Why B2C companies should consider entering B2B markets: higher, more sustainable margins, less competition. Comparison of business models, winning formula, example.

1. Technology Assessment International
From B2C to B2B
Why B2C Companies Should Consider
Entering B2B Markets

2. Technology Assessment International
Why B2B Markets?
So Many B2C Opportunities !!!

3. Technology Assessment International
Consumer Sales
IMITATION
Consumer Margin
The more successful the company is, the
faster it will generate competition that
will cap its margin and sales growth.

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Let me look for it online…
I bet Big Brand has something like this.
The company
could invest in
brand building
only to be
preempted by
competitors with
existing brands
and deep
pockets.
I saw this really cool product on TV.
I can’t remember the brand name.

5. Technology Assessment International
6.98 billion potential competitors for your
consumer product
The large consumer market exposes the product to billions of individuals,
virtually guarantying multiple imitators.

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The competitor with the best brand building
and distribution wins!
Will it be your company or
a stronger competitor?
Big Brand only needs something that approximates your “Cool Product “

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The setup for success in B2B markets:
Value to Customer
Price
Margin
High margin is derived from
delivering far more value to the
customer than he is being charged
for. Simple, but not easy.

8. Technology Assessment International
May I see the head of Maintenance (Selling to end user) ?
Mr. Maintenance, our company sells products that reduce wear and
eliminate dynamic seals (benefit selling). Do you have bearings or couplings
that generate more down time than you would like?
Of course I do! Show me what you’ve got.
If you show them to me in your plant, I will be better able to help you.
How much down time do you get from those? This equipment must
cost at least $5000 / hr to run.
Closer to $8000 and they take 12 hours to repair every 3 months.
Good that is a 5 year saving of $384,000 for a
$2100 coupling. If I price at $21,000 (Value Pricing)
and show him the cost comparison, it should be a
no brainer.
Customer Intimacy
90% Margin

9. Technology Assessment International
Potential competitors:
1,000 people who understand this
Only specialists with intimate knowledge of the industry will recognize how the company
delivers value. Few of those exist, even fewer with an entrepreneurial bend and opportunities in
any B2B market segment will be insufficient to excite anybody.

10. Technology Assessment International
B2C versus B2B
B2C
 Goal: many
purchasers, small purchases
 Distribution + Promotion
 Simple “pitch”
 Generic use
 Mass Marketing
B2B
 Goal: large accounts, high
margin
 Direct sale to end user
 Sophisticated “value pitch”
 Market specific application
 Customer intimacy

11. Technology Assessment InternationalTechnology Assessment International
Why B2B Now?
 Sustainable High Margin
 Low risk of competition
 Exit strategy: Private Equity loves niche B2B
businesses with high margin. B2C and B2B can
be kept separate for separate exit strategies.