MARKETING STRATEGY Segmenting Business Markets

Competition 2  Identify competitors‘ strategies, objectives, strengths, weaknesses and reaction patterns  Manage a good balance of consumer and competitor monitoring

Segmentation variables for business customers  Demographics: industry, company size, location  Operating variables: technology, user status, customer capabilities  Purchasing approaches: centralized, dezentralized, power structure, relationships, purchasing policies and criteria  Situational factors: urgency, specific applications, size of order  Personal characteristics: focus on companies whose people/values are similar to the buyer‘s, risk taking/risk avoiding customers; high/low loyalty customers 3

Five different target market strategies  Single-segment concentration  Selective specialization  Product specialization  Market specialization  Full market coverage 4

Single-segment strategy  concentrated strategy: one market segment is served with one market mix;  The choice for smaller companies with limited resources 5

Selective specialization  Multiple segment strategy = differentiated strategy  Different marketing mixes are offered to different segments  The product itself may or may not be different  In many cases only the promotional message or the distribution channel vary 6

Product specialization  The firm specialises in a particular product and tailors it to different market segments 7

Market specialization  A firm specializes in serving a particular market segment and offers that segment an array of different products 8

Full market coverage  Mass marketing strategy offering a single undifferentiated marketing mix to the entire market  Differentiated strategy offering a separate marketing mix to each segment 9

Differentiated marketing costs  Product modification costs: R&D, engineering  Manufacturing costs: producing 10 units of 10 different products is more expensive than 100 units of one product  Administrative costs: separate marketing plans for each segment – extra marketing research, forecasting, sales analysis, promotion, planning and channel management  Promotion costs: increased promotion planning costs and media costs 10