Selecting a business market segment based on product characteristics includes five types of product preferences.

• Business Market Segment Based On Price Sensitivity

• Business Market Segment Based On Quality Required

• Business Market Segment Based On Desired Benefits

• Business Market Segment Based On Technical Requirements

• Business Market Segment Based On Speed Of Delivery

Business Market Segment Based On Price Sensitivity

Some businesses, like some people, buy strictly on price. They are willing to sacrifice benefits and features to get the cheapest price.

To capture this business market segment, you have to beat your competitors’ prices. In order for this strategy to be successful, you have to sell lots of products (high sales volume) at a low profit margin.

Only the best automated businesses can afford to compete for this business market segment, and the low profit margins demand operating lean and mean.

Business Market Segment Based On Required Quality

Other businesses, like other people, buy the best quality products they can get with little to no regard for price.

This can be a profitable business market segment because the B2B business can use more human labor, cheaper and less automated equipment, but better quality parts and components.

They don’t have to produce a high volume of the product to make a profit because they can charge higher than normal prices. They sell far fewer products, but often make more profit overall.

Business Market Segment Based On Desired Benefits

More common than the price-sensitivity or the quality-required business market segments are those that buy based on value. The owners of these businesses consider the benefits that the product offers with the price. They often comparison shop for the best combination, but won’t buy a product that fails to provide the benefits they want and need, regardless of price.

This is usually the best business market segment because it enables the B2B business to distinguish its product on unique benefits rather than on price. It’s far easier to maintain a distinguishing characteristic based on benefits than it is on price. Because competitors can always lower their prices, but sometimes they can’t provide a feature to offer the same benefit as another product.

Business Market Segment Based On Technical Requirements

One benefit often required by businesses today relate to technical requirements. The business owners know exactly what they want a product to do, and they require that its technology performs efficiently, effectively and consistently.

Meeting these technical requirements sometimes requires that the B2B business custom produce products, and nearly always requires that it have high-tech employees, expertise, and equipment.

Technical advances can become a distinguishing characteristic for a B2B business, but in today high-tech environment, it takes constant research and development to depend on technological advancements.

Business Market Segment Based On Speed Of Delivery

No matter what the business market segment your customers are in regarding other product characteristics, most want the best delivery speed possible.

Of course that speed depends on the product, the distribution channel, your and your customer’s locations and other characteristics. But today, fast delivery has become an expected requirement.

Of course, some business customers define “fast” differently than others and all realize that some products can take longer than others. But some business owners make purchase decisions based on how quickly they can get the products.

Business Market Segment: Product Characteristics Conclusion

Knowing which business market segment, or combination of segments, that comprises your best customers or potential customers, will help to guide many other business decisions.

Market segmentation enables B2B business owners like you to determine the characteristics for each business market segment, select the business market segment that provides the best potential for a profitable target market, and build your B2B business around that business market segment.

To read the next post in this series, click the following link: Business Market Segment: Purchasing Characteristics 1.

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Posted 4-16-08: Business market Segment:

Product Characteristics

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Determining the best business market segment is as important to business-to-business (B2B) marketing as determining the best consumer market segment is to business-to-consumer marketing. Both types of businesses need to identify and define their target markets.

I recently released an article on this topic. It covered selecting market segments by organizational characteristics. If you came here from that article, you’ll find much more information about selecting your best business market segment through this series of posts.

This post reveals how B2B businesses can select the best business market segment for their products and services by the following topics.

Business Market Segment: Product Characteristics

• Business Market Segment Based On Price Sensitivity

• Business Market Segment Based On Required Quality

• Business Market Segment Based On Desired Benefits

• Business Market Segment Based On Technical Requirements

• Business Market Segment Based On Speed Of Delivery

Business Market Segment Purchasing Characteristics

• Business Market Segment Based On Purchasing Approaches

• Business Market Segment Based On Purchasing Situation

• Business Market Segment Based On Volume and Frequency

Business Market Segment: Decision Makers’ Characteristics

• Business Market Segment Based On Purchasing Function

• Business Market Segment Based On Risk Acceptance

• Business Market Segment Based On Personal Characteristics

Overview Of Business Market Segment Article.

As a B2B business owner, you can improve your marketing by targeting a business market segment.

Organizational, financial and industrial characteristics – called firmographics – provide the easiest.

Organizational firmographics include:

• Size of the business – number of employees, number of branches, and locations;

• Age of the business,

• Geographic location of the business.

Knowing these firmographics will help you to determine the most profitable business market segment for your B2B business.

Financial firmographics include the business’ market share, its sales volume, and its amount of profit. These firmographics can help you determine how much profit to expect from a business market segment.

Industrial firmographics enable you to pick businesses in industries who need the products that you sell. These firmographics will also help you to better understand the types of customers that will be in a business market segment.

