you about
the buying process and the strategy. But before that, what
is the most important thing for understanding the strategy
or developing a sustainable strategy in B2B business is to
understand the type of benefits that are there in B2B
business. Now this is very important. For you to
understand, so there are four type of benefits which are
significant in B2B business. First one tangible financial
benefits, now here tangible financial benefits means values
that the seller can communicate and the buyer can verify.
So, for example, at the standard measures like horsepower,
torque, processing speed in computers, fuel efficiency in
engines, now these kind of things, these are tangible
parameters and that is readily verifiable by the buyer. So if
you are telling that this is something is your USP and that
leads to a benefit for the firm, then it is easy for them to
understand and appreciate this, but now it will start getting
complex. The next one will be non tangible financial
benefits. So values that the seller can convey, but the buyer
cannot validate easily. So for example, you will say that the
additional revenue that the company will generate by using
certain softwares or using certain hardwares, by using
some big data analytics in CRM, by This is going to increase
the profit. Now obviously these things are good when you
say that your machine is better than your competitors. It is
more advanced. Now these kind of things, it is, you can

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obviously say this, but how this is going to make a
difference to the business of the company, how it is going
to make a difference to the business of your customer. So,
this is something difficult to identify. See nobody does the
math over here. You, you do not expect that customer will
do the numbers and they will try to find out if the
processing speed is more than what is going to happen,
then how, how I am going to earn more money this kind of
thing they do not do. So you need to, there is no such word
called tangibilize, but I would use it non the same. You
need to tangibilize the intangible. Okay. That could be by
preparing some numbers by say that, okay, by using the big
data analytics with your customer data, this is the way how
you are
Marketing Fundamentals
Prof. Ashis Mishra Module 5 © All
Rights Reserved. This document has been authored by Prof.
Ashis Mishra and is permitted for use only within the
course "Marketing Fundamentals" delivered in the online
course format by IIM Bangalore. No part of this document,
including any logo, data, illustrations, pictures, scripts, may
be reproduced, or stored in a retrieval system or
transmitted in any form or by any means – electronic,
mechanical, photocopying, recording or otherwise –
without the prior permission of the author. going to
,target more customize your offering to your customers
and thereby your repeat orders will increase and there by
your revenue will increase . Now this path you have to
clearly show over here or you can show third party reports.
You can say that other people equivalent to your customer,
they have used your hardware or software and all and they
have made, they have got the benefits out of it. That is also
something that you can show that is tangibilizing the
intangible. There is a third way, you may say that, see, you
do not have to pay me the whole thing. You can pay per
performance. You can pay for hour of use or you can lease
it for a particular period of time. In which case you say that
see I am telling you it is good for you, you try it out. If it is
not, I will take it back. So somehow you have to bring that
tangibility into the non tangible benefits and that is how
you will be able to develop a customer relationship and try
to win over the customer. So you can always understand

22/42
over here that what will be the input for the strategy, okay.
Let me go to the third one. Here, tangible non financial
benefits. Now what is the meaning of that? Values that is
difficult for the seller to quantify even though the buyer can
perceive it. The buyer can appreciate it. For example, what
is the comfort level or convenience while using some
hardware or software? Say you have been using Windows
or Mac operating system or Linux, something you have
been using all your life or last 20 years. Now if you are
purchasing another software, if somebody is telling that is
another software which is based on the same Windows or
Mac or Linux basis, you suddenly feel okay, I know about
this. On the other hand, if you are always using Windows
and suddenly somebody says this is Mac based, then you
have a discomfort. You do not know whether it is going to
work properly or not. The reputation of the corporate, well,
reputation of the corporate, you cannot put it in terms of
numbers, but a reputed company always has better, I
mean, it is better to do business with them. If a customer
has the international sourcing, your vendor or supplier has
international sourcing rather than local sourcing. Then you
know that even though there is some local disturbance or
some weather changes or some logistics problem,
something will happen, but because it is a international
sourcing, it will actually turn out okay.
Marketing Fundamentals
Prof. Ashis Mishra Module 5 © All
Rights Reserved. This document has been authored by Prof.
Ashis Mishra and is permitted for use only within the
course "Marketing Fundamentals" delivered in the online
course format by IIM Bangalore. No part of this document,
including any logo, data, illustrations, pictures, scripts, may
be reproduced, or stored in a retrieval system or
transmitted in any form or by any means – electronic,
mechanical, photocopying, recording or otherwise –
without the prior permission of the author. Your supply
chain will not be affected. Your raw materials will not be
affected. Your business will not be affected. Similarly, scale
of operations, if the scale of operation is large, then you are
comfortable dealing with them because you know that your
business again is better off by dealing with a larger player
than a very small player. Now, these kinds of things are not

