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