Is Your Company A B2B2C

What is a B2B2C?

Traditionally, the business world has categorized manufacturers into one of two camps.  Companies were either B2B’s, Business to Business, or B2C’s, Business to Consumer.

In the course of working with our customers, however, we have noticed that there is a hybrid group; we call them B2B2C’s.  These companies produce materials, components and/or ingredients which their B2C customers then use to manufacturer products for their consumers.

For companies which fall into this group, being conversant in consumer marketing is becoming increasingly important, and it can provide B2B2C’s with a key competitive advantage.

As manufacturing companies cut overhead costs and look externally for innovation assistance, B2B2C companies are being asked to assist their customers with more sophisticated, consumer-oriented projects.  Those B2B2C’s which are able to demonstrate competency in fulfilling these requests can gain an important edge over their competitors.

One of Argentum Strategy Group’s clients recently experienced this with one of their largest customers, a Fortune 500 food manufacturing company, Customer A. Our client is an ingredient manufacturer which often develops flavor prototypes for customers in its professionally staffed industrial kitchen. Typically, this is the process for prototype development:

In this particular instance, however, Customer A asked our client and two other suppliers to do both Steps 2 and 3.  Without any experience working with consumer-qualified concepts and consumer research, our client turned to us to help them design and implement a process for identifying the best flavors to recommend.

Our client is not alone in this experience.  More and more, B2B’s are being asked to partner with their customers on product development, recipe creation, sustainability and trend tracking.  In a recent survey we conducted with self-identified B2B2C companies, 80% indicated that their customers have been asking them for more assistance in these areas.  Sixty-two percent noted that they have been receiving more requests like these in the last three years, and this is supported by findings recently reported in Inc. magazine, which noted in a March 2008 article that this type of joint development initiative is on the rise. (The Start of a Beautiful Friendship)

The So What’s

As a B2B2C, becoming more consumer-centric can provide an additional point of differentiation for your company in the marketplace.  And while it may be a less common qualification today, in the future, it will most likely be the cost of entry for becoming a preferred supplier to larger companies. There are some easy steps that any B2B2C company can take now to ensure that its team is versed in the rudiments of consumer marketing.  Here are five easy ways to develop a basic working familiarity with the world of B2C.

1. DO gain a basic understanding of key consumer marketing principles and concepts.  Knowthis.com is a great source, as is the book “Kellogg on Marketing”.
2. DO think creatively about ways to tap into consumer insights without breaking the bank.  For example, if you’re looking to understand food trends, look at restaurant menus at cutting edge restaurants or even Panera Bread.  Gourmet stores and the Food Network are also great resources.
3. DO learn to communicate more like a B2C company, including using a “deck” format for providing information (CLICK HERE to see format). This will make it much more likely that the things you write will get passed up the chain with minimal translation from your contacts in purchasing and R&D.
4. DO consider hiring an expert consumer marketing resource to help you, as 29% of our respondents reported doing.
5. DO be comfortable saying no to requests which move your company too far from its core competency. 37% of our survey respondents reported that they are selective in the consumer-oriented projects which they agree to.

We will continue to track the evolution of this issue, and we would love your help. If you work for a B2B2C company, please CLICK HERE to take the B2B2C survey referenced in this article.