23/42
numbered, but the buyer can appreciate it. Your customer
can appreciate it. So, buyers often reward companies such
benefits with price premium or request for quotation when
you have this tangible non financial benefits. The last one,
the most difficult one, non tangible non financial benefits.
Now, the values that both buyer and seller are unable to
quantify in monetary terms. Now, you can understand how
difficult it is. For example, vendors go beyond the letter of
contract and try to help out the customer in terms of the
link supply on holidays, maintenance 24/7 throughout the
year. Now, the problem with this is good to have, I mean,
obviously it is good, nothing wrong with it, but do I want to
pay for this? Is this the reason why I will? go in favor of one
supplier versus another, there is no way of knowing that
such benefits will be offered in future and there is no way
that you actually will be using it. You do not know that. So
both buyer as well as seller must be experienced enough to
appreciate such benefits. And if you, so again I will go back
to what I told you earlier, tangibilize the intangible. If you
cannot put the benefits of you in terms of numbers in an
excel sheet, then that has got no value. That is as good as
not being there. So what are we talking about here? Let us
say maintenance 24/7 throughout the year. How that will be
an USP? How that will be a distinctive value proposition for
you? How it will help you to solve the problem of your
customer? So typically what, can I think of anything? Can I
think how you can tangibilize this? Yeah, it is not that
difficult. So if you think of similar kind of companies, last
one year, how many times they had breakdowns? And this
breakdown, how many times it happened during weekends
or during the time when service was not available? And
because of that, how much of loss that happened? And if
there is a 24/7 maintenance throughout the year, this is the
money that you will be able to save or there is the loss that
you will be able to avoid.
Marketing Fundamentals
Prof. Ashis Mishra Module 5 © All
Rights Reserved. This document has been authored by Prof.
Ashis Mishra and is permitted for use only within the
course "Marketing Fundamentals" delivered in the online
course format by IIM Bangalore. No part of this document,
including any logo, data, illustrations, pictures, scripts, may

24/42
be reproduced, or stored in a retrieval system or
transmitted in any form or by any means – electronic,
mechanical, photocopying, recording or otherwise –
without the prior permission of the author. If you can put
these things in terms of numbers, then nothing like it, then
that is the absolute best. So, this helps the customer in the
acquisition process. So, customer tend to give chance to
existing suppliers or vendors to catch up on technology or
service or competitors offering. So, if you are a competitor
and you are competing on such kind of parameters which
are non tangible and non financial then you have to give
distinct and concrete benefits which the customer can
appreciate. Moral of the story, four different type of
benefits, but you should be able to put the benefits in an
excel sheet in terms of numbers. And you should be able to
say. That how your customer is going to reduce the loss or
increase the revenue, or increase the profit or acquire more
customers, anything, whatever is the performance metrics
for your customer, you should be able to tell that clearly. If
you can't tell that clearly, then that is a benefit on which
you can build up that is a benefit that could be a distinctive
value proposition for you. Now, if you cannot do that, then
it is good to have lip service, but nobody cares about it. And
you can understand automatically that what kind of
strategy that you need to adopt if your value proposition is
non tangible, non financial, so what you have to do to make
it tangible and financial. How? Obviously, it depends upon
the salesmanship. Selling is the most important tool for a
B2B business because there is no advertising, sales
promotion, publicity, those kind of things are not really
significant over here. What is it that you put the
information, you connect with them, you give
presentations, you give demonstrations and multiple
rounds of negotiations and then you try to convert the
sales. And in case of Government of India kind of, and
many such kind of, government agencies, it is the two stage
purchase process where we are talking about a first a
technical qualification and then there is a financial
qualification. So what you say in terms of L1, so the tender
document goes, then, tender document is advertised. Then
you people will apply for it. Then there will be a selection
process, pre bidding meeting, and then the bidding will

25/42
 happen. People will bid their documents, it is called sealed
bid kind of process in which either online portal or offline
portal you apply for those tender, against that tender.
Marketing Fundamentals
Prof. Ashis Mishra Module 5 © All
Rights Reserved. This document has been authored by Prof.
Ashis Mishra and is permitted for use only within the
course "Marketing Fundamentals" delivered in the online
course format by IIM Bangalore. No part of this document,
including any logo, data, illustrations, pictures, scripts, may
be reproduced, or stored in a retrieval system or
transmitted in any form or by any means – electronic,
mechanical, photocopying, recording or otherwise –
without the prior permission of the author. And then on a
particular date or time, they open it and they see.
Technically, whether you qualify or not, whatever will be the
parameters, against that parameter they will evaluate all of
them. And if you qualify, then the next bid will be opened,
which is the financial one, where the lowest price one
typically wins the contract. So all these multiple rounds of
negotiations and discussions and coming up with your
alternatives and all, this, this is the typical strategy that
happens in B2B market. So, selling, personal interaction
and selling that is the tool, major tool in B2B. So, you can
understand that the significance of the benefit over here
that whoever is engaging with your customer in terms of
your benefits, in terms of your salesmanship, in terms of
your products and services delivery, that guy or those
groups should be very clear of what kind of benefit that you
are providing. And how to convince the customer of those
benefits. And hence, benefit is actually very, very important.

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give main points

Here are the key takeaways from the document:

Buying Strategy in B2B Business

26/42
1. Importance of Benefits in B2B Business

Understanding the types of benefits is crucial for developing a sustainable B2B

strategy.

2. Four Types of Benefits in B2B Business

a) Tangible Financial Benefits

These are measurable and verifiable by the buyer.

Examples: Horsepower, torque, processing speed, fuel efficiency.

b) Non-Tangible Financial Benefits

Seller can convey these benefits, but buyers cannot easily verify them.

Examples: Additional revenue from software, improved profit margins through

analytics.

Solution: "Tangibilize the intangible" by providing data, third-party reports, or

performance-based pricing.

c) Tangible Non-Financial Benefits

Hard to quantify, but buyers can perceive and appreciate them.

Examples: Ease of use, familiarity with software, reputation of a company, large-

scale operations.

These benefits can lead to price premiums or preference in vendor selection.

d) Non-Tangible Non-Financial Benefits

Neither the seller nor the buyer can quantify them in monetary terms.

Examples: 24/7 maintenance support, going beyond contract terms.

Solution: Use past data to estimate cost savings, show case studies, and quantify
impact where possible.

3. Strategy Implications

B2B selling relies on personal interaction, presentations, demos, and

negotiations.

Advertising and promotions have less significance in B2B.

For government and institutional sales, there is a two-stage tendering process

(technical + financial evaluation).

4. Key to Success in B2B Sales

27/42
 Salesmanship is critical – Sales teams must clearly communicate and quantify
benefits to convince customers.

Align benefits with customer performance metrics (e.g., cost savings, increased
revenue, efficiency improvements).

Conclusion
To succeed in B2B sales, companies must convert intangible benefits into tangible financial
advantages and effectively communicate their value proposition through skilled selling
techniques.

Would you like me to refine this further for a presentation or summary document?

© All Rights Reserved. This document has been authored

by Prof. Ashis Mishra and is permitted for use only within
the course "Marketing Fundamentals" delivered in the
online course format by IIM Bangalore. No part of this
document, including any logo, data, illustrations, pictures,
scripts, may be reproduced, or stored in a retrieval system
or transmitted in any form or by any means – electronic,
mechanical, photocopying, recording or otherwise –
without the prior permission of the author. B2B Buying
Process So, now I will tell you how the purchase decision,
how the sales decision happens in B2B. Now, this is where
there is a major difference between B2B and B2C, so you,
you should pay attention to this part very carefully. B2C. So,
buying decision in companies are often not made by
individuals, but group of managers and they would be from
multiple departments. Because you are talking about big
ticket items, you are talking about something that affects
the whole organization. So, there have been typically what
is called purchase committees, which take the decision for
B2B purchases. This is called a buying center and typically
such purchase committees or buying centers would be
anything between 3, 4 people to all the way till 40 people
from 6, 7 different functions, different departments. And
this is where the challenge is. Challenge is that marketers
find it difficult to communicate to such a committee
because all of them will be having different different
requirements from the same purchase behavior from the
same purchase activity. Each one in the purchase
committee will be having different requirements and they

28/42
will be interested in different benefits. So, often a single
benefit that is most important For the supplier, for the
vendor will not resonate with all this bunch of guys with
different, different requirements. So one USP, one self
speech, that doesn't work with the whole committee, so the
marketers need to identify each member of the committee
and his or her requirement and map the benefits
accordingly. Now, this is the difference, major difference
between B2B and B2C. In B2C, one product has got one
USP, one positioning for one target group. But here, for one
product, in a way, you can find, you can understand that
there are multiple target groups and each target group has
got different, different requirements. So there are different,
different positioning for the same. It is not really different,
different positioning, but I am just drawing the analogy
from B2C to B2B. In B2C, one product has one positioning,
but in B2B, one product theoretically has got multiple
positionings because there are multiple target segments.
Marketing Fundamentals
Prof. Ashis Mishra Module 5 © All
Rights Reserved. This document has been authored by Prof.
Ashis Mishra and is permitted for use only within the
course "Marketing Fundamentals" delivered in the online
course format by IIM Bangalore. No part of this document,
including any logo, data, illustrations, pictures, scripts, may
be reproduced, or stored in a retrieval system or
transmitted in any form or by any means – electronic,
mechanical, photocopying, recording or otherwise –
without the prior permission of the author. So this is
where it becomes difficult. This is where, the challenge is
that in the buying center, they'll just like B2C, there will be
multiple people multiple roles will be there. There'll be
somebody who is an initiator, somebody who will be an
approver, somebody who is a buyer, somebody who is a
user, somebody who is a influencer, somebody who is a
gatekeeper, and somebody is a decider. So, Initiator you
know somebody who initiates the product, initiate the idea.
It could be coming from any one of the departments who
starts off with the purchase process. Then there will be the
influencers. There will be multiple departments who will be
giving their own inputs. So, they will be the influencers.
Then there will be, the purchase group or the buying center

