B2B market segmentation improves marketing by helping owners of business-to-business companies to understand different market business segments and to better market to their business customers.

Rather than marketing directly to consumers, B2B businesses market to other businesses. However, B2B market segmentation is equally important for B2B businesses as consumer market segmentation is for business-to-consumer businesses. Market segmentation is vital for both types of businesses because it reveals information that improves marketing effectiveness.

Market segmentation for business-to-consumer companies often focuses on demographics, which are facts like age, income, occupation, education level, gender, race, etc.

B2B Market Segmentation Uses Firmographics

B2B market segmentation also focuses on facts called firmographics. Some firmographics include the age of the business, its number and type of employees, its gross income, its geographic location and reach, its type of industry, etc.

B2B market segmentation uses these and other firmographics to segment B2B business customers because business segments influence the kinds of products and services that businesses buy and the reasons that they buy.

So businesses who share firmographics often have similar reactions to marketing tactics because they have similar needs for products or services. These similar needs categorize business customers into market segments.

B2B market segmentation utilizes firmographics to determine which market segments comprise the best target market for the B2B business. A target market is the market segment most likely to buy a business’ products or services. B2B Market Segmentation Examples

To illustrate how B2B market segmentation uses firmographics to structure market segments consider two businesses. The first makes metal frames for major appliances and markets to appliance manufacturers. The second manufactures the appliances and markets to retailers who sell the appliances to consumers.

Both the manufacturer of the metal frames and the major appliance manufacturer are B2B businesses. However, the segments to which each markets their products differ by many firmographics.

The appliance manufacturer is usually located in an industrial section while the retailer is more likely located in a mall or downtown area.

The manufacturer has hundreds of employees, who belong to unions. The retailer has only a dozen employees, and they have no union affiliation. Yet, working conditions are better in the retail store than at the manufacturing plant.

Furthermore, the size of the two businesses, their annual sales volume, their industry standards, the type of vendors they purchase from, and many other firmographics make these two types of business segments different enough that the categorize into different market segments, requiring different marketing.

B2B market segmentation can help B2B business owners by providing them distinguishing characteristics based on business segments that reveal specific information about their customers. The more of this information that B2B business owners know about their business customers, the more likely their marketing efforts will be successful.

B2B Market Segmentation Also Uses Demographics

However, in spite of the types of businesses that people own or run, the people are still people. So in addition to knowing firmographics of different business segments, it’s also important for B2B business owners to know how to appeal to the people that own and operate customer businesses.

As people, business leaders have the same emotional and rational needs as other people. These needs evolve around their personal values, attitudes, family relationships, wants and dreams. Thus, demographic market segmentation can help business owners to better understand the people who make purchasing decisions for businesses in their target market.

To read more about B2B marketing, you can access a series of posts that I recently put on my blog.
Access the first one here: B2B Market Segment:Introduction. Each post links to the next to guide you through the series.

You can better understand business leaders with a target market profile of chief executive officers. It, 19 other target market profiles, and an e-book on market segmentation are available at Target Market Profiles.

Submitted to GoArticles.com 4-7-08: B2B Market Segmentation Improves B2B

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