Mkt Segmentation Guide #7

In business-to-business categories, segmentation can be accomplished by studying the different types of customers.

Unlike consumer markets, you can study customers in business-to-business product categories and determine what the segments are.  The motivation of businesses is economic in nature.  It isn’t difficult to understand.  A business wants to make money, and marketers satisfy that need by either assisting the customer in reducing their costs or increasing their revenue.

Moreover, businesses of the same size in a given industry tend to have very similar operating profile.  As an example, once you’ve documented the operating profile of a large, long-haul trucking operator, the operating profile of other large, long-haul trucking operators is going to be very similar.

Because of the lack of behavioral complexity in businesses, business markets tend to be segmented along easily understood characteristics such as application of the product, size, extent of usage, industry, etc.  Anderson and Narus, in their Business Market Management: Understanding, Creating, and Delivering Value, encourage business-to-business marketers to consider what they call “progressive bases of segmentation” in addition to the more conventional bases of segmentation.  These include customer sophistication regarding the marketer’s product category, the degree of vertical integration, contribution to the supplier’s profitability, etc.