29/42
who will be the deciders. So there will be multiple teams in
the, multiple members in a purchase group or a buying
center who will be the deciders. Then there will be
approvers who finally will say, yeah, this works, this works,
this works, this doesn't work, this doesn't work. So those
will be the approvers. Then there will be gatekeepers. Who
will allow the information to pass or information not to
pass. So the gatekeepers will be very, it could be somebody
like a secretary also. It could be somebody like a purchase
manager. It could be somebody who is handling the
tendering process. So you might have given some
brochures, you might have given some information, you
might have sent some emails as a vendor. So that may not
have reached the purchase committee, that may not have
reached the buying center. Now, the guy who does this role
is called a gatekeeper. So typically the thing is they are
supposed to scan through the information and give the
significant information or useful information to the, buying
center and then other information they filter out. Now, you
could get filter out in this process also, that is the
gatekeeper. Then of course, the buyer, finally the purchase
manager or the CFO or somebody who signs on the check.
And then, of course, the users, all these departments will
be using the product or service. So, you can understand the
complexity of the decision making process over here, that
there could be multiple guys with multiple roles in the
buying center and all of them are significant. So, you need
to identify all of them and try to satisfy all these people. Let
me give you the example of this what I am talking about in
a little more details. So, manufacturer is
Marketing Fundamentals
Prof. Ashis Mishra Module 5 © All
Rights Reserved. This document has been authored by Prof.
Ashis Mishra and is permitted for use only within the
course "Marketing Fundamentals" delivered in the online
course format by IIM Bangalore. No part of this document,
including any logo, data, illustrations, pictures, scripts, may
be reproduced, or stored in a retrieval system or
transmitted in any form or by any means – electronic,
mechanical, photocopying, recording or otherwise –
without the prior permission of the author. destined to
buy a new machining center. What will be, say that there

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are 6 people in the buying center. So, what will be the
requirement of each one of them? So, the factory head
would want to know that how much time will be required
for the vendor to install the machines and train the
operators. Okay. The maintenance manager will focus upon
the vendor service contracts. The procurement manager
will be interested for price. The CEO will want to know the
impact on the bottom line, that is the profit or the returns.
COO will be concerned about the switchover period to the
new machining center and how much time it will take and
what are the. Operational challenges over there, the CFO
will be focusing on the financial terms of the deal. So clearly
one self speech doesn't satisfy all these guys. So that is the
interesting thing or that is the important thing that you
should understand over here. Now, clearly, I mean, what
are the, what are the best way to go? The best way to go is
what are the strategy that you'll adopt? The strategy is.
Identify who are the members in the buying center and
what are their requirements, what are their expectations.
And then try to position your product, try to provide the
resonating focus, the value that I was talking to you about.
So that the, each of these members of this buying center
they seed the benefit in the purchase. So, in a way, how you
solve the problem for all of them? Also the important thing
is everybody in a committee are not equally vocal or not
equally significant. There are some people who are
probably driving the whole purchase decision process. It is
very important for a B2B sales to understand that who is
this significant person or who are this significant people
and how you will be able to influence those people. How we
will be able to position the product perfectly or adequately
to these people. Now that will be the significance or that
will be the major strategy when we are talking about B2B
decision making. Who is the major decision participant?
What decision do they influence? What is the level of
influence? What evaluation criteria do they use? So typically
what are the stages. I have told you about consumer
decision making process, need recognition prepurchasing
information search, evaluation of alternatives, purchase
decision and the post purchase decision. So, now the
stages, what are the stages in the B2B buying process?
Problem

