Presentation on theme: "Segmenting B2B Markets Anand G. Khanna. Why Segmentation ? 1. Better matching of customer needs 2. Enhanced opportunity for growth 3. Retention of customer."— Presentation transcript:
Segmenting B2B Markets Anand G. Khanna
Why Segmentation ? 1. Better matching of customer needs 2. Enhanced opportunity for growth 3. Retention of customer 4. Targeted IM Communications 5. Share of the Market Segment 6. Enhanced operational efficiency 7. Better share of customer wallet
Selecting well- defined groups of potentially profitable customers. High-Growth Companies Succeed By: Focusing marketing resources on acquiring, developing, and retaining profitable customers. Developing distinctive value propositions.
Five Criteria for Evaluating Potential Market Segments Measurability Accessibility Substantiality Compatibility Responsiveness
Criteria for effective Segmentation MeasurableSize, Purchasing Power, profiles of segments can be measured SubstantialSegments must be large or profitable enough to serve AccessibleSegments can be effectively reached and served DifferentialSegments must respond differently to different marketing mix elements ActionableMust be able to attract and serve the segment
Segmentation Benefits Attunes marketer to unique needs of customer segments Focuses product development efforts, develops profitable pricing strategies, selects appropriate distribution channels Provides valuable guidelines to allocate marketing resources.
Bases for Segmenting Business Markets Macro segmentation Micro segmentation
Business Marketing Segmentation Geographic Customer Type Customer Size Product Use BusinessMarketsBusinessMarkets Purchasing Criteria Purchasing Strategy Importance Personal Characteristics Micro- segmentation Micro- segmentation Macro- segmentation Macro- segmentation
MAJOR SEGMENTATION VARIABLES FOR INDUSTRIAL MARKETS Demographic Industry : which industries that buy this product should we focus on ? Company size ; what size companies should we focus on ? Location : what geographical areas should we focus on ? Operating Variables Technology : what customer technologies should we focus on? User/non-user status : should we focus on heavy, medium, light users or non-users? Customer capabilities : should we focus on customers needing many services or few services? Purchasing Approaches Purchasing function organization : should we focus on companies with highly centralized or decentralized purchasing organizations? General purchase policies: should we focus on companies that prefer leasing ? service contracts? systems purchases? sealed bidding? Purchasing criteria; should we focus on companies that are seeking quality? service ? price?
Situational Factors Urgency ;Should we focus on companies that need quick and sudden delivery or service Size of order : Should we focus on large or small orders Organizational Characteristics (Personal ) Buyer –Seller similarity : People and values are similar to ours Attitudes toward risk : Risk taking or risk avoiding customers Loyalty (or Attitude) : Should we focus on companies that show high loyalty to their suppliers
Purchasing Strategy Classifications 1. Satisficers approach given purchasing requirement by contacting familiar suppliers and placing order with first supplier to satisfy product and delivery requirements. 2. Optimizers consider numerous suppliers, familiar and unfamiliar, solicit bids, and examine all alternative proposals carefully before selecting supplier.
Meaningful Micro Segments Importance of Purchase -- appropriate when product is applied in various ways by various customers Attitudes toward Vendors – analysis of how various clusters of buyers view alternative sources of supply often uncovers opportunities Organizational Innovativeness – some organizations innovate more and are willing to purchase new industrial products than others Personal Characteristics – although some interesting studies have shown viability of segmentation based on individual characteristics, further research needed to explore potential as valid base for micro segmentation.