You can read the next post in this series on Business Market Segment:

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Posted 4-15-08: Business Market Segment:

Introduction

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Handbook of Market Segmentation: Strategic Targeting for Business and Technology Firms by Art Weinstein provides loads of helpful information about market segmentation, but it is written so that it’s relevant to small as well as large businesses.

Although, this market segmentation book targets technology, industrial markets, and large businesses, the information is relevant, understandable and usable for small business owners.

It covers market segmentation for business-to-business companies as well as business-to-consumer companies and provides a through list of characteristics to segment business customers. It explains how to use firmographics in B2B market segmentation similarly to how demographics are used for consumer market segmentation. It even provides a list of resources for finding firmographics for business customers.

Handbook of Market Segmentation Covers Target Marketing

It provides a chapter on target marketing, which I consider the most important aspect of market segmentation for small businesses.

Handbook of Market Segmentation Includes Nine Chapters:

1. gives an overview of market segmentation,

2. specifically covers market segmentation for B2B businesses,

3. provides guidelines for business marketers,

4. covers geographics and firmographics,

5. explains how to do usage analysis,

6. discusses the role of benefits in market segmentation,

7. considers purchasing behavior and business psychographics,

8. covers implementing market segmentation strategies, and

9.provides techniques to enhance market segmentation’s value.

In addition to nine chapters, this book also includes six case studies that small business owners may find insightful when considering market segmentation.

I found this book a quick read, a good reference and well worth it’s relatively low price.

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Posted 4-14-08: Handbook of Market Segmentation:
Strategic Targeting for Business and Technology Firms Review

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Market Segmentation: How To Do It, How To Profit From It by Malcolm McDonald and Ian Dunbar is written primarily for marketing practitioners for corporations, marketing consultants and marketing academics, who wish to learn how to do market segmentation. But, it assumes a greater knowledge of marketing theory than most small business owners have.

Market Segmentation: How To Do It, How To Profit From It Is Written For Marketing Practitioners

This book was written to guide marketing practitioners through the process of conducting market segmentation research for large corporations, either as a member of a corporate team or as a marketing consultant for corporations.

Its structure also works well for a textbook with each chapter having a preview and a review with references at the end. It also contains lots of infographics to illustrate the processes explained.

Because of its target market and purpose noted above, I don’t recommend it if you are a small business owner without considerable knowledge of marketing theory. However, I do find lots of the content relevant to small business owners.

Market Segmentation Is The Missing Link In Corporate Marketing

For instance, the authors blame the failure to use market segmentation for the lost “influence of marketing in the corporate world.” They state that “few companies measure customer retention by segment.” They conclude that marketing is now considered a support function for sales because most corporations don’t really know what results they get from their marketing expenditures.

If corporations, with huge marketing budgets, can better monitor their marketing expenses by using market segmentation, then can’t market segmentation also help you small business owners better monitor your marketing expenses and return on investments.

The authors contend that only through market segmentation can marketing retake its former role in strategy-making, but that most marketers don’t even understand how market segmentation can help them to better understand customers, much less incorporate that understanding into strategy for their companies.

Corporations who do the most mass marketing need to understand their customers and target markets. Then don’t small business owners like you, who primarily do target marketing often to niche markets, have an even greater need to understand your customers and target market members.

Small Businesses Also Need Market Segmentation

The authors claim that market segmentation is central to “every corporate function,” including mission and objectives, market research, ongoing operations.

This is equally true for small business owners. Market segmentation provides information that should be included in all your small business’s functions and strategic plans.

Market Segmentation: How To Do It, How To Profit From It: Conclusion

In conclusion, I found much that I liked about this book. But it does require marketing knowledge and concentrated study. I believe few small business owners will want to or need to use market segmentation to the extent recommended and taught in this book. However, I believe that the importance, which the authors assign to market segmentation for improving corporations, increases for small businesses.

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To read another book review, click below:

Handbook of Market Segmentation: Strategic Targeting for Business and Technology Firms Review

Posted 4-11-08: Market Segmentation:
How To Do It, How To Profit From It Review

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All fourbenefits of market segmentation were listed in an earlier post that you can access through the link below:

Four Benefits of Market Segmentation: Benefit 1 -Improving Products

Today’s post will cover the fourth benefit of Market Segmentation. This fourth benefit is improving your market position.

Market Segmentation Improves Your Market Position

Market segmentation improves your market position by helping you to determine how well your products and services meet target market member’s needs compared to how well your competitors’ products and services meet those needs.

Using market segmentation to access the power of market characteristics enables you to meet target market members’ needs, speak their language and relate to them through events and activities.

The more effective you are at improving your marketing strategies and tactics with characteristics derived from market segmentation, the more likely you will convert target market members into customers.

Market Segmentation Makes You More Competitive

If you do these better than your competitors, your market position will improve, you will sell more, and your business will become more successful.

Thus, the extent that you utilize target market characteristics better than your competitors, the better your market position. You can also improve your competitive advantage by learning more about competitor intelligence statistics.

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Posted 4-10-08: Market Segmentation:

Benefits of Market Segmentation - Market Position

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