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Marketing Fundamentals
Prof. Ashis Mishra Module 5 © All
Rights Reserved. This document has been authored by Prof.
Ashis Mishra and is permitted for use only within the
course "Marketing Fundamentals" delivered in the online
course format by IIM Bangalore. No part of this document,
including any logo, data, illustrations, pictures, scripts, may
be reproduced, or stored in a retrieval system or
transmitted in any form or by any means – electronic,
mechanical, photocopying, recording or otherwise –
without the prior permission of the author. recognition,
then general need description. So here the multiple
departments or the multiple areas, they will find out what
are the different needs so if one department starts the
discussion, identifies that there is a requirement for a
machine or requirement for a software, requirement for a
service. So, then other departments whoever are involved
in the whole process or who are affected by the whole
process, they all will give their own requirements. They all
will say that how it is going to affect them. And then the
product specifications will be drawn out. What are the
minimum requirements, basic minimum criteria, minimum
requirements will be drawn out. So, once these things are
done, then the next thing is supplier search. So then you
will start the tendering process or you'll start approaching
the different suppliers. So these are our requirements. So
who will be interested? So for a typical government
tendering process, you need minimum three suppliers. But
yeah, individually, private and all. It could be less, it could
be more. It doesn't really matter. So once you see that, say
there are five people or 10 people who are interested for
supplying the product or service to you. Then the next is
proposal solicitation. So you ask them to give the proposal,
you ask them to fill up the tender document and with all
the details. So typically it'll not only be the product details,
also the company's details will be there. Their past
experiences, what kind of, projects they have taken up or
whom they have supplied before. So all those kind of things
that will be there and then you do the supplier selection. So
you have the performance matrix as I told you sometime
back in another video that you do the technical bidding,
technical specification analysis and then you do the

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financial bidding, the financial specification. So, this is
where the supplier selection would happen that you will
evaluate the supplier on technical side and then you will
evaluate the supplier on the financial side depending upon
the weightage. It could be 60, 40, it could be 70, 30, it could
be 80, 20, whatever is the way in which the company goes
ahead with selecting the supplier. So, once the supplier
selection happens. Then, you sit down and negotiate with
the chosen one and do the order routine specification that
this is the order, how frequently this order will come,
Marketing Fundamentals
Prof. Ashis Mishra Module 5 © All
Rights Reserved. This document has been authored by Prof.
Ashis Mishra and is permitted for use only within the
course "Marketing Fundamentals" delivered in the online
course format by IIM Bangalore. No part of this document,
including any logo, data, illustrations, pictures, scripts, may
be reproduced, or stored in a retrieval system or
transmitted in any form or by any means – electronic,
mechanical, photocopying, recording or otherwise –
without the prior permission of the author. the final
financial one you sign the contract, all those kind of things
will happen and then your supply will happen and then you
will also would have the performance review that whether
typically always there will be a contract in which
performance review will be there that the quality, the
specifications and the frequency, the lead time, all those
things will be there. So if somebody matches, then you
continue and if you, if either of the buyer or the supplier
they are unhappy with each other, then they will have the
option of terminating the contract. So that is the
performance review stage. So this is typically the different
stages in the buying process. And here I will tell you one
more thing, which is significant over here. There are three
different type of buying situations over here. One which is a
straight rebuy, in which there is no change in the product
specific. It is normally the consumables and all which is
purchased in the same way in which they are non technical
kind of products like papers or pens or accessories and all
which is not very technical in nature and you have got
standard requirements for them. You have got a set of
vendors who normally supply to you. So whenever there is

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a requirement, you place the order and that get delivers. So
there is no real all the detailing over here. Then you have
got something called modified rebuy. Here you have been
purchasing something, but there have been some changes
in the specifications. You know the papers are there but
now you need a paper for, color printing or now you need a
paper for, some thick engraving kind of a thing or you need
some paper for printing photos. Now still it is the same
paper but your requirement have changed significantly,
slightly. So then what you will do over here is you will
update the specifications. But still you will go back to the
same vendors already you have selected and you will ask
them that whether they can supply the same thing to you
or not. So what I am talking to you about is that all the 8
steps that I told you each of them are not applied all the
time. Straight rebuy just need identification and then you
go to the vendors and then you place the order sign the
contract and then deliver. Modified rebuy, you will go to the
vendor, you will still go through the first three stages in
which you will go through the different departments
Marketing Fundamentals
Prof. Ashis Mishra Module 5 © All
Rights Reserved. This document has been authored by Prof.
Ashis Mishra and is permitted for use only within the
course "Marketing Fundamentals" delivered in the online
course format by IIM Bangalore. No part of this document,
including any logo, data, illustrations, pictures, scripts, may
be reproduced, or stored in a retrieval system or
transmitted in any form or by any means – electronic,
mechanical, photocopying, recording or otherwise –
without the prior permission of the author. finding out the
requirements, you will come up with product specifications,
but you will not go for a vendor selection, you will directly
go to the vendors and say that this is the modified one,
please if you will be able to supply that. But if a new task
that is a completely new purchase process, then you will go
through all the stages in the. So, what typically I am talking
about here is that the buying steps that I told you just like
in B2C also I told you that when you are buying low
involvement kind of products from need recognition
directly go to purchase. You do not do information search,
alternative evaluation, etc., etc. But when you have got

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 complex high involvement purchases, at that time you go
through need recognition, pre purchase information
search, evaluation of alternatives, purchase, post purchase,
everything you go through one by one. So the same thing
happens in B2B also, straight rebuy, not much complexity,
modified rebuy, slight complexity, new task, it is a high
complexity kind of job. .

