B2B Marketing

Module 4
Segmentation, Targeting & Positioning
Segmentation

Unique Standardised
Offerings Offerings

… viewing a heterogeneous market …

as a number of smaller homogeneous
markets in response to differing product
preferences… (Wendell, 1956)

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 Segmentation Bases
Firmographics

Macro
Operating
variables

Purchasing
approach

Situational
factors
Micro

Personal
characteristics

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Firmographics
1. Industry
 Industrial classification
 Knowledge of the use for the supplier’s technology

2. Customer location
 Ease of reaching
 Presence of sales staff
 Logistics

3. Firm size
 Depends on the purchase item: capex vs. MRO
 Supply justification

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Operating Variables
 Relatively easily observable
 First manifestations of how customer firms behave

1. Company technology
 Compatibility
2. Product & brand-use status
 Readiness to use
 Usage rate
 Customer’s knowledge of supplier products: ability to
communicate need
3. Customer capabilities
 Establish what customers are capable of doing with the
product/process

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 Pilkington Glass

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 Operating Variables

4. Firm strategic type

 Strong indicator of buying behaviour
 Difficult to ascertain
 Employee responses (socially acceptable?)
 Observation (outsiders)
 Content analysis of company plans (rare)

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Purchasing Approach
1. Purchasing function organisation
 Unstructured in smaller firms or proprietorship
firms
 Centralised procurement?
2. Power structure
 Importance of purchases
 Relative influence of departments in DMU
3. General purchasing policies
 Single or multiple vendors
 Vendor rating / accreditation / bidding
methods / disclosure of costs

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Purchasing Approach
5. Purchasing criteria
 Financial (purchase price vs. TCO)
 Technological (product performance
parameters)
 Service level (delivery, pre-sales technical
assistance, after-sales service)
6. Buyer-seller relationships
 Relationship orientation
7. Buying situation

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Situational Factors
1. Prevailing need - urgency
2. Usage plan
3. Order size

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Innovativeness

 Willingness to purchase new products

 Level of resistance to change
 Desire to excel
 Product diffusion rate

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Buyer Personal Characteristics

 Demographics – age, educational background

 Decision making style – normative / conservative
 Risk appetite
 Confidence
 Drive behind purchase behaviour
 Fastidiousness in information search
 Supplier orientation
 Evaluation
 Sharing of views with supplier personnel

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Targeting
Identified Check for acceptability
Segment

Relative Yes
Attractiveness

Resource Yes
Not acceptable -
Demands
selection
unsuitable: No
select a new
Management
segment Yes
Demands
No

Organisational Yes
No
Demands

No Target
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Estimating Segment Demand

 Qualitative
 Executive judgment
 Frequent & repetitive forecasts
 Stable environment
 Small lag between decision, action &
feedback
 Sales force composite
 Delphi technique

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Estimating Segment Demand

 Quantitative
 Time series: trend, seasonal, cyclical,
irregular patterns
 Regression / causal analysis
 Identify factors that affected past sales
 Fit them into a mathematical / statistical
model

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Value of Information

 Characteristics of information (Gates, 1996)

 Accuracy
 Timeliness
 Relevance
 Uniqueness
 Technical (accurate) vs. managerial
(timely and relevant)
 Communication between research agency and
client

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Handling responses

 Response rates
 Representativeness of the respondents to the
sample (and the population)
 Criteria affecting responses
 Sponsorship
 Covering letter
 Questionnaire
 Anonymity/confidentiality
 Contacts – appointments
 Incentives – monetary/non-monetary

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Industry Classification

 To ensure common understanding of

industry definition
 Every form of economic activity put under
an alpha-numeric category
 United Nations: ISIC
 India: NIC
 US: NAICS

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NIC

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Market Research Agencies
 B2B professional service firms
 All buyer-seller relationship concepts
apply
 Determinants in successful client-agency
relationship
 Clear understanding of the management
problem prior to contacting the agency
 Close involvement ASAP
 Check credentials, experience, industry
familiarity of agency

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Secondary Research
 Benefits
 Cost-effective, MR budget is low in B2B firms
 Derived demand study
 Availability of data
 Use of internet
 Crucial, especially with the need for secondary
data
 Relevance and recency issues
 Care about dubiousness of data

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Business Information Sources

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Targeting Strategy
 Undifferentiated
 Differentiated
 Niche

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Niche targeting

Packhelp created a marketplace for packaging

solutions for small retailers – physical and
ecommerce

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 Positioning
 Offering occupies a space in the buyer’s mind
 Relative position - basis by which comparison
is made with ideal position and also others
 Clarity about the capabilities
 Using value proposition

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 Value Proposition
All benefits Favourable PODs Resonating focus
What? All benefits Favourable PODs Points whose improvements
will deliver greatest value in
the foreseeable future
Answers the Why should our firm Why… What is most worthwhile for
question… purchase your … our firm to keep in mind
offering? instead of your about your offering?
competitor’s?
Requirement Knowledge of own Knowledge of own Knowledge of how own
market offering market offering and market offering delivers
NBA superior value, compared
with NBA
Pitfall Benefit assertion Value presumption Requires customer value
research

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 Repositioning

Nature of relationship
Completeness of offering

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 Thank you!

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