B2B, B2C, B2B2C...

I've just transitioned from a position that was my first-ever purely B2B (business-to-business) marketing role--food ingredients for manufacturers of consumer foods and beverages.


B2C (business-to-consumer) defines the typical retail arrangement, whether it is a branded manufacturer selling their own goods or services (think Gap, United Airlines, Starbucks) or a retail outlet selling third-party goods and services (think Target, 7-Eleven, Barnes & Noble). Some are hybrids, particularly in the grocery/home space with the growth of store brands in the US, although we're still behind Canada, the UK and Europe in terms of share of shelf.


Most of my experience is in what I refer to as B2B2C. That is, marketing through a retail business channel to the consumer. I've been fortunate to have worked with a number of different industries and channels throughout my career: travel agencies, bike and ski shops, grocery, drug store, mass merchandisers, warehouse clubs, convenience stores, dollar/extreme value stores among others.


Just as each consumer has her/his own needs, budgets and values, each channel has plays a certain role in terms of value proposition to its target consumer, the typical operating margin and the way it presents its merchandise or services. Grocery stores carry a mix of products, and the merchandising typically reflects some continuum of choices, for example from healthy to indulgent, light to dark or fine to coarse, and frequently uses manufacturer-paid and installed displays to promote their branded products or make it easier for you to find them and put them in your cart. Margins are typically quite small (less than 5%).


Remember when Target and Best Buy became Apple retailers? It surprised lots of people that Apple would loosen the reins on its brand, but the real motivation for Apple was to expand distribution--they certainly make a better margin in their own stores, where they don't need to share any of the retail markup with a channel partner and don't discount, lest they upset any of the retailers they have authorized to sell to consumers on their behalf. But the fact is, Target has more stores in more places than Apple ever will.


The lesson for marketers is that channel management is critical. Brands need to balance their desire for that reaching more consumers with reaching the right consumer. We communicate a different message to the channel than we do to the consumer, even about the same product, because they each have different needs and motivations. Who is your target consumer--do you know how to reach them, or do you need a B2B2C strategy with a channel partner who already has a relationship with them?