Types of B2B buyers

B2B Buyers mainly include businesses which can be for profit or not for profit businesses. In business markets, it is generally difficult to figure out who makes the key buying decisions. Business markets are different from consumer markets and business buying is also different from B2C. However, B2B buyers can be divided into four main categories that include producers, resellers, government agencies and Institutions including not for profits.

Producers:

Producers are goods or services producing businesses that purchase raw materials from other businesses which are later transformed into products or services. This category includes both product manufacturers like automobile businesses and service providers like airline businesses.

The producers need to buy certain products or raw material to create a finished product and then sell it. The key thing is that these producers transform the goods they purchase into something new. For example, an electric car manufacturer buys batteries from Panasonic and then fits it into the electric cars it produces to create a finished electric car. It sourced steel and other raw materials or parts from other suppliers to make an electric car.

There are several such examples around us where manufacturers buy products from other businesses. Laptop manufacturers like HP and Lenovo also buy several types of raw materials from diverse businesses whom we call suppliers and then make the PCs and laptops which they sell in the market. Delta airlines buys aircrafts from Boeing and Airbus and various other products and services from other suppliers which are required to provide airline services to consumers.

Even the famous restaurant brands around us that we regularly eat at like Domino’s and McDonald’s buy a lot of products as raw materials to create the products including burgers and pizza that they sell to the customers. Even the dentist near you needs various drugs to provide his services to the consumers.

Resellers:

Another important category of industrial buyers or B2B buyers are the resellers. These resellers play a critical role in the distribution strategy of several large businesses. Even the leading retail brands like Walmart and Costco are resellers that sell products created by other businesses. They bring a large assortment of products under one roof to sell to final consumers. Several of the businesses selling to retailers like Walmart and Costco depend on these resellers for a vast part of their sales. Resellers can buy from manufacturers to sell products to customers. Several businesses use their own distribution channels like branded stores and resellers for selling their products to the customers. For example, you can find HP and Nike products being sold by authorised resellers in various markets.

Sometimes, resellers can be of great help in achieving sales. If you are a manufacturer and are able to sell your product to one of the leading retailers like Walmart, Costco or Target Corporation, you might find your sales skyrocketing suddenly.

Governments and Government Agencies:

Governments and government agencies around the world are also among leading industrial buyers. You might be knowing of several brands that have entered into exclusive contracts with the government to provide certain products. Governments also buy a large variety of products for providing various types of services to the nation from building roads, providing transportation services to producing electricity and supplying cooking gas.

For example, the government agency responsible for providing transportation services in a particular nation might buy Volvo buses in bulk. Government purchases a large range of products for its various needs including running those offices and providing security to its citizens. It contracts with weapon manufacturers, plane manufacturers and businesses that provide IT related products and services for various needs.

The US government purchases or procures products and services for the benefit and direct use of government agencies through contract which is a legally binding agreement regulated by the Federal Acquisition Regulation (FAR). Businesses can visit the US General Services Administration Website gsa.gov to learn more about it.

The government is also a leading buyer of IT products and services. For example, in the United States, AWS (Amazon Web Services) has won several such government contracts including one to fulfill the cloud technology related needs of the Pentagon and another by the Nation Security Agency (NSA) to modernize its computing capabilities1.

You will find that in several nations, a specific portion of these contracts are reserved for the small businesses or the ones owned by minorities and women.

However, selling to the government can be highly complicated due to several reasons. While some businesses may find it very profitable to sell to the government and government agencies and therefore market their products aggressively before them, others may find it overly complicated and would avoid selling to the government. The main reason is the red tape that several businesses might avoid selling to the government buyers. Moreover, selling to each government agency is not always a similar process and sellers might come across different specifications and legislations governing purchases by different government agencies. Several times there is also a lot of politics involved in the sales of products to governments. This is especially the case with very large purchases like buying fighter jets. If a government decides to buy a fighter jet from another nation, there is going to be a lot of politics around it.

So, selling to the government is not easy and requires dealing with various specifications and legislations. However, certain companies have gained an expertise in it and therefore find it profitable to deal with government buyers.

Institutions:

Institutions include a large range of organizations including the not for profit organizations like churches, American Red Cross as well as private colleges, hospitals and so on. These organizations including the charitable organizations also buy products in enormous quantities. For example, charitable organizations that are dedicated to helping the poor with food, clothing and education, buy these materials in large quantities. Similarly, Universities and colleges also need various kinds of supplies for operations which they buy in bulk. In the case of the institutions, their focus mainly remains on controlling costs. The higher their savings, the more people they can serve. For example, if the American Red Cross is buying medical supplies, if the prices are high, it will not be able to serve too many people. So, it will buy from the sellers that are willing to provide at lower costs.

A few last words:

Businesses buyers can include both for profit and not for profit businesses. Generally B2B buyers are divided into four categories which include producers, resellers, governments and institutions. Producers can include the manufacturers of products or services. The main difference between the producers and resellers is that while producers transform the goods they buy into something new, the resellers just sell the products they bought from others. Manufacturers often sell to resellers who sell it to smaller businesses or final consumers. Governments including central, state and local governments also buy a large range of products and services to cater to the needs of various agencies and to provide various essential services to the people.

However, selling to the government is often complicated because of the red tape, differing specifications and legislations for selling to different agencies. Moreover, large purchases by the government also often involve a lot of politics. However, selling to the government can be profitable for businesses if they know the ins and outs of the process. Institutions are also among significant B2B buyers and can include not for profit or charitable organizations like the American Red Cross, PETA, churches and other similar organizations as well as private institutions. A critical focus of these institutions in terms of B2B buying is to keep costs under control so that they can serve more and more people.