Posts Tagged “target market”

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Apr 18 2008

Business Market Segment: Purchasing Characteristics 2

Posted by: Linda in Business Market Segments, tags: , , ,

Selecting the best business market segment based on purchasing approaches was the subject of yesterday’s post. Today I’ll continue covering purchasing characteristics with the two below:

• Business Market Segment Based On Purchasing Situation

• Business Market Segment Based On Purchasing Volume and Frequency


Business Market Segment Based On Purchasing Situation

Purchasing situations deal with each business market segment’s needs. Some need quicker deliveries than others. Some need more consulting than others. Some prefer to buy online while others prefer to order by telephone or fax.


Business Market Segment: Purchasing Characteristics – An Illustration

To illustrate purchasing situations, let me provide another example from my business, but this time using it as a business customer.

My business uses lots of ink toner cartridges. I used to buy cartridges at local business supply stores, but found it too time-consