We all know the basic differences between B2­B and B2C marketi­ng. Among the many differences be­twe­en marketing to consumers and ma­rketing to businesses, the complexities of downstream channel relationships in the B2B arena typically lea­ve those product marketers with several definitions of “the customer.” Rather than sell primarily to end-us­ers through channels playing largely a logistic role, B2B marketers typically sell their products to firms that, in turn, create other products for sa­les. Each combination of primary buyer and secondary buyer creates a different customer chain.

In developing marketing strategies, one of our first critical questions is the price sensitivity of a target segment. Does competitive advantage lie in price competition, or does it take value marketing — a bundle of services and intangible benefits enhancing the product — to win the business? Finding the answer that should drive your marketing plan is straightforward when the customer chain is simple, and the sole customer type is a direct buyer or a customer purchasing through a passive channel.

But most business markets do not work that way. The primary bu­yer responds to its set of value drivers and in turn must cater to downstream buyers’ preferences. Part of your competitive advantage, then, becomes your contribution to your direct customer’s marketing success downstream. For instance, does your product help your primary customer cut costs and thus better appeal to price-sensitive downstream buyers? The popularity of ingredient business branding, for example, reflects the industry’s growing recognition of brands’ ability to influence downstream demand and make a product indispensable to primary customers.

In a two-stage customer chain, how do you protect your downstream positioning as a value-added producer when your primary customer buys mainly on price? Or if your value sell to the primary customer will not impress the price-driven secondary customer? At this point, it can be useful to analyse your customer chains according to a useful framework that recommends specific strategies depending on the customer chain environment in which you are selling. As the Blue Canyon framework makes clear, marketing strategies and the need to build a B2B brand are not simply a matter of throwing advertising money at the market. The basic framework specifies four B2B market environments based on the price-sensitivity of primary and secondary customers:

n When both primary and secondary customers buy mainly on price factors, promote your ability to reduce their costs.

n When both primary and secondary customers buy mainly on non-price factors, competitive advantage depends on building relationships throughout the value chain, emphasising service, product enh­ancements and the contributions of your processes and systems to customers’ business success.

n When the primary buyer res­ponds to value-added and other no­n-price appeals, but the secondary customer is a price buyer, your job is to provide the systems and product enhancements that help the primary customer cut its price to secondary customers.

n When the primary buyer is pri­ce-driven, but the secondary customer seeks value enhancements and other non-price reasons to buy, promote cost-justifiable product en­hancements that improve the primary buyer’s value-added appeal to the secondary buyer.

Mapping customer chains that create distinct market segments, then refining Blue Canyon’s model have helped firms spot opportunities or identify shortcomings in marketing plans. One industrial tool manufacturer relying on a top-shelf image and pricing to match, for example, repeatedly failed to penetrate a new distribution channel that it thought would be a natural expansion. Researching the price and value drivers of its current and hoped-for segments, and applying Blue Canyon’s customer chain analysis, revealed why the manufacturer’s premier brand should not even try to compete in the relatively price-sensitive market segment it had hoped to capture.

The writer is CEO and MD of CustomerLab Solutions