2-B2B-Market Segmentation

Market Segmentation
B2B Marketing
Requirement / Checklist for creating segments
• Measurability—The degree to which information on the particular buyer
characteristics exists or can be obtained. Specific information about the size and
expenditures and characteristics of any segment can be determined through primary
or secondary research
• Accessibility—The degree to which the firm can effectively focus its marketing efforts
on chosen segments. The firm must be able to reach the segment through marketing
efforts.
• Substantiality—The degree to which the segments are large or profitable justify a

firm’s expenditures of manpower and capital and expenditure.
• Different and Responsiveness—The degree to which segments respond differently to

different marketing mix elements, such as pricing or product features.
Benefits of Segmentation
• Forces the marketer to become more attuned to the unique needs of
customer segments
• Concentrate on unique needs of target segment
• Right product development
• Develop profitable pricing strategy
• Focus on appropriate channel
• Targeted communication
Macro Level Segmentation
Characteristics of Buyer
Customer Type Commercial, Government, Institutions/ OEM,
User
Industry Type, Industry growth, Company growth
Degree of competition in customers’
industries, ease of entry into customers’
Competitive Forces industries, and ease of customer switching
Small, Medium & Large (Based on Sales or

Size No. Of Employees), Financial capability
Geographical location Region, Industrial zones
Usage rate Non user, Light user, Moderate user, heavy
user
Macro Level Segmentation
Product/ Service Application
Product Required Custom/ Standard
End market served As per Product/Service
Value in use High, Low
Micro Segmentation-
Organisational Variables
Purchasing situation/phase: New task, modified or straight rebuy;
• In the new task situation, for instance, the firm’s ability to penetrate
the market will depend on its ability to assist in problem solutions, to
provide information to key decision makers, and to work with
customers through all phases of the purchasing decision process.
• In a straight rebuy purchasing situation, out suppliers must be capable

of convincing customers that it is worth reevaluating current suppliers
by offering superior product advantages or significant price
differences
Micro Segmentation-
Organisational
Key Criteria
Variables
For some business products, the marketer can divide the market
according to which criteria are the most important in the purchase
decision.
• product quality,
• prompt and reliable delivery,
• technical support,
• price, and
• Supply continuity. The marketer also might divide the market based
on supplier profi les
Micro Segmentation-
Organisational
Customer Experience Stage:
Variables
Product life-cycle stages (introduction, growth, and maturity)
When customers are unfamiliar with products (product introduction), they tend to
• assign purchasing responsibility to those persons within the firm who are competent
in dealing with the uncertainties involved.
• be attracted by “a bundle of vendor supplied benefits and proven technology .
Customers become more familiar with product application, they tend to

• shift purchasing responsibility to functional specialists or purchasing agents who are more
price sensitive, and supplier support programs begin to decline in value, opening the door
to shut-out suppliers.
Thus, the level of customer experience affects the the decision making process, it also
affects marketing strategy considerations for current as well as potential customer firms.
Micro Segmentation- Organisational Variables
Purchasing Strategies: No of suppliers (more or few), Suppliers with value

addition capability
Purchase Importance: High/ Low, Degree of perceived risk (cost, usage

factors, quality or time.
Purchase Policies: Market-based prices, bids or leasing preferences

Supplier reputation, technical services reliability, flexibility, etc.
Purchasing Criteria: Supplier reputation, technical service, reliability,

flexibility etc.
Inventory requirements: Material requirement planning or just-in-time systems

Micro Segmentation- Purchase Situation Variables
Structure of the buying center: Key influencers and decision makers

(e.g.. engineering. marketing, plant managers, and R&D)
• Organizational Innovativeness: Some organizations are more

innovative and willing to purchase new industrial products than
others.
Micro Segmentation-
Organisational Variables
• Customer Interaction needs: Dependence on supplier in implementing decision-
making process or supplier’s knowledge compared to customer’s knowledge
• Since product packages must be adapted to customer needs, the buyer-seller relationship
often involves considerable interaction. The duration and involvement of that interaction
will depend on whether buyers are capable of determining their own needs or are
dependent on suppliers. Buyers who are uncertain of their needs will exhibit different sets
of problems and behaviors and desire considerably more supplier interaction.
• Product Innovativeness: Innovative versus followers firms

• considerable differences exist in the buying needs and practices of organizations that are
innovative product leaders as opposed to those that are followers. For example, high-
technology component purchase decisions in the instrument manufacturing industry tend
to be influenced by current product innovation practices
• Organizational Capabilities: Extent of operating, technical, or financial capabilities

Micro Segmentation- Individual Variables
Personal Characteristics:
• Demographics (e.g., age and experience) personality, Perceptions
• Risk Taking: risk takers/avoiders
Power Structure: Collaboration, compromise, avoidance, or coalition

formation
Attitude towards vendor: Favorable, unfavorable

Segment selection
• This process requires that a firm compare potential segments it
may serve, estimating future attractiveness, resource demands,
and fit with firm strategy
Segment selection
• The firm must look at demands on its resources Firm should examine whether this new
in technology, relationships, human resources in segment is congruent with its present or
each of the functional areas, image, capital
investment, and product development required.
future strategy related
to the overall corporate direction,
management’s commitment, and
organizational requirements
required to implement the strategy.

2-B2B-Market Segmentation

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Market Segmentation

• Substantiality—The degree to which the segments are large or profitable justify a

• Different and Responsiveness—The degree to which segments respond differently to

Small, Medium & Large (Based on Sales or

• In a straight rebuy purchasing situation, out suppliers must be capable

Customers become more familiar with product application, they tend to

Purchasing Strategies: No of suppliers (more or few), Suppliers with value

Purchase Importance: High/ Low, Degree of perceived risk (cost, usage

Purchase Policies: Market-based prices, bids or leasing preferences

Purchasing Criteria: Supplier reputation, technical service, reliability,

Inventory requirements: Material requirement planning or just-in-time systems

Structure of the buying center: Key influencers and decision makers

• Organizational Innovativeness: Some organizations are more

• Product Innovativeness: Innovative versus followers firms

• Organizational Capabilities: Extent of operating, technical, or financial capabilities

Power Structure: Collaboration, compromise, avoidance, or coalition

Attitude towards vendor: Favorable, unfavorable

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