Industrial Segmentation Variables | B2B Segmentation

Industrial Segmentation Variables | B2B Segmentation

Business (industrial, B2B) markets can be segmented with similar variables like those being employed in consumer market segmentation, such as: geography, benefits, and usage rate. Yet business markets can also be segmented using several other variables.

Bonoma and Shapiro proposed segmenting a business market applying several variables in five general segmentation criteria, which they arranged as a nested hierarchy. Moving from the outer nest toward the inner, the 5 criteria are: demographics, operating variables, customer purchasing approaches, situational factors, and personal characteristics of the buyers. The marketer moves from the more general, easily observable segmentation characteristics (demographics) to the most specific, subtle ones (personal characteristics of the buyers).

It may not be needed or useful to always use every stage of this nested approach for every product. The marketer may skip irrelevant criteria. On the other hand the nested approach ensures a conscious choice is made on omissions and shortcuts.

• DEMOGRAPHICS
  
  • Industry: Which industries should business serve?
  • Company size: What size companies should business serve?
  • Customer Location: What geographical areas should business serve?
• OPERATING VARIABLES
  
  • Company Technology: What customer technologies should a business focus on?
  • User or Nonuser Status: Should business serve heavy users, medium users, light users, or nonusers?
  • Customer Capabilities: Should business serve customers needing many or fewer services?
• CUSTOMER PURCHASING APPROACHES
  
  • Purchasing Function Organization: Should business service companies with highly centralized or decentralized purchasing organizations?
  • Power Structures: Should business service companies that are engineering dominated,financially dominated, and so on?
  • Nature of Existing Relationships (Buyer-Seller Relationships): Should business service companies with which we have strong relationships or simply go after the most desirable companies?
  • General Purchasing Policies: Should business service companies that prefer leasing? Service contracts? Systems purchases? Sealed bidding?
  • Purchasing Criteria: Should business service companies that are seeking quality? Service? Price?
• SITUATIONAL FACTORS
  
  • Urgency (of Order Fulfillment): Should business service companies that need quick and sudden delivery or service?
  • Product Application: Should business focus on certain applications of our product rather than all applications?
  • Size of Order: Should business focus on large or small orders?
• PERSONAL CHARACTERISTICS OF THE BUYERS
  
  • Buyer-Seller Similarity: Should business serve companies whose people and values are similar to ours?
  • Attitudes Toward Risk: Should business serve risk-taking or risk-avoiding customers?
  • Loyalty: Should business service companies that show high loyalty to their suppliers?

The demographic variables are the first to be considered, followed by the operating variables, down to the personal characteristics of the buyers.

Sources:
Thomas V. Bonoma and Benson P. Shapiro (1983), " Segmenting the Industrial Market ", 1983
Philip Kotler (2001), "Marketing Management Millenium Edition", 2001, 10th Edition, pp. 152-153