Fluctuating demand

According to the news out yesterday, UK retailers suffered the worst December on record. So it looks like people aren’t shopping as much as they have during Blair’s feel-good years. A sign of the boom and bust economy in the UK fuelled and drained by living on credit.

The question to marketeers is: do businesses selling consumer products (B2C companies) suffer first in an economic outturn or businesses selling supplies to other business (B2B companies)?

Well according to Kotler, B2B suffers first. The companies making consumer products sense the pinch coming and ring up their suppliers quickly to cancel orders. OK, long term the companies selling to consumers will also suffer, but not in fits and burst. For many B2B suppliers it’s all or nothing – the tap can be completely turned off by their B2B customers. Whereas B2C companies suffer more gradually, the tap dries up more gradually.

Looking at another macro-economic factor: B2B customers are less price sensitive overall (again, according to Kotler). If you’re on an MBA course soon, be prepared to discuss why…

Alex Woodruff

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