Page 253 - Marketing Management

230 PART 3 CONNECTING WITH CUSTOMERS

Bases for Segmenting Business

Markets

We can segment business markets with some of the same variables we use in consumer markets,
such as geography, benefits sought, and usage rate, but business marketers also use other variables.
Table 8.5 shows one set of these. The demographic variables are the most important, followed
by the operating variables—down to the personal characteristics of the buyer.
The table lists major questions that business marketers should ask in determining which
segments and customers to serve. A rubber-tire company can sell tires to manufacturers of
automobiles, trucks, farm tractors, forklift trucks, or aircraft. Within a chosen target industry,
it can further segment by company size and set up separate operations for selling to large and
small customers.
A company can segment further by purchase criteria. Government laboratories need low prices
and service contracts for scientific equipment, university laboratories need equipment that requires
little service, and industrial labs need equipment that is highly reliable and accurate.
Business marketers generally identify segments through a sequential process. Consider an alu-
minum company: The company first undertook macrosegmentation. It looked at which end-use
market to serve: automobile, residential, or beverage containers. It chose the residential market, and it
needed to determine the most attractive product application: semifinished material, building compo-
nents, or aluminum mobile homes. Deciding to focus on building components, it considered the best
customer size and chose large customers. The second stage consisted of microsegmentation. The

TABLE 8.5 Major Segmentation Variables for Business Markets

Demographic
1. Industry: Which industries should we serve?
2. Company size: What size companies should we serve?
3. Location: What geographical areas should we serve?
Operating Variables
4. Technology: What customer technologies should we focus on?
5. User or nonuser status: Should we serve heavy users, medium users, light users, or nonusers?
6. Customer capabilities: Should we serve customers needing many or few services?
Purchasing Approaches
7. Purchasing-function organization: Should we serve companies with a highly centralized or decentralized purchasing organization?
8. Power structure: Should we serve companies that are engineering dominated, financially dominated, and so on?
9. Nature of existing relationship: Should we serve companies with which we have strong relationships or simply go after the most
desirable companies?
10. General purchasing policies: Should we serve companies that prefer leasing? Service contract? Systems purchases? Sealed bidding?
11. Purchasing criteria: Should we serve companies that are seeking quality? Service? Price?
Situational Factors
12. Urgency: Should we serve companies that need quick and sudden delivery or service?
13. Specific application: Should we focus on a certain application of our product rather than all applications?
14. Size or order: Should we focus on large or small orders?
Personal Characteristics
15. Buyer-seller similarity: Should we serve companies whose people and values are similar to ours?
16. Attitude toward risk: Should we serve risk-taking or risk-avoiding customers?
17. Loyalty: Should we serve companies that show high loyalty to their suppliers?

Source: Adapted from Thomas V. Bonoma and Benson P. Shapiro, Segmenting the Industrial Market (Lexington, MA: Lexington Books, 1983).