Segmenting business markets
Segmenting business markets operating variables
Companies that segment markets by size focus greater sales and marketing resources on enterprise customers, selling direct through a sales force and offering high levels of service. These customers are, as a result, more important to them on an individual basis, so careful customer selection becomes more critical. However, with the advent of digital communications and mass data storage, it has been possible for marketers to conceive of segmenting at the level of the individual consumer. In small companies, for example, this task will be much more straight-forward; in larger companies, it can be challenging to identify the key decision-makers accurately. Get the Complete eBook. Most music CDs, Pepsi, Coke, many movies, the Honda Fit, and thousands of other products are targeted toward teenagers and persons under 25 years old. The first is for an IT firm that produces accounting software for businesses. References 3. A questionnaire is used to provide an orderly and structured approach to data-gathering. However, firms that market to other businesses will typically have a smaller number of customers. In contrast, most cruises, medical products, fine jewelry, vacation homes, Teslas, and denture products are targeted toward people 50 years old and up. In addition, the effectiveness of promotional methods often differs in B2B markets. Size will also become an issue in determining how to best connect with these organizations and which individuals within the organizations to target for communications. For instance, the expensive and time-consuming process of personal selling is commonly used in business markets.
The first variable considered is a business description, which broadly splits the potential market into food service, manufacturing, and supermarkets. Get the Complete eBook.
Each of these product types is designed to meet the needs of specific market segments. Invert sugar and sugar syrups, for example, are marketed to food manufacturers where they are used in the production of conserves, chocolate, and baked goods.
Bases for segmenting business markets
This is the era of market differentiation based on demographic, socio-economic and lifestyle factors. For example, in the fast-food industry, the heavy user a young, single male accounts for only one in five fast-food patrons. A marketer who just saw the demographics might create one advertisement to reach both of them. This is patently not the case when the target audience consists of a couple of hundred business buyers. They segment their markets into smaller groups that share certain characteristics so that they can meet the needs of each group precisely. Invert sugar and sugar syrups, for example, are marketed to food manufacturers where they are used in the production of conserves, chocolate, and baked goods. Companies also may concentrate their resources on geographic regions with a high concentration of customers in their industry segment, such as Silicon Valley for information technology customers or Washington for government customers. Get the Complete eBook. Companies build an understanding of the specific needs of the segment and emphasize their understanding of industry issues and challenges in their marketing messages. The objective of experiments is to measure causality. Our experience of over 2, business-to-business studies shows that B2B markets typically have far fewer behavioural or needs-based segments than is the case with consumer markets. Marketing research can use either primary data where the organization actually gets the data and analyzes it or secondary data where the organization uses data that has already been developed and published by another entity and the organization is able to utilize the data for its own purposes. An example of how Frito Lay targets various age groups for three of its most popular products is shown in Figure.
The first is for an IT firm that produces accounting software for businesses. However, organizations might also segment based on use of the product, characteristics of purchasing function, and size of the client or industry, as well as other considerations related to characteristics of business customers.
Best market segmentation examples
Geographic segmentation can be useful for identifying media and marketing channels designed to reach certain geographic areas most effectively both through marketing messages, as well as through distribution channels. As well as targeting individual consumers, a key part of their marketing efforts and their profitability will be obtained from business markets. Segmentation by Size Business to business, or B2B, marketers sometimes choose to target potential business customers based on their size. This is the era of market differentiation based on demographic, socio-economic and lifestyle factors. Samuel Pepys, for example, writing in , describes being invited to the home of a retailer to view a wooden jack. The risk of this, and something which is evident in many industrial companies, is that business-to-business marketers can be complacent and pay inadequate attention to the changing needs and characteristics of customers over time. Demographic and purchasing data were available for groups but rarely for individuals and secondly, advertising and distribution channels were available for groups, but rarely for single consumers. Benefit Segmentation Benefit segmentation is based on what a product will do rather than on consumer characteristics. Both Ford and Chevrolet sell more pickup trucks and truck parts in the middle of the country than on either coast. For instance, companies that make specialized computer components will want to identify companies that use the components and then segment these companies into a targeted group for communications and outreach. Through marketing research, companies can be sure they are listening to the voice of the customer. The first is for an IT firm that produces accounting software for businesses. Sales and technical representatives visit the customers. Business markets may segment based on geography, volume, and benefits, just as consumer markets are.
Larger companies may represent the potential for more significant sales, while smaller companies hold value by virtue of the fact that there will be many more of them to target as potential customers. It now offers regular Crest, Crest Tartar Control for people who want to prevent cavities and tartar buildup, Crest for kids with sparkles that taste like bubble gum, and another Crest that prevents gum disease.
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