Industrial Market is another name for B2B (Business to Business) Markets. This presentation focuses on 1. Segmentation Variables for Business Markets 2. Effective Segmentation Criteria 3. Steps in Segmentation Process

1. Industrial Market Segmentation

2. Consumer Market Segmentation
=
B2C Market Segmentation
Industrial Market Segmentation
=
B2B Market Segmentation
But we will continue on
B2B Market Segmentation

3. How shall we proceed?
1. Segmentation Variables for
Business Markets
1. Demographic
2. Operating Variables
3. Purchasing Approaches
4. Situational Factors
5. Personal Characteristics
2. Effective Segmentation Criteria
1. Measurable
2. Substantial
3. Accessible
4. Differentiable
5. Actionable
3. Steps in Segmentation Process
1) Needs-Based Segmentation
2) Segment Identification
3) Segment Attractiveness
 Porter’s Five Force Model
4) Segment Profitability
5) Segment Positioning
6) Segment “Acid Test”
7) Marketing-Mix Strategy

4. 1. Segmentation Variables for Business Markets

5. Snapdragon (by Qualcomm) [S]

6. Tata Steel [T]

7.  Industry: Which Industries should we serve?
S: Mobile Phones Manufacturing Industries. Companies like Sony, Motoroala,
etc. are part of this industry.
T: Automobile, Aerospace, Rail and Other Manufacturing Industries.
Companies like Maruti, Godrej Interio
 Company Size: What size companies should we serve?
S: Medium to Large sized companies. From Karbonn to Samsung
T: Medium to Large sized companies. From Godrej Interio to L&T
 Location: What geographical areas should we serve?
S: All areas in the world
T: South-East Asian, Indian, and European regions.
1) Demographic

8.  Technology: What Customer Technologies should we focus on?
S: Octa-core, faster processing e.g. Krait processors
T: Different grades of steel for different companies according to their
manufacturing requirements
 User / Non-User Status: Should we serve heavy users, medium users, light
users, or non users?
S: Focus more on Heavy users and cater to other users as well
T: Focus more on Heavy users and Medium users
 Customer Capabilities: Should we serve customers needing many or few
services?
S: Few Services.
T: Few Services.
2) Operating Variables

9.  Purchasing-function organization: Should we serve companies with a
highly centralized or decentralized purchasing organization?
S: Highly Centralized
T: Both, Highly Centralized and Decentralized
 Power Structure: Should we serve companies that are engineering
dominated, financially dominated, and so on?
S: Engineering Dominated
T: Financially Dominated and Engineering Dominated
 Nature of Existing Relationship: Should we serve companies with which we
have strong relationships or simply go after the most desirable companies?
S: Most Desirable companies
T: Both
3) Purchasing Approaches

10.  General Purchasing Policies: Should we serve companies that prefer
leasing? Service contract? Systems purchases? Sealed bidding?
S: Systems Purchases
T: Systems Purchase, Service Contract
 Purchasing Criteria: Should we serve companies that are seeking Quality?
Service? Price?
S: Quality. Snapdragon, unlike MediaTek, focuses on Quality rather than Price
T: Depends company to company. Some might require Quality, some Service
while others Price.
3) Purchasing Approaches

11.  Urgency: Should we serve companies that need quick and sudden delivery
or service?
S: No
T: Can cater to Sudden Delivery demands if it has enough inventory in place.
 Specific Application: Should we focus on a certain application of our
product rather than all applications?
S: All Applications
T: Certain Application or All Application, this doesn’t matter
 Size or Order: Should we focus on large or small orders?
S: Large Orders
T: Medium sized Orders to Large
4) Situational Factors

12.  Buyer-seller similarity: Should we serve companies whose people and
values are similar to ours?
S: Yes, but not necessary
T: Not at all necessary because Tata it is a product based company and not
service based, hence the transactions with people will be lower in number
 Attitude towards risk: Should we serve risk-taking or risk-avoiding
customers?
S: Risk Taking
T: Both, Risk-Taking and Risk-Avoiding
 Loyalty: Should we serve companies that show high loyalty to their
suppliers?
S: High Loyalty (Repeat orders)
T: Same for Tata Steel, High Loyalty
5) Personal Characteristics

13. 2. Effective Segmentation Criteria

14. 1) Measurable
2) Substantial
3) Accessible
The size, purchasing power, and characteristics of the segments can
be measured.
The segments are large and profitable enough to serve. A segment should be the
largest possible homogenous group worth going after with a tailored marketing
program. It would not pay, for example, for an automobile manufacturer to develop
cars for people who are less than four feet tall.
The segments can be effectively reached and served.

15. 4) Differentiable
5) Actionable
• The segments are conceptually distinguishable and respond
differently to different marketing-mix elements and programs.
• Example: Married and unmarried women respond differently to
different products such as dress materials, cosmetics, households
products, etc.
• Effective programs can be formulated for attracting and serving
the segments.
• Example : Cigarette manufactures cannot promote their product
directly through the different medias such as television,
newspaper, internet, etc. therefore they have to take different
approach to promote their product.

16. 3. Steps in Segmentation Process

17. 1) Needs-Based Segmentation
2) Segment Identification
Group customers into segments based on similar needs and benefits
sought by customers in solving a particular consumption problem.
For each needs-based segment, determine which demographics,
lifestyles, and usage behaviors make the segment distinct and
identifiable.

18. 3) Segment Attractiveness
Competitive
Rivalry
Threat of
New
Entrants
Bargaining
Power of
Suppliers
Threat of
Substitutes
Bargaining
Power of
Buyers
Using predetermined
segment attractiveness
criteria (such as market
growth, competitive
intensity, and market
access), determine the
overall attractiveness of
each segment.
Porter’s Five Force model
is the ideal choice to
determine the market
attractiveness

19. 4) Segment Profitability
5) Segment Positioning
Determine Segment profitability
For each segment, create a “value proposition” and product-price positioning
strategy based on that segment’s unique customer needs and characteristics.
6) Segment “Acid Test”
Create “segment storyboard” to test the attractiveness of each
segment’s positioning strategy.
7) Marketing-Mix Strategy
Expand segment positioning strategy to include all aspects of the marketing mix:
product, price, promotion, and place.