Segmenting the Industrial/B2B Markets

Who ..should we serve? Customer segments

What ..differentiates us from our competitors in meeting the needs of our target customer segments?

Where ..is our product in its life cycle? Introduction? Growth? Maturity? Decline?

When ..should we introduce new products or services or enter new market segments? Also, when should we exit from a market segment?

Why are we pursuing a particular marketing strategy? What is our strategic vision for our marketing efforts and what are the values we attach to such a vision ?

How will our competitors react to our marketing strategy ? How should we anticipate and/or respond to theirs?

What is Segmentation? Segmentation is dividing the heterogeneous market into distinct homogenous groups Aim is to cluster customers Compared to large markets, segments can be served more efficiently and effectively with products/services that match their needs It is important that the segments are sufficiently different from one another.

It is critical that the segmentation is based on one or more customer characteristics relevant to the firms marketing effort

Demographic Segmentation Should we focus on.. Industry:...Industries that buy this product? Company Size? Location:Geographical areas?

Operating Variables Segmentation Should we focus on Technology: Customer technologies? User/nonuser status: Heavy, medium, light users or non-users? Customer capabilities: On customers needing many services or few services?

Purchasing Approaches Segmentation Should we focus on companies Purchasing function organisation: highly centralised or decentralised purchasing organisations? Power structure: engineering-dominated or financially-dominated?

Purchasing Approaches Segmentation Should we focus on companies Nature of existing relationships: with which we have strong existing relationships or simply go after the most desirable companies? General purchase policies: that prefer Leasing? Service contracts? Systems purchases? Sealed bidding? Purchasing criteria: that are seeking Quality? Service? Price?

Situational Factors Segmentation Should we focus on companies Urgency: that need quick and sudden delivery or service?

Specific application: on certain applications of our product rather than all applications? Size of order: ..on large or small orders?

Personal Characteristics Segmentation Should we focus on companies Buyer-Seller similarity: whose people and values are similar to ours? Attitudes towards risk: risk-taking or risk-avoiding? Loyalty: that show high loyalty to their suppliers?

Discipline

Whatever approach is used for market segmentation and selection, it is important to have the discipline to say no to opportunities that fall outside the served market. Company should never try to be all things to all people, chasing marketing opportunity that comes along +++