Segmenting the Business Market

High-Growth Companies Succeed By:

Selecting welldefined groups of potentially profitable customers. • Developing distinctive value propositions that meet these customer needs better than the competition.

Focusing marketing resources on acquiring, developing, and retaining profitable customers.

5 Criteria for evaluating potential market Segments
• Measurability—The degree to which information on the particular buyer characteristics exists or can be obtained. • Accessibility—The degree to which the firm can effectively focus its marketing efforts on chosen segments. • Substantiality—The degree to which the segments are large or profitable enough to be worth considering for separate marketing cultivation. • Compatibility—The degree to which the firm's marketing and business strengths match the present and expected competitive and technological state of the market. • Responsiveness—The degree to which segments respond differently to different marketing mix elements, such as pricing or product features.

Evaluating the Competitive Environment
• Few extremely dynamic industries, such as the computer or telecommunications industries, "market stability is threatened by
– Short product life cycles – Short product design cycles – New technologies – Frequent entry by unexpected outsiders – Repositioning by incumbents – Radical redefinitions of market boundaries as diverse industries emerge.

Competitive Analysis
1. Define Industry Boundaries 2. Identify Competitors 3. Determine Strengths & Weaknesses of rivalswhile anticipating their actions
Focus on the strategic intent of current and potential competitors. Here attention is directed to competitors' core competencies and how they can be leveraged in the pursuit of new applications, especially in divergent industries.

Sintex has leveraged its core competency in plastic injection molding first in overhead water tanks(B2C) & then in an array of products(B2B) such as septic tanks. Upvc Windows & Doors.panel tanks.Garbage Carts etc.Public Dustbins. .

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Plastic Fuel Tank .

Spotting new Competitors • Marketers should examine scenarios of industry change and competitor entry and exit. where. – Which firms (current and potential) find this segment attractive? – How do we match up with each? – When. and how will they enter? .

. 2.Technological Environment Assessment 1. Product technology—set of ideas embodied in product or service. Process technology—set of ideas or steps involved in production of product or service. 3. Management technology—management procedures associated with selling product or service and with administering the business Changes in any of these areas can lead to •Less market-segment stability •Shifts in traditional product market boundaries •New sources of competition.

. • Companies are recognizing that new opportunities lie at the intersection of 2 or more industries. • Firms are learning about new markets & competitors as well as how to achieve maximum synergy across the different parts of their business.Industry Convergence • Industry boundaries are blurring at an incredible rate.

but they are moving into electronics to digitize their image making capabilities.Dell & Gateway have launched consumer electronics products such as TV’s. 1-13 .Media.HP. • Photography Co’s such as Kodak are also chemical Co’s . • Traditional PC Co’s such as HCL.Telecom) • The merger of AOL & Time Warner has created an online & traditional media hybrid that opens up a host of new marketing communication options.TMT(Technology.Digital Cameras to take advantage of the marriage of computing & CE.

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publishers & music labels. .Top US music retailer due to its itunes online music store – Telecom – Information Technology – Consumer Electronics – Publishing Content.Device & Experience For movie studios.• Straddles 5 Industries – Entertainment.Apple represents promising new ways to reach consumers as well as a potentially threatening shift in a balance of power that has traditionally favoured the creators of content.

Storage Media Compact Disc Segments • Entertainment • Education Digital Storage Segments • Enterprise Data • Internet Data Servers • E-governance .

Demand Demand .

Stock: Moser Baer Period : 1995-2011 Lifetime High : Rs 346 in Jan 2008 .

Media & Information Content • • • • • • Movies (Warner Bros.Frost & Sullivan) Scientific Journals (Cross Referencing.Tagging) Publishing Industry(Print Media) – e-reader (Kindle.ColumbiaPictures.iPad.RPG SaReGaMa) Encyclopaedia Brittanica Industry Research Reports(IDC.Sony ) Music (Apple itunes..Sony) .

