Segmentation, Targeting and

Positioning of Products in B2B Space

Dr. Priyanka Suresh
 Benefits, Limitations and Requirements of
B2B Market Segmentation
Benefits of B2B market segmentation
• It enables the marketer to understand the market better.
• Larger firms with adequate resources can develop
separate marketing strategies to meet the needs of
different market segments.
• Smaller firms can also survive and succeed by focusing on
niche market segments.
• Effective allocation of resources to segments can be done.
• It can establish how the company stands competitively
with respect to the market segments.

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 Limitations of Market Segmentation
• Segmentation is not beneficial or practical for
small market or for a few customers.
• It Increases the marketing costs like
communications, inventory carrying and
transportation.
• Difficulty in the segmenting process due to
differences in buying practices, requirements and
characteristics of buying center members.

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Market Segmentation
Market People or organizations with
needs or wants, the ability to purchase and the
willingness to buy.

Market A group of present or potential customers with

Segment some common characteristics which we can
explain (predict) their actions when subjected to
marketing stimuli.

Market The process of dividing a market into meaningful,

Segmentation relatively similar and identifiable segments or
groups.
What key criteria best define a unique
market segment?

• Measurability The degree to which information on particular

buyer characteristics exists or can be obtained
The degree to which the firm can effectively
• Accessibility focus its marketing efforts on chosen
segments.
The degree to which the segments are large or
• Substantiality profitable enough to be worth considering for
separate market cultivation.
The degree to which segments respond
• Responsiveness differently to different marketing mix elements
such as pricing or product features.
 Art of Segmentation

Segmentation involves identifying groups of customers or

business groups that are…
1. Large enough - Measurability
2. Unique enough- Responsiveness
3. Financially independent enough- Sustainability
4. Reachable enough- Accessibility
…to justify a separate marketing strategy.
 Consumer vs. Business Profiling
 Consumer-goods marketers are interested in meaningful
profiles of individuals concerning:
 Demographics
 Lifestyle
 Benefits sought

 Business marketers profile:

 Organization size
 Organizational buyer’s decision styles & buying criteria

 Two broad classifications for commercial markets:

◦ Micro & Macro Segmentation
Business Marketing Segmentation
Geographic

Customer Type
Macro-
segmentation Customer Size

Product Use
Business
Markets
Purchasing Criteria

Purchasing Strategy
Micro-
segmentation Importance
Personal
Characteristics
 Chapter-6

The Process of Segmenting and Targeting

Business Markets
The process includes a two-staged hierarchical
approach, with the following four steps.
• Conduct marketing research.
• Identify and select macro-segments.
• Go for micro-segmentation (if selected macro-
segments do not explain difference in buying
behavior of buying firms).
• Profile selected target segments.

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 Chapter-6

Bases/Variables for Segmenting Business Markets

• Major Macro-variables
- Type of Industry
- Type of customer Characteristics of BO
- Customer’s geographical location
- Size or usage rate of customer companies Product application
- Application or end-use of the product / Purchasing situation
analysis
• Major Micro-variables
- Buying situations
- Customer firms’ capabilities
- Purchasing criteria
- Personal characteristics of buying-center members
- Purchasing policies 6/11
 Chapter-6

The Nested Approach to Segmentation

• Here, the five
segmentation variables or
Demographics
criteria are arranged as a
Operating variables
nested hierarchy, moving
from the outer nest
Purchasing approaches towards the inner nest.
• Marketers go through
Situational factors
many variables, but select
Personal characteristics
important
variables/criteria.
• Cost and time of
information collections is
less for outer nests
variables compared to
that of inner nests.

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 Chapter-6

Evaluate and Select Target Segments and

Decide Strategy for Target Segments
Criteria used for evaluating each segment:
- Size and growth rate.
- Profitability analysis.
- Competitive analysis.
- Company objectives and resources.
Selecting the target segments
Most attractive segments that are compatible with
the company’s objectives and resources are
selected.
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 Chapter-6

Strategy for Target Segments

After selecting target segments, firms adopt one
of the following strategies:
- Concentrated marketing
- Differentiated marketing
- Undifferentiated marketing
- Niche marketing

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 Chapter-6

Outline the Positioning Strategy

What is Positioning ?
• It is a distinct (or unique) place a product (or
service) of a selling firm occupies in the minds of
target customers in relation to competition.
• In B2B marketing, it is the value proposition of the
market offering of a selling firm to target
customers that should answer the question:
“Why should the target customer buy the
selling company’s product/service instead of
from the competitor ?”
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 Chapter-6

The Process of Developing a Positioning

Strategy ?
• Decide target market segments (segmenting and
targeting)
• Identify the target customers’ major attributes or
benefits for differentiation by conducting
marketing research.
• Select one or few differentiating attributes or
benefits by using perceptual map technique, which
helps to decide positioning strategy.
• Communicate the positioning strategy to target
segments effectively and efficiently.
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