Key Takeaways from the B2B Buying Process

1. Key Differences Between B2B and B2C Buying

B2B decisions are made by committees, not individuals.

Involves multiple stakeholders from different departments.

Each stakeholder has different requirements from the same purchase.

Unlike B2C (one USP, one positioning), B2B products require multiple positionings for
different target groups.

2. Roles in the Buying Center

Initiator: Starts the purchase process.

Influencer: Provides input on the decision.

Decider: Final decision-makers in the committee.

Approver: Gives the final green light.

Gatekeeper: Controls information flow (e.g., secretaries, procurement officers).

Buyer: Handles financial transactions.

User: Uses the purchased product/service.

3. Steps in the B2B Buying Process

1. Problem Recognition: Identifying a need.

2. General Need Description: Departments define requirements.

3. Product Specification: Setting technical and functional criteria.

4. Supplier Search: Identifying potential vendors.

5. Proposal Solicitation: Requesting proposals or tenders.

6. Supplier Selection: Evaluating bids based on technical and financial factors.

7. Order Routine Specification: Negotiating terms and setting delivery schedules.

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 8. Performance Review: Assessing supplier performance post-purchase.

4. Types of Buying Situations

Straight Rebuy: Routine purchases with no changes (e.g., office supplies).

Modified Rebuy: Slight modifications in specifications but same suppliers.

New Task: Completely new purchase, requiring all steps of the buying process.

5. Strategic Considerations for B2B Sales

Identify key decision-makers and their level of influence.

Tailor value propositions to each stakeholder’s needs.

Recognize that not all committee members have equal influence—target key decision
participants.

In government and institutional sales, supplier selection follows technical and financial
evaluation with predefined weightage (e.g., 70-30, 60-40).

Would you like a structured summary for presentation or notes?

© All Rights Reserved. This document has been authored

by Prof. Ashis Mishra and is permitted for use only within
the course "Marketing Fundamentals" delivered in the
online course format by IIM Bangalore. No part of this
document, including any logo, data, illustrations, pictures,
scripts, may be reproduced, or stored in a retrieval system
or transmitted in any form or by any means – electronic,
mechanical, photocopying, recording or otherwise –
without the prior permission of the author. Types of B2B
buyers The last part of, the theoretical dimension of B2B
would be talking about the type of customers and how
these customers are significant to the business. So, as you
understand by now, what I'm talking about is the long-term
relationship between the supplier and the buyer. The B2B
supplier and the B2B buyer is the best way to go forward
because, long term relationship in which both of them get
benefited out of it. If somebody is supplying to you all the
time and you, somebody is receiving from one guy all the
time, they are kind of in a symbiotic relationship and that
benefits both of them. So the ultimate objective of B2B
marketing is to develop customers who will stay with you.
So, it is important for us to see that what are the different

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kind of customers and who are likely to stay with you and
who will not. So, the first type is called commodity buyers.
So, here the force vendors to strip away all the value added
services and sell them only the basic product. They view the
product as commodities and like to switch to any other
supplier if there is a lower price on offer. So, essentially as
the name suggests a commodity buyer is somebody who
will play the price game. So, if you are a supplier in the
commodity market in B2B, then the only way how you can
do business, how you can earn money is by scale. So, you
should be one of the largest players in this commodity
segment and even though there will be churn, some
customers will leave you and some new customers will
come and all that thing will happen, but eventually some
new customers will also come because you have a
significant part of the market. So, you will continue your
business. Otherwise, if you are one of the smaller players,
this is not the ideal business to be in. So, people are here,
they are not looking at quality, they are not looking at you
to solve your problem. In fact, the all benefits works for
them. The advanced resonating focus or favorable POD
kind of value proposition is something they are not
interested about. So this is the first type, which is
commodity. Next one is called underperformers. Now who
are underperformers? Company that operates in industries
with high fixed cost. Iron and steel industry, pharma
industry. Vendors often provide free services or low prices
to acquire such customers. They expect to increase price
later, which
Marketing Fundamentals
Prof. Ashis Mishra Module 5 © All
Rights Reserved. This document has been authored by Prof.
Ashis Mishra and is permitted for use only within the
course "Marketing Fundamentals" delivered in the online
course format by IIM Bangalore. No part of this document,
including any logo, data, illustrations, pictures, scripts, may
be reproduced, or stored in a retrieval system or
transmitted in any form or by any means – electronic,
mechanical, photocopying, recording or otherwise –
without the prior permission of the author. as you
understand never happens. They lose money and hence,
eventually it does not become sustainable. So, you could be

