B2B Marketing

Market Segmentation
Macro Segmentation
Industry
Agriculture mining construction, manufacturing, transportation, wholesale, retail, finance,
services
• Growth rate of industry
• Customers’ growth stage within the industry;

Customer of customers’ product

• End-use Marketers
• Product Application
Economic Factors
• Cyclically of customers’ industry
Competitive Forces
• Degree of competition in customers’ industries, ease of entry into customers’ industries,
and ease of customer switching
Micro Segmentation-
Organisational Variables
• Purchasing situation/phase New task, modified or straight rebuy;

• In the new task situation, for instance, the firm’s ability to penetrate the
market will depend on its ability to assist in problem solutions, to provide
information to key decision makers, and to work with customers through all
phases of the purchasing decision process.

• In a straight rebuy purchasing situation, out suppliers must be capable of

convincing customers that it is worth reevaluating current suppliers by
offering superior product advantages or significant price differences
Micro Segmentation-
Organisational Variables
• Customer Experience Stage: Product life-cycle stages (introduction, growth, and
maturity) as it relates to customer adoption process (i.e early and late adopters)

• When customers are unfamiliar with products (product introduction), they tend to assign
purchasing responsibility to those persons within the firm who are competent in dealing
with the uncertainties involved. They also tend to be attracted by “a bundle of vendor
supplied benefits and proven technology.

• As they become more familiar with product application, however, they tend to shift
purchasing responsibility to functional specialists or purchasing agents who are more
price sensitive, and supplier support programs begin to decline in value, opening the
door to out suppliers. Thus, the level of customer experience, as Table shows, not only
affects the composition of the decision making unit and the decision making process, it
also affects marketing strategy considerations for current as well as potential customer
firms.
Micro Segmentation-
Organisational Variables
• Customer Interaction needs: Dependence on supplier in implementing decision-making
process or supplier’s knowledge compared to customer’s knowledge

• Since product packages must be adapted to customer needs, the buyer-seller relationship often
involves considerable interaction. The duration and involvement of that interaction will depend on
whether buyers are capable of determining their own needs or are dependent on suppliers. Buyers
who are uncertain of their needs will exhibit different sets of problems and behaviors and desire
considerably more supplier interaction.

• Product Innovativeness: Innovative versus followers firms

• considerable differences exist in the buying needs and practices of organizations that are innovative
product leaders as opposed to those that are followers. For example, high-technology component
purchase decisions in the instrument manufacturing industry tend to be influenced by current
product innovation practices

• Organizational Capabilities: Extent of operating, technical, or financial capabilities

Micro Segmentation- Purchase Situation Variables

• Inventory requirements: Material requirement planning or just-in-

time systems
• Purchase Importance: High/ Low, Degree of perceived risk (cost,
usage factors, quality or time)
• Purchase Policies: Market-based prices, bids or leasing preferences
Supplier reputation, technical services reliability, flexibility, etc.
• Purchasing Criteria: Supplier reputation, technical service, reliability,
flexibility etc.
• Structure of the buying center: Key influencers and decisionmakers
(e.g.. engineering. marketing, plant managers, and R&D)
Micro Segmentation- Individual Variables
Personal Characteristics:
• Demographics (e.g., age and experience) personality, Perceptions
• Risk Taking: risk takers/avoiders

Power Structure: Collaboration, compromise, avoidance, or coalition

formation

Attitude towards vendor: Favorable, unfavorable

Segmentation is the first crucial step in marketing, and the key towards
satisfying needs profitably. It is often the mix of where-what-who and why
(the benefit or need) which is driving the segmentation. The grouping
together of customers with common needs makes it possible to select
target customers of interest and set marketing objectives for each of
those segments. Once the objectives have been set, strategies can be
developed to meet the objectives using the tactical weapons of product,
price, promotion and place (route to market).