Segmenting the
Business Market
Chapter 5
High-Profit Companies

What makes them successful?

Three targets
Business Market Segmentation &
Benefits

Market segmentation
• “A group of present or potential
customers with some common
characteristic which is relevant in
explaining (and predicting) their
response to a supplier’s marketing
stimuli.”

Percentage breakdowns
Business Market Segmentation &
Benefits

Five criteria for measuring
desirability
• Measurability
• Accessibility
• Substantiality
• Compatibility
• Responsiveness
Business Market Segmentation &
Benefits

Competitive Environment
• Competitive analysis
• Core competencies
• New competition

Technical Environment
• Three types of technology




Product technology
Process technology
Management technology
Benefits of Segmentation
Bases for Segmenting


B2C Segmentation
Macrosegmentation
• Organizational characteristics


Examples:
Dell
• Microsegmentation


Characteristics of decision-making units
Examples:
Macrolevel Bases

Segmentation Methods
• Characteristics of Organization




Size
Geography
Usage rate
Structure of purchasing function
• Product Service Application

NAICS
Macrolevel Bases

Segmentation Methods (cont’d)
• Value in use

Definition
• Purchasing situation

Example
• First-time
• Novice
• Sophisticates
Microlevel Bases

Segmentation Methods
• Key criteria


What’s important to customer
Example
•
•
•
•
Programmed
Relationship buyers
Transaction buyers
Bargain hunters
• Value-based strategies



Innovation
Customer in fast-growing markets
Customer in highly-competitive markets
Microlevel Bases

Segmentation Methods (cont’d)
• Purchasing strategies


•
•
•
•
•

Satisficers
Optimizers
Structure of the decision-making unit
Importance of purchase
Attitudes toward vendors
Organizational innovativeness
Personal characteristics
Microsegmentation Illustration
• Philips
Organizational Market
Segmentation Model

Macrosegmentation

Microsegmentation

Check on costs and benefits
• UPS

Implementation
• Questions to ask