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having big So, companies which you think that if you get
them, then you have a long term relationship with them
and continuous orders will be there and hence it will be
beneficial for you, but the problem as you see over here is
these guys are too big, they have lot of fixed costs. So, you
are supplying to them and it is a significant part of your
business not necessarily your customers. And if you get
into this, if you get a client with a lower price model that
because I am doing the best, I am reducing the cost the
most and hence I am undercutting all other competitors
and obviously I am going to get the contract. It is very
difficult for you to eventually increase the price and come
to a level where you will start making money. That will not
happen. So it is not, so it could be a good strategy to enter
into the market, but invariably it is not a great strategy over
a period of time, it is not a great strategy. So, I mean, my
personal opinion is anywhere, unless you have tremendous
amount of scale, price war never wins anyone anything.
You will reduce the price, your competitor will reduce the
price, whether it is B2B, B2C, it does not matter. So
eventually it is the customer who is going to be benefited
by this and you are not going to make money out of this
ever. I mean, you would also realize that in, if you are,
keeping yourself updated with the current market scenario,
most of the online players they are in the mode of
customer acquisition. So, they are all into giving a lot of
discounts to acquire customers. So, in every field, even
whether it is important, non important, in all kind of
products and services, they are giving you discounts. Now,
this discount helps you, helps them to acquire customers,
but you are there with that particular platform or that
particular supplier, or that particular retailer because of
only price. So, if somebody else offers you a lower price,
you will switch. You have no loyalty over there. The
opportunity cost, the switching cost is minimal.
Marketing Fundamentals
Prof. Ashis Mishra Module 5 © All
Rights Reserved. This document has been authored by Prof.
Ashis Mishra and is permitted for use only within the
course "Marketing Fundamentals" delivered in the online
course format by IIM Bangalore. No part of this document,
including any logo, data, illustrations, pictures, scripts, may

38/42
be reproduced, or stored in a retrieval system or
transmitted in any form or by any means – electronic,
mechanical, photocopying, recording or otherwise –
without the prior permission of the author. So, nobody as
of now, as I am recording this, as of now, nobody in the
digital online space, this product and service providers in
B2C market predominantly, none of them are really making
money. I do not want to take names over here, but you
know pretty well whom I am talking about. Most of the
retailers, most of the platform providers businesses who
are giving it to the customers, who are supplying to the
customers, then they aren't really making money. They're
all into acquisition, customer acquisition mode, and they
expect that at some point of time, they will reach that
critical mass, that they'll be able to, eliminate all the
competitors and thereby they'll be able to make money.
Well, it has not happened until now. And I do not know
when it is going to happen. The reason I am telling you this
is a price war never really wins anyone anything and it is
not a sustainable business unless you have tremendous
amount of scale economy of scale. Third type of
customers, partners. Now customers are these guys are
expensive to serve, but they usually return the favor and
justify the effort. How? So, that they the customers do not
develop in house solutions and they expect turnkey
solutions from the vendors. They view suppliers as value
adding partners and look for long term commitments. So,
here it is they are expensive because they are looking at
customized solution. They are looking at turnkey solutions.
So, as a supplier, as a business vendor, you are more like
their partners than the suppliers. So, you do not have a
standardized product that you can deliver to them. You
have to customize them, customize your business based on
the changes in the market so far as your customers
business are concerned. Here you of course, have to
provide them with the solution and you have to invest in
this, but the relationship is quite long term. The
relationship is for future because they have also invested,
they are kind of dependent on you and you have changed
your business or you have changed your structure based
on your customer's business. So both of you kind of are
stuck with each other and it's a good. So, this is a very

