Understanding the Meaning and Methodology of B2B Business Models

What is B2B (Business to Business)?

Do you know what is b2b? It is an abbreviation for business-to-business. Sounds complicated? Well, it will not be once you get to understand what is B2B. The term simply refers to any transactions or activities that take place between two businesses or more simply put; it refers to one company buying or selling something to another company.

On the other hand, when you buy something from a shop or online retailers or from anywhere else, as an individual, it is called B2C or Business to Consumer.

There’s a subtle difference here that will determine your buying process, a B2B or B2C transaction. Suppose you’re buying stationeries like pens and staplers for yourself from Amazon. You have bought this from your private account on Amazon for using it in your home. This will count as a B2C transaction.


Now let us assume that you own a business. You have bought the same stationaries, including pens and staplers for your office. Instead of using your private account, you opened a business account with Amazon. You use your business account to buy these stationaries for your office. This will now count as a B2B transaction. Now that you have got the B2B meaning let us get into how B2B companies operate.

Real-World B2B applications and Business Examples

Business to Business Company Model

Simply put, a B2B company produces or supplies products that are bought by another company. The product here could be anything that has a perceived value for the buying company – the product could be a physical good, digital application, or any service work. A company does not necessarily have to be either a B2B or B2C company; it could have a mix of operations of both types. Whether a company is a pure B2B or pure B2C or a hybrid depends entirely on the vision of the company, its products, and long-term objectives.

Continuing with our earlier example, Amazon is the perfect example of a company that has hybrid transactions, i.e.; it functions both as a B2C as well as a B2B company. Microsoft is another classic example – its digital products are sold to consumers directly as well as to companies. If you look a little bit deeper, you will find that most companies have both B2B and B2C operations.

On the other end of the spectrum, many companies choose to operate in the B2B route only. The reasons for being a dedicated B2B company could depend on:

  • The business segment in which the company operates. This factor is governed by the products or services offered by the company.
  • The vision and business objectives of the company. This factor is primarily governed by the owner of the company or the team that manages the company.
Real-World B2B Company Examples

For instance, Boeing is the leading manufacturer of aerospace systems. The kind of product this company has is not something that a regular consumer will buy for their personal use. This company’s products put them in a segment where they must operate on a B2B model and thus comes in the category of B2B companies.

On the other hand, there are many companies whose names you might not have heard of, who are purely into B2B mode not by compulsion, but by choice. For example, you have many times used the services of a computer service company for any hardware or software related services for your personal computer. This makes that computer service provider a B2C company. However, many companies like ITSavvy have a similar product and service portfolio, but they deal with only corporate customers. In this scenario, the products do not limit their business model, but their intent and objectives lead them to conduct B2B transactions.

Creating a New Approach to Entice Business'

B2B in Marketing

In a B2B scenario, the marketing and sales functions must work in close coordination to achieve the desired results. In a B2B scenario, each customer is unique, and their requirements vary differently. One may ask for an open credit payment term while the other may ask for an additional after-sales warranty. Sometimes, you need to customize your product to meet the specific demand of the customer. Hence, the marketing and sales strategy may need to be prepared differently for each customer.

When you are planning to develop a marketing plan for a B2B sale, you should keep the following in mind:

  • Educate yourself about the purchase process of your targeted customer. Identify the key stakeholders in the decision-making chain.
  • Create awareness about your products and services by conducting presentations and demonstrations to the key stakeholders.
  • Participate in industry meets and conferences to highlight your capabilities and services.
  • Have discussions with the key stakeholders to understand their pain-points. Go back to your product development team with the inputs and try to come up with a customized solution.
  • Carefully read the Request for Quote (RFQ) or Bid Invitation documents issued to you. You should devote your efforts to understanding the customer’s requirements first. What type of technical product they require, what are the commercial terms they prefer, how urgently they need the deliveries, etc.
  • You must prepare a suitable technical offer that highlights how your products and services can solve their pain-points. Your offer should also contain your acceptance of the customer’s commercial terms, any deviations that you have taken should be highlighted. Finally, the offer should contain the prices at which you are willing to close the deal.
  • You should always expect a round of techno-commercial negotiations with the customer’s purchase team. Prepare well for the negotiation and close the deal in such a way that it becomes a win-win situation for both parties.

In a B2B model, companies are your customers. When you try to sell your product to a company, you must go through many processes to complete the sale. This is mainly because the purchase decision process in a company is different from the way an individual consumer makes a purchase decision.

The purchase decision in a company is not dependent on one individual for closing deals on business-to-business products or services. There is a defined team of people who analyze various parameters and then come to a purchase decision. The purchase decision is made keeping a single objective in mind – getting the best deal that meets the company’s requirements.