SEGMENTING; TARGETING

& POSITIONING
B2B MARKETING
EMBA 2K12
MARKET
SEGMENTION
Process of dividing a market into groups of customers who
have similar requirements for a product or service offering

In business-to-business marketing, segments are
clusters of firms that are distinct from others in terms
of what they need and buy as well as how they buy

PROCESS OF MARKET
SEGMENTATION
Conducting marketing research to collect
data on buying firms and competition
Identify MACROSEGMENTS based on
analysis of data
Select MACROSEGMENTS which satisfy
company objectives & resources
Evaluation MACROSEGMENTS based on
differences in Buying Behavior
If No, identify & select meaningful
MICROSEGMENTS
Profile target segments on buying
organization & DMU characteristics
If Yes, select the target macro
segments based on specific criteria
Stop, and use the Macro segments
as target segments
BENEFITS, LIMITATIONS & REQUIREMENTS OF
MARKET SEGMENTATION

Market segment cannot be practiced effectively in business
marketing because of difficulty in grouping the industrial
customers into market segments.
Many business & individuals with different background in
decision Process.
Despite the difficulties, there are distinct BENEFITS in Market
segmentation.
BENEFITS

Enables the industrial marketer to compare marketing
opportunities of different market segments by studying
the customer needs and potential, competition and
satisfaction levels of customers in each market segments
Industrial firms with availability of adequate resources can
develop separate marketing strategy for different
segments
Firms with less resources can succeed by concentrating
on a few market segments
The budget allocation of resources can be done effectively
to various segments, and hence, marketing resources can
be used more efficiently
LIMITATIONS
Not always beneficial or practical, particularly when
market is too small
Increase in marketing expenses such as inventory
carrying cost, marketing expenses, advertising costs,
transportation cost etc.
Existence of great differences in buying practices,
customer characteristics, product applications, and
benefits sought by different members of buying center
Despite the difficulties, there are distinct BENEFITS in
Market segmentation
REQUIREMENTS
Measurability: Can the size, growth and buyer characteristics
be measured?
Accessibility: Can the segments be identified, reached and
served effectively with the firms marketing
Substantiality: Are the segments large enough in terms of the
sales and profit potential to serve?
Compatibility: Do the companys marketing and business
strengths match the present and expected competitive and
technological state of market.
6-8
APPROACHES TO MARKET SEGMENTATION
Nested Approach
Stresses segmentation according to the amount of
investigation required to identify and evaluate
different criteria.

Layers of the nest begins with organization
demographics
More specific customer characteristics are
nested inside the broader organizational basis
BASES FOR SEGMENTING
BUSINESS MARKET
Business Market can be segmented on several bases,
broadly classified into two major categories:

MACRO SEGMENTATION
MICRO SEGMENTATION
MACROSEGMENTATION



MACROSEGMENTATION: consists of identifying macro variables on the
basis of industry characteristics such as type, size geographic location or
product application.
MACROSEGMENTATION VARIABLES
VARIABLES
1. Type of Industry/Customer

2. Company Size, Usage rate

3. Customer Location,
Geographic area

4. End-use or application,
benefits of products
EXAMPLES
Type of Industry: Mining, Chemical, rubber, textile etc..
Type of Customer: includes government, commercial
and institutional
Size of companies: Based on sales potential (or Usage),
market is segmented by (A, B, & C) or large, medium
and small size customers
Geographical Areas: near to factory or in various
regions.

Specific end-uses or application: Aluminum for doors,
frames, electrical control panels, electronic
equipments, Utensils, etc
MICROSEGMENTATION



MICROSEGMENTATION: are homogeneous groups of
customers within the macro segments. Based on the
purchasing decisions
MICROSEGMENTATION
VARIABLES
1. Buying Situations

2. Organizational
capabilities

3. Purchasing Policies

4. Purchasing criteria

5. Personal
Characteristics



EXAMPLES
Should we serve customers who need more
information, help or decision making process from
suppliers?

Should we concentrate on customers who need
financial support (more credit), more services (prompt
or quick deliveries), or Technical support?

Should we focus on customers who prefer competitive
bidding, market based negotiated prices, turn-key
contracts or service contracts?

Should we serve the customers who seek Quality,
Service or Price?