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important scenario to be in, but that is not the, this is not
going to be a starting point. This is after a period of time
only you develop the trust.
Marketing Fundamentals
Prof. Ashis Mishra Module 5 © All
Rights Reserved. This document has been authored by Prof.
Ashis Mishra and is permitted for use only within the
course "Marketing Fundamentals" delivered in the online
course format by IIM Bangalore. No part of this document,
including any logo, data, illustrations, pictures, scripts, may
be reproduced, or stored in a retrieval system or
transmitted in any form or by any means – electronic,
mechanical, photocopying, recording or otherwise –
without the prior permission of the author. And the fourth
one, which is the most important one, I mean the ideal one
I will say is the most valuable customer. So they are as loyal
as partners, but they are less expensive to serve. That is
because the vendors have more efficiency in delivery and
buyers have taken over the function of the supplier that
they traditionally provide. So in a way, the buyer will
actually do the things that they will invest in the in simple
terms, in case of most valuable customers, the customer
will invest in the vendor, the customer will invest in the
supplier to improve your business. So, you are the supplier
to your customer, customer business is changing, customer
wants you to still supply to them. So, they will invest in your
business to manufacture those products or services with
whom the customer's business will improve. So, as a result,
what will happen is that both of you are dependent on each
other, both of you are investing in each other and both of
you are going to go forward together. This is called the
most valuable customer. So eventually your business is the
best if you are in the most valuable customer space. But
yeah, I mean, to achieve that of course, everybody will not
be able to do that, you will have to work really hard in order
to get to that space and you will be lucky if you can do this.
So finally, organizational buying refers to the decision
making process by which formal organizations establish
the need for the purchase product service and identify
evaluate and choose among different brands and different
suppliers. So, I have already explained to you that how this
thing actually works. This is in brief the organizational

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market and the buying process and the major factors that
is involved in this. The finally, I will tell you there is a
different kind of business market. B2B market, which is
called institutional market. Now institutional market
consists of schools, colleges, universities, hostels, hospitals,
nursing homes, jails all such kind of things that provide
goods and services to the people in their care. So the, here
there is no processing, further processing of product and
service. It is not like the iron and steel that I spoke to you
about that is purchased to make cars. It is not like the oil
that is purchased to make soap, moisturizers or soaps. This
is more about the purchase, the finished product in large
volumes, but they themselves are not the users, the people
whom they care for.
Marketing Fundamentals
Prof. Ashis Mishra Module 5 © All
Rights Reserved. This document has been authored by Prof.
Ashis Mishra and is permitted for use only within the
course "Marketing Fundamentals" delivered in the online
course format by IIM Bangalore. No part of this document,
including any logo, data, illustrations, pictures, scripts, may
be reproduced, or stored in a retrieval system or
transmitted in any form or by any means – electronic,
mechanical, photocopying, recording or otherwise –
without the prior permission of the author. So, those are
the people who use this products and services. So, they
typically characterized by low budgets and captive
clienteles. They will go by the government, typically the
government system of technical qualification and then, L1,
that is the least cost model and again, this is kind of, in a
way, the commodity market model. They will not buy high
customization or highly technical products and they will
prefer the lower price. So in a way it is the commodity
market or at best it could go for what we spoke about is the
underperformers kind of things. But yeah, I mean, if you
have the scale, then this is a good market to be in. So, that
is all so far as the B2B market and the theories of that is
concerned. Next we will discuss a case related to that and I
will show you that how the B2B sales that happens and
what are the pitfalls of that.

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This document, authored by Prof. Ashis Mishra and delivered as part of the "Marketing
Fundamentals" course at IIM Bangalore, explores various types of B2B buyers and their
significance to the business. It discusses the following buyer types:

1. Commodity Buyers: These buyers treat products as commodities and are highly price-
sensitive. They often switch suppliers based on price, making it crucial for suppliers in
the commodity market to have scale in order to survive, as smaller players face
difficulties in such a competitive environment.

2. Underperformers: Companies in industries with high fixed costs (e.g., iron and steel,
pharmaceuticals) may look for low prices or free services to acquire suppliers, expecting
to raise prices later, but this often leads to unsustainable business. Price wars tend to
benefit the customer, but vendors struggle to make a profit unless they have economies
of scale.

3. Partners: These buyers are more expensive to serve but justify the investment by
seeking long-term relationships. They expect turnkey solutions and rely on their
suppliers for customized or value-added services. This type of relationship is more
sustainable, but it takes time to develop trust and commitment.

4. Most Valuable Customers: These customers are loyal, less expensive to serve due to
efficient processes, and are highly invested in the supplier's business. Both the supplier
and buyer invest in each other’s success, fostering a mutually beneficial and long-term
partnership. This is the ideal customer type for suppliers.

The document also introduces the concept of organizational buying, where formal
organizations make decisions to purchase goods and services for their operations,
considering various factors such as pricing, supplier evaluation, and long-term needs.

Finally, the Institutional Market is discussed, which includes schools, hospitals, and other
institutions that purchase goods and services for their care facilities. These organizations
often operate on tight budgets and follow a cost-driven model, making them similar to the
commodity market, where price is a key factor.

This understanding of B2B buyer types and their behaviors helps businesses identify their
ideal customers, develop appropriate strategies, and foster long-term relationships with
their clients.

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