Segmenting Business Markets

Segmenting Business Markets

Consumer and business marketers use many of the same vari¬ables to segment their markets.  Business marketers also use some additional variables, such as customer operating characteristics, purchasing approaches, situational factors, and personal character¬istics.

Segmenting International Markets
Companies can segment international markets using one or a combination of several variables.
• Geographic location: Nations close to one another will have many common traits and behaviors.
• Economic factors: Countries may be grouped by population income levels, or by their overall level of economic development.
• Political and legal factors: Type and stability of government, receptivity to foreign firms, monetary regulations, and the amount of bureaucracy.
• Cultural factors: Grouping markets according to common languages, religions, values and attitudes, customs, and behavioral patterns.

Intermarket segmentation is segmenting of consumers who have similar needs and buying behavior even though they are located in different countries.

Requirements for Effective Segmentation

To be useful, market segments must be:
• Measurable: The size, purchasing power, and profiles of the segments can be measured.
• Accessible: The market segments can be effectively reached and served.
• Substantial: The market segments are large or profitable enough to serve.
• Differentiable: The segments are conceptually distinguishable and respond differently to different marketing mix elements and programs.
• Actionable: Effective programs can be designed for attracting and serving the segments.
MARKET TARGETING
Evaluating Market Segments
In evaluating different market segments, a firm must look at three factors:
1. Segment size and growth
2. Segment structu¬ral attractiveness
3. Company objectives and resources
The largest, fastest-growing segments are not always the most attractive ones for every company.
The company also needs to examine major structural factors that affect long-run segment attractiveness.
• A segment is less attractive if it already contains many strong and aggressive competitors.
• The existence of many actual or potential substitute products may limit prices and the profits.
• The relative power of buyers also affects segment attractiveness.
A segment may be less attractive if it contains powerful suppliers who can control prices.

Selecting Target Market Segments
A target market consists of a set of buyers who share common needs or characteristics that the company decides to serve.
Undifferentiated Marketing: Using an undifferentiated marketing (or mass-marketing) strategy, a firm might decide to ignore market segment differences and target the whole market with one offer. This mass-marketing strategy focuses on what is common in the needs of consumers rather than on what is different.
Differentiated Marketing: Using a differentiated marketing (or segmented market¬ing) strategy, a firm decides to target several market segments and designs separate offers for each.
Concentrated Marketing: Using a concentrated marketing (or niche marketing) strategy, instead of going after a small share of a large market, the firm goes after a large share of one or a few smaller segments or niches. It can market more effectively by fine-tuning its products, prices, and programs to the needs of carefully defined segments.  It can market more efficiently, targeting its products or services, channels, and communications programs toward only consumers that it can serve best and most profitably.

Micromarketing: Micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations. Micromarketing includes