Delineating the Differences


Tim J. Smith, PhD
Founder and CEO, Wiglaf Pricing

Published September 15, 2004

Are marketing ideas and practices from consumer markets readily applicable to business markets? Should we expect an expert consumer marketer to also be a high-performing business marketer? Clearly, the goal in consumer and business marketing is shared: to create customers and capture profitable revenues. But does a shared goal imply that the strategies and tactics used in consumer markets are directly applicable to business markets?

Time and time again business gurus will claim that practices and ideas that have been formulated in one industry are applicable in a number of others, but are these claims valid? Business gurus are selected according to their ability to inject fresh thought into marketplace and rise to prominence through relating their ideas in multiple industries. In order to spread their ideas as broadly as possible, marketing gurus will, more often than not, claim that their ideas are just as applicable in business markets as they are in consumer markets. A little reflection reveals that these claims are only partially true.

Likewise, headhunters have stated that the best business marketers will come from a consumer marketing background, but is this claim valid. In looking at motivators, headhunters may define the best person for a position as that which is most likely to be hired by senior management rather than the person that is most likely to excel in the role assigned. After all, their compensation is dependent upon the ability to place individuals, not the ability of those individuals to perform in their new role.

While business marketing and consumer marketing share some common attributes, their differences are quite pronounced. It is true that the base marking mix issues of price, product, promotion, and placement must be managed by both consumer and business marketers. But, the strategies and tactics for effective marketing will differ widely. Furthermore, it is true that the concepts developed in one type of market are, at times, transferable to the other type of market, but their implementation will take very different forms.

The difference between business marketing and consumer marketing can be traced to fundamental differences in underlying market structures. The key market structural differences can be classified into three categories of size, information flow, and purchasing motivators. Understanding how these three structural difference influence the management of the marketing mix enables executives to put leading edge ideas into context. Because context is key to planning and executing effective marketing strategies within the constraints of time, labor, and capital, examining these structural differences and their influence on marketing should improve our ability to discern useful concepts from those that are merely interesting.

In this and the following issues, we examine the structural differences between business markets and consumer markets. This examination is not done to show the shortfalls of other thought leaders, but rather to highlight the differences between business and consumer marketing to enable sales and marketing professionals in business markets in transferring useful consumer marketing concepts into a business market context. The three structural differences that will be discussed are potential market size, information flow, and purchasing motivators.

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About The Author

Tim J. Smith, PhD, is the founder and CEO of Wiglaf Pricing, an Adjunct Professor of Marketing and Economics at DePaul University, and the author of Pricing Done Right (Wiley 2016) and Pricing Strategy (Cengage 2012). At Wiglaf Pricing, Tim leads client engagements. Smith’s popular business book, Pricing Done Right: The Pricing Framework Proven Successful by the World’s Most Profitable Companies, was noted by Dennis Stone, CEO of Overhead Door Corp, as "Essential reading… While many books cover the concepts of pricing, Pricing Done Right goes the additional step of applying the concepts in the real world." Tim’s textbook, Pricing Strategy: Setting Price Levels, Managing Price Discounts, & Establishing Price Structures, has been described by independent reviewers as “the most comprehensive pricing strategy book” on the market. As well as serving as the Academic Advisor to the Professional Pricing Society’s Certified Pricing Professional program, Tim is a member of the American Marketing Association and American Physical Society. He holds a BS in Physics and Chemistry from Southern Methodist University, a BA in Mathematics from Southern Methodist University, a PhD in Physical Chemistry from the University of Chicago, and an MBA with high honors in Strategy and Marketing from the University of Chicago GSB.