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The impact customers have on a business is enormous. After all, they determine the value of what the business produces. Unfortunately, what's valuable to one is worthless to another. For a successful business, knowing which is which is critical. One important way to categorize customers is by their use of the product or service being sold. Businesses buy material goods for their own consumption, and also as components used in the products or services they sell. The materials they consume, such as cleaning compounds, lubricants, or machine repair parts, are known as maintenance, repair, and operating (MRO) inventory. Component parts, such as memory chips for a computer manufacturer, also become part of the company's inventory. A business also purchases services. It might contract with a firm to provide security, hire a consulting firm to design an information system, or hire a transportation company to deliver its products. Business-to-business transactions have become such a major part of the economy that they have taken on an acronym—B2B. Business-to-consumer transactions have been tagged B2C. Consumers buy products and services that they utilize in their day-to-day activities. Businesses have very different uses for what they buy than a consumer would have. Consequently, they define the value of products and services differently than consumers would. In some cases, a firm might produce a product or service for a business as well as for a consumer. Despite the fact that the product or service might be the same for each type of customer, the business customer and the consumer would still define value differently. Exhibit 1.6 shows a comparison of companies that produce different types of outputs and serve different types of customer.
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