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Watches.gaming.Display Media Paper Segments Information(Newspaper & Magazines) Education Advertising Packaging LCD Segments • Television • Computer Monitors • Mobile Phones • Digital Devices(Cameras.printers etc.) • E readers • • • • .

Major Supplier of Paper to Publishing Industry Demand Major Supplier of LCD panels for Apple’s iPad Demand .

. • Operators hope to generate a new revenue source as the growth of fixed lines remain stagnant.IPTV • Offer voice. cable TV and Internet services on a single line.

• Pre-installed on Sony TV’s and Blu ray players as well as Logitech companion boxes. • Currently Set Top box are needed to access TV feed.Google marries Web & Television • Not just a browser. . • Developers can immediately work on Google TV projects. • Will require around 3 Mbps connection for good performance. will later integrate with Sony Playstation. • Will be available to consumers in late 2010. • Google expected to make money through advertising & revenue share.International expansion planned for 2011.you will be able to search for and navigate both TV and online content.

personalised recommendation and social features for Google TV across all sources of premium content avaialable to the user 1-26 .etc.• The browser on Google TV is simply the Linux version of Google Chrome • The user interface will be modified for TV. • Jinni.com is a next generation TV application firm working to provide semantic search. of co’s like Jinni.Hence a TV can be a photo slideshow viewer. • With the browser built in. a gaming console.com and Rovi. a music player .Google TV is expected to help you access all your favourite websites & easily move between TV and the web. • Android software will power Google TV. • Google has started building strategic alliances with a no.

powered by Google’s Android-based Google TV platform . Sony Internet TV.Sony’s internet-enabled LCD television.

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selects appropriate distribution channels. • Focuses product development efforts. and train & deploy the sales force. . • Provides valuable guidelines to allocate marketing resources.develop & target advertising messages. develops profitable pricing strategies.Segmentation Benefits • Attunes marketer to unique needs of customer segments.

Bases for Segmenting Business Markets • Macrosegmentation : centers on the characteristics of the buying organization and the buying situation. focusing on the characteristics of decision-making units within each macrosegment. . • Microsegmentation : requires a higher degree of market knowledge.

a division of Thomson Learning. .Selected Macrolevel Bases of Segmentation • Macrolevel segmentation bases concerned with general characteristics of buying organization. and characteristics of buying situation. All rights reserved. nature of product application. Developed by Cool Pictures and MultiMedia Presentations Copyright © 2007 by South-Western. Inc.

such as purchasing managers. increases. • Usage Rate: – Heavy users may place more value on technical or delivery support services than their counterparts. • Structure of Procurement Function – Centralized buyers place significant weight on long-term supply availability and the development of a healthy supplier complex. – An opportunity may exist to convert moderate users into heavy users through adjustments in the product or service mix. – Decentralized buyers emphasize short-term cost efficiency. .Macrolevel Characteristics of Buying Organisations • Market Size: The influence of owners declines with an increase in corporate size & the influence of other participants.

15mm wire diameter to 26mm wire diameter. office equipment. bicycles. guns & rifles.and missile systems. toys. Intel's microchips are used in household appliances.Product/Service Application • The marketer can divide the market on the basis of specific end-use applications. surgical devices. – Similarly.railways. Manufactures more than 4. telephones. and aircraft as well as in computers. retail terminals. – The manufacturer of a component such as springs may reach industries incorporating the product into automobiles.machine tools.000 varieties of springs varying from 0. .

polyester and silk 4 wheeler & 2 wheeler & Railways . LCV & HCV Yarn dyeing for cotton. window regulator mechanisms. defence mechanism. timer mechanism. Brakes. seat recliners. cord retraction mechanism Engines Clutch for 4 wheelers (Cars. Gear boxes chain tension mechanism. Clutches.Brush springs and alternators.

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.Value in Use • Value in use is a product's economic value to the user relative to a specific alternative in a particular application. • The economic value of an offering frequently varies by customer application.

