Segmenting the business market

Segmenting the Segmenting the Business MarketBusiness Market

Chapter 5Chapter 5

High-Profit CompaniesHigh-Profit Companies What makes them successful?What makes them successful?

Three targetsThree targets

Business Market Segmentation & Business Market Segmentation & BenefitsBenefits

Market segmentationMarket segmentation• ““A group of present or potential A group of present or potential

customers with some common customers with some common characteristic which is relevant in characteristic which is relevant in explaining (and predicting) their explaining (and predicting) their response to a supplier’s marketing response to a supplier’s marketing stimuli.”stimuli.”

Percentage breakdownsPercentage breakdowns

Business Market Segmentation & Business Market Segmentation & BenefitsBenefits

Five criteria for measuring Five criteria for measuring desirabilitydesirability• MeasurabilityMeasurability• AccessibilityAccessibility• SubstantialitySubstantiality• CompatibilityCompatibility• ResponsivenessResponsiveness

Business Market Segmentation & Business Market Segmentation & BenefitsBenefits

Competitive EnvironmentCompetitive Environment• Competitive analysisCompetitive analysis• Core competenciesCore competencies• New competitionNew competition

Technical EnvironmentTechnical Environment• Three types of technologyThree types of technology

Product technologyProduct technology Process technologyProcess technology Management technologyManagement technology

Benefits of SegmentationBenefits of Segmentation

Bases for Segmenting Bases for Segmenting B2C SegmentationB2C Segmentation MacrosegmentationMacrosegmentation

• Organizational characteristicsOrganizational characteristics Examples:Examples: DellDell

• MicrosegmentationMicrosegmentation Characteristics of decision-making unitsCharacteristics of decision-making units Examples:Examples:

Macrolevel BasesMacrolevel Bases Segmentation MethodsSegmentation Methods

• Characteristics of OrganizationCharacteristics of Organization SizeSize GeographyGeography Usage rateUsage rate Structure of purchasing functionStructure of purchasing function

• Product Service ApplicationProduct Service Application NAICSNAICS

Macrolevel BasesMacrolevel Bases Segmentation Methods (cont’d)Segmentation Methods (cont’d)

• Value in useValue in use DefinitionDefinition

• Purchasing situationPurchasing situation ExampleExample

• First-timeFirst-time• NoviceNovice• Sophisticates Sophisticates

Microlevel BasesMicrolevel Bases Segmentation MethodsSegmentation Methods

• Key criteriaKey criteria What’s important to customerWhat’s important to customer ExampleExample

• ProgrammedProgrammed• Relationship buyersRelationship buyers• Transaction buyersTransaction buyers• Bargain huntersBargain hunters

• Value-based strategiesValue-based strategies InnovationInnovation Customer in fast-growing marketsCustomer in fast-growing markets Customer in highly-competitive marketsCustomer in highly-competitive markets

Microlevel BasesMicrolevel Bases Segmentation Methods (cont’d)Segmentation Methods (cont’d)

• Purchasing strategiesPurchasing strategies SatisficersSatisficers OptimizersOptimizers

• Structure of the decision-making unitStructure of the decision-making unit• Importance of purchaseImportance of purchase• Attitudes toward vendorsAttitudes toward vendors• Organizational innovativenessOrganizational innovativeness• Personal characteristicsPersonal characteristics

Microsegmentation IllustrationMicrosegmentation Illustration• Philips Philips

Organizational Market Organizational Market Segmentation ModelSegmentation Model

MacrosegmentationMacrosegmentation

MicrosegmentationMicrosegmentation

Check on costs and benefitsCheck on costs and benefits• UPSUPS

ImplementationImplementation• Questions to askQuestions to ask