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1.6: How Organizations Use Marketing

  • Page ID
    16178
  • What you’ll learn to do: describe how different types of organizations, such as nonprofits, consumer product (B2C) firms, and business-to-business (B2B) organizations, use marketing

    Although marketing activities come in many different forms, the fundamental principles of marketing apply, regardless of what you’re trying to sell, advocate, or promote. Grounding your marketing efforts in a customer-oriented mindset and staying focused on the relationships you build with those customers will always steer you in the right direction.

    At the same time, different organizations use marketing in different ways to achieve their goals. The next reading will give you more insight into how marketing supports the success of several common types of organizations.

    The specific things you’ll learn in this section include:

    • Explain the difference between a customer and a consumer
    • Define different types of organizations including B2C, B2B, and nonprofit organizations
    • Provide examples of how each type of organization uses marketing

    Although we often think of marketing in the context of for-profit businesses and product sales, a wide variety of organizations use marketing to achieve their goals.

    For-Profit Marketing Versus Nonprofit Marketing

    For-profit organizations are typically privately owned or publicly traded companies with a primary purpose of earning money for their owners. Nonprofit organizations also earn money, but their primary purpose is to use these funds for a specific charitable purpose. Types of nonprofit organizations that may engage in marketing include schools and colleges, hospitals, museums, charitable organizations, and churches, among others.

    As the terms denote, the difference between for-profit and nonprofit marketing is in the organization’s primary objective. For-profit marketers measure success in terms of profitability and their ability to pay dividends or pay back loans. Continued existence depends on the level of profits they can generate. The primary focus of marketing is usually to sell products, services, experiences or ideas to target customers and to make these customer relationships as profitable as possible.

    Left: Photo taken at a Race for the Cure event: Four pink-haired people clothed all in pink hold a sign that says, Proud to be a fundraising team! Team Janet forever and always. Right: Photo taken at a Red Bull Flugtag event: A person rides a small biplane that looks like a badger. The plane's wings are brightly colored, feature cartoon snakes, and read Badger. The plane is in front of a giant Red Bull sign and above several inflated cans of Red Bull.
    Left: Global Race for the Cure opening ceremony, Washington, DC. Right: Red Bull Flugtag competition, London.

    Nonprofit institutions exist to benefit a stated mission or purpose, regardless of whether profits are achieved. Owing to their socially beneficial purpose, nonprofit organizations are subject to an entirely different set of laws—notably tax laws. While they are allowed to generate profits, they must use these funds in specific, philanthropic ways in order to maintain their nonprofit status. Marketing efforts focus on activities that promote the organization’s mission. A school, college, or university might use marketing to attract students, improve academic reputation, and solicit donations from alumni. A museum or nonprofit theater company uses marketing to attract visitors, ticket sales, event sponsors, and philanthropic donations. Marketing for nonprofit hospitals usually focuses on attracting patients and strengthening reputation as a high quality health care provider.

    Business-to-Consumer and Business-to-Business Marketing

    Many boxes filled with bags of chips

    An important distinction in how organizations use marketing is whether their efforts target business-to-consumer (B2C) transactions or business-to-business (B2B) transactions. In business and marketing, the consumer is the individual who actually uses the product. The customer is the individual who buys the product from a business. In some transactions, these are the same person, but in other transactions they are different entities.

    Suppose you take a break from studying and walk to a corner store to buy a snack bar that’s made by a local health-food company. From the perspective of the corner store owner, you are both the customer and the consumer in this transaction. However, from the perspective of the health-food company that made the bar, you are only the consumer, because although you consumed the product, you didn’t buy it from them. The health-food company’s customer is the corner store owner who decides whether or not to stock their snack bars in her store.

    In marketing, this distinction is important because it helps marketers better understand where to focus their attention. Business-to-business (B2B) marketers sell to other businesses or institutions that consume the product as part of operating the business, or use the product in the assembly of the final product they sell to consumers. Business-to-consumer (B2C) marketers focus their efforts on consumers, the individuals who consume a finished product.

    A B2B Emphasis

    The tools of marketing are available to both B2B and B2C organizations, but some tactics tend to be more effective than others in each type of marketing. Business-to-business marketers use more personal selling, in which a sales force builds personal relationships with individuals in decision-making roles to facilitate sales within the organizations they target. Professional conferences and trade shows provide opportunities for meeting and networking with a B2B marketer’s target customers. Company Web sites are a primary way for B2B organizations to share information and promote their offerings. Since they usually target a narrow, specialized sliver of the population, B2B marketers have little need for mass advertising. Because B2B sales tend to be higher-priced, larger-ticket items, marketing tactics often include extensive adjustments in factors such as the selling price, product features, terms of delivery, and so forth.

    A B2C Emphasis

    For B2C marketers, such as consumer goods manufacturers, there is a dual focus. B2C marketers typically invest a lot in generating demand for their products among the general population. Mass marketing tactics designed to reach a large audience nearly always have a B2C focus: think Superbowl ads, Macy’s Thanksgiving Day Parade, and anything hailing the return of McRib at McDonalds. At the same time, B2C marketers face a constant battle getting their products into retail outlets anywhere they don’t sell directly to consumers.

    People sitting on a great variety of lounge chairs.
    IKEA Store, Beijing

    A Dual Emphasis: B2B and B2C

    Organizations may conduct both B2B and B2C marketing, targeting different types of customers. The Swedish home-furnishing company IKEA, for example, markets its ready-to-assemble, eco-friendly furniture and furnishings all over the world. IKEA’s B2C marketing targets families, young professionals, and penny-pinching college students. Meanwhile, its B2B marketing focuses on small-business owners and start-up companies.

    Whether to have a B2B or a B2C focus depends on whose perceptions you want shape, what behaviors you want to influence, and where the most promising opportunities are for making the impact your organization wants to achieve.

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