" Benefits sought A sales rep who knows and Easy-to-read manuals understands my business An honest sales rep Technical support hot lines A vendor who has been in business for some time A sales rep who can communicate in understandable manner A trial period A high level of training What's less important Sales rep's knowledge of products and services A high level of training Sales reps who knowledgeable are Sophisticates "Talk technology to me." Compatibility with existing systems Products customized to customer needs Track record of vendor Maintenance speed fixing problems Post-sales support technical support An honest sales rep A sales rep who knows and understands my business in and Training Trial Easy-to-read manuals A sales rep who can communicate in an understandable manner ." "Help me make it work.What Buyers of Industrial Products Look For First-Time Prospects Novices Dominant theme "Take care of me.

Developed by Cool Pictures and MultiMedia Presentations Copyright © 2007 by South-Western.Selected Microlevel Bases of Segmentation Marketers often find it useful to divide each macrosegment into smaller microsegments based on similarities and differences among decisionmaking units. All rights reserved. a division of Thomson Learning. Inc. .

and seek cost-effective solutions that keep overall costs down. – Customers in fast-growing market who are pressured by competitive battles over market growth and seek proven performance in technology. – Customers in highly-competitive markets who produce mature products. center on process efficiency and effectiveness in manufacturing. . and supplychain management. manufacturing.Value Based Strategies • Many customers actively seek business marketing firms that can help them create new value to gain a competitive edge in their markets – Innovation-focused customers who are committed to being first to the market with new technologies and who seek new-product-development expertise and innovative solutions that will attract new customers.

. A supplier entering the market would have a higher probability of penetrating a decision-making unit made up of optimizers than of penetrating a unit consisting of satisficers who rely on familiar suppliers. familiar and unfamiliar. Optimizers consider numerous suppliers. 2. and examine all alternative proposals carefully before selecting supplier.Purchasing Strategy Classifications 1. Satisficers approach given purchasing requirement by contacting familiar suppliers and placing order with first supplier to satisfy product and delivery requirements. solicit bids.

GE is an optimiser.GE wants contracts to be awarded afresh and ask their existing vendors to lower prices.Infosys and Wipro stopped working for GE because every year. .

. likewise provides a way to divide the business market into subsets of customers by isolating the patterns of involvement in the purchasing process of particular decision participants (e.Structure of the Decision making Unit • The structure of the decision-making unit. engineering versus top management) .g. or buying center.

– Groups that select a small set of suppliers from which individual hospitals may select needed products. – Private group practices(Polyclinics) and the nonhospital segment. such as investor-owned hospital chains. . – Groups that select a single supplier that all member hospitals must use.• A Study initiated by DuPont indicates that the medical equipment market can be segmented on the basis of the type of institution and the responsibilities of the decision makers and decision influencers in those institutions.

.Importance of Purchase • Buyer perceptions differ according to the effect of the product on the total mission of the firm. • Appropriate when product is applied in various ways by various customers.

(Opportunities) .Attitudes towards Vendors • Analyzing how various clusters of buyers view alternative sources of supply often uncovers vulnerable segments that competitors are either neglecting or not fully satisfying.

boosting the accuracy of new product forecasting. • Products diffuse more rapidly in some segments than in others.Organizational Innovativeness • Some organizations are more innovative and willing to purchase new industrial products than others. • IGIA/BIAL used reflective sheets from 3M for traffic signages whereas BBMP is slow to adopt the product. .

further research needed to explore potential as valid base for microsegmentation. .Personal Characteristics • Although some interesting studies have shown viability of segmentation based on individual characteristics.

Segmentation of Hand Power Tool Industry • Industry – Construction – Metals • Professional Service Providers • Do It Yourself(DIY) .

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156. “Industrial Market Segmentation. a division of Thomson Learning.An Approach to Segmentation of Business Markets Figure combines these macrosegment bases and outlines steps required for effective segmentation.. Copyright 1974 by Elsevier Science Publishing Co. Source: Adapted by permission of the publisher from Yoram Wind and Richard Cardozo. Developed by Cool Pictures and MultiMedia Presentations Copyright © 2007 by South-Western. All rights reserved. Inc. Inc. .” Industrial Marketing Management 3 (March 1971): p.

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