Should we focus on the customers based on the
personal characteristics of Buying-Center members
such as risk-takers, Risk-avoiders?
TARGET MARKETING
EVALUATING MARKET SEGMENTS based on:

Size and Growth
Profitability Analysis
Competitive Analysis
Company Objectives & Resources
SIZE AND GROWTH
Company needs to find out Size of each market segment.
Current and future market potential should be identified
PROFITABILITY
Three elements involved in analyzing profitability of each potential
segment.
Market Potential
Sales Forecast
Profitability

COMPETITIVE ANALYSIS
Profit Potential and ability of the industrial marketer to penetrate a
particular market segment depends on a careful analysis of the
strengths and weaknesses of the existing &/or potential competitors
To be identified in each segment in each of the following areas
Manufacturing
R&D -Finance
Technical Service
Product Quality
Delivery Performance
Sales Force
Advertising
Distribution
Technology
Organization & Management reputation

OBJECTIVES & RESOURCES
Industrial Marketer should ask whether each potential segment is
in line with the companys objectives.

Analysis of resource or strengths to be in line with the success
factors of each segment
FACTORS IN ASSESSING
SEGMENT ATTRACTIVENESS
Size of segment
Growth rate of segment
Intensity of unmet need(s)
Reach ability of segment through
communication channels
Readiness of segment to seek
and adopt a solution
Likelihood of competitive
intensity
Sufficiency of channel reach
Likely value contribution by
channel(s)
Match between segment needs
and suppliers strengths
Differentiability of suppliers
offering
Opportunity to achieve strategic
goal by addressing segment
Opportunity to achieve learning
goal by addressing segment
20
A USEFUL TOOL FOR ASSESSING
MARKET SEGMENTS: SEGMENT RATING
CHART
WEIGHT RATING (0-10) TOTAL
Market attractiveness factors
Customer needs and behavior .5 10 5.0
Segment size and growth rate .3 7 2.1
Macro trends .2 8 1.6
Total: Market attractiveness 1.0 8.7
Competitive position factors
Opportunity for competitive advantage .6 7 4.2
Capabilities and resources .2 5 1.0
Industry attractiveness .2 7 1.4
Total: Competitive position 1.0 6.6
TARGET MARKET
STRATEGIES
CONCENTRATED MARKETING
DIFFERENTIATED MARKETING
UNDIFFERENTIATED MARKETING
CONCENTRATED
MARKETING
Focusing all the marketing efforts on a single or relatively few,
carefully-defined segment(s).
Very narrow range of products/service accompanied by high
quality, high price & highly selective promotional & distribution
strategies.
May be done by the companies with limited resources.
Involves more risk as the market potential in chosen segment
can decline or big competitor may invade
DIFFERENTIATED
MARKETING
Targeting several segments whose needs, product
usages or market responses are appreciably different
Developing separate marketing strategies/plans for
each of its chosen segments
Despite of higher costs the aim is to achieve greater
sales volume and stronger position in the market
UNDIFFERENTIATED
MARKETING
Can sometimes be due to lack of effective
segmentation
Developing a single marketing plan for the entire
market
Despite of higher costs the aim is to achieve greater
sales volume and stronger position in the market
STRATEGIES FOR SELECTING
TARGET MARKETS
Concentrated
Strategy
Undifferentiated
Strategy
Multi segment
Strategy
POSITIONING
STRATEGIES
Positioning is defined as the distinct place a
product/service occupies in the minds of the
target customers relative to competing
products/services

PRODUCT POSITIONING
STRATEGY
Introduction
Product Positioning
The way a product is defined by customers
Product Differentiation
Involves meaningful differences in the product,
services offered, personnel, etc.
6-29
WHY STRATEGICALLY POSITION
PRODUCTS AND SERVICES?
So they are perceived as different from competitors in ways that
represent value to customer segments
As a tool to help marketers visualize the customers perceptions
of the competitive offerings available according to various
variables (axes) of importance
PRODUCT POSITIONING
STRATEGY
Approaches to Positioning
Technology
Quality
Price
Distribution
Image
Service
6-31
PRODUCT POSITIONING STRATEGY
Successful Positioning
Consider what position the firm presently owns.
Decide what position the firm wants to own.
Decide who the firm must outflank to gain that
position.
Consider if the firm has the necessary resources.
Consider if the firm is committed to achieving the
objective.
Determine if the firm can create a marketing mix to
achieve the desired position.
CRITICAL COMPONENTS OF
POSITIONING STATEMENT
Target: mentions the characteristics of the target customers in
which the supplier is interested

Offering Concept: states the absolutely necessary attributes
of the market offering for target customer

Value Proposition: indicates the difference of the market
offering compared to the next-best-alternative offering that are
valuable to the customers
CRITERIA TO SELECT THE POSITIONING
STATEMENTS FROM A NUMBER OF
ALTERNATIVE POSITION STATEMENTS
Target: mentions the characteristics of the target customers in
which the supplier is interested

Offering Concept: states the absolutely necessary attributes
of the market offering for target customer

Value Proposition: indicates the difference of the market
offering compared to the next-best-alternative offering that are
valuable to the customers