Market segmentation examples
You should also review examples for segmenting consumer markets.
The key difference is that you need to consider more business-oriented segmentation bases.
To help explain this concept further, let’s look at a couple of examples of business market segmentation. The first is for an IT firm that produces accounting software for businesses. The following diagram outlines a possible segmentation tree for them.
In this business market segmentation example, the firm has used two segmentation variables to construct six market segments. The first variable used is a basic business description, splitting the market into the broad categories of manufacturing, services, and retailing.
Then the firm has applied a cultural variable and considered whether the potential customers tend to adopt new products (in this case, major accounting software) early or late.
Let’s look at one more business segmentation example, this time we will use a manufacturer of tomato paste that is suitable for use as a pizza topping. Here is a possible segmentation approach for this firm:
In this example, a variety of segmentation variables have been used in order to construct an interesting definition of market segments. The first variable considered is a business description, which broadly splits the potential market into food service, manufacturing, and supermarkets. Then, for each broad group, a different variable has been injected. For instance, food service was then further split by business description (restaurant/café or pizza outlet) and then by operating practice (whether or not they are a franchised operation).
Manufacturers are further defined by whether they use pizza sauce as a key ingredient (say for frozen pizza) or may use this style of sauce in other products (frozen or microwavable pasta for example). And finally supermarkets were further defined by whether or not they already sell a private label pizza sauce through their stores.