What segmentation bases are used for business markets?
Just like for consumer markets, business or organizational markets should be segmented in order for the firm to effectively develop a successful marketing program. The segmentation bases/variables for business markets vary a little in terminology, but are quite similar in concept and application to the process of segmenting consumer markets.
The main segmentation bases/variables used in business markets include: geographic location, business description (sometimes referred to as demographics), behavioral/operating practices, culture/personality, and organizational goals.
A brief description of the various main business segmentation bases is outlined in the following table:
Broad Category of Business Market Segmentation Base
Which factors are being considered?
|Geographic location||Where does the organization operate?(Could be multiple locations)|
|Business description||What sort of business is it, where does it fit into its industry?|
|Behavioral/operating practices||How does the organization undertake its purchasing decisions?|
|Culture/personality||What is the management style of the organization?|
Understanding business market segmentation bases/variables
The following table outlines some of the segmentation variables that can be utilized in business markets, listed by main categories:
|Main Category||Segmentation Base||Questions to help define segment groups|
|Geographic location/s||Country/continent||In which countries do they operate?|
|Region/area of the country||In which regions do they operate?|
|Number of outlets||Does the firm have one office only, or potentially 1,000s of outlets?|
|Geographic spread||Does the firm operate in one geographic area, or spread over a wide area?|
|Business description||Industry||What industry do they operate in?|
|Size (by staff or outlets)||How many staff do they have, or how many outlets do they have?|
|Size (revenues/profits)||What is their financial position?|
|Products sold||What is their product mix?|
|Equipment/technology||What is the main forms of manufacturing and/or IT equipment do they use?|
|Company ownership||Are they a public or private company? Are they a subsidiary?|
|Behavioral/operating practices||Do they have a centralized purchase decision-making process?|
|Are they generally loyal to suppliers or do they frequently switch?|
|Are they fast or slow decision makers?|
|Do they use franchising?|
|Culture/personality||Are they a lead user (an early adopter) or more of a market follower?|
|Do they make highly analytical decisions or are they more intuitive?|
|How socially and environmentally conscious are they?|
|Organizational goals||Do they have aggressive growth goals?|
|Do they want to be seen as a market innovator?|
|How important is brand equity to them?|
You can also review examples of business segmentation on this website.
After reviewing this list, you will note that there are two similar points between the consumer and business markets in terms of segmentation bases. The first is that there are clearly many ways to segment (divide) both types of markets. And the second point is that it is necessary to have a good understanding (that is, suitable data and information) to effectively segment any market. Particularly when segmenting by behavior and culture, a deep knowledge of the firms in the marketplace is very important, otherwise the segmentation process is unlikely to be effective.