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Segmenting Business Markets

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Segmenting Business Markets
SEGMENTING BUSINESS MARKETS
Segmentation of markets remains important even though the number of buyers in a business market may be relatively fewer compared to a consumer market.
The basic grouping of a business market is by customer location, customer type and transaction conditions. 1. Customer Location
On most occasions, business markets are segmented on a geographical basis. Some industries are geographically concentrated. An example is a business that process natural resources locate themselves close to the source in order to minimize shipping costs. 2. Customer Type
This sub-divided into four different categories: - a) Size b) Industry c) Organizational Structure d) Purchase Criteria a) Size: Business customer size can be estimated using factors such as sales volume, number of employees, number of production facilities and number of sales offices. Most sellers divide their potential market into large and small accounts, using separate distribution channels to reach each segment. The sellers force may contact large volume accounts directly, but to reach the smaller accounts, the sellers may use a middleman or rely on the internet or telemarketing. b) Industry: Firms that sell their products to other business may want to segment its market on the basis of industry. However, if a firm like the afore-mentioned one were to segment its potential customers by type of customer and then specializing in order to meet the needs of organizations then they would be performing better. c) Organizational Structure: Any operating organization should have its own structure in order to operate efficiently. For an organization, the organizational structure is a hierarchy of people and its functions. The organizational structure of an organization tells you the character of an organization and the values it believes in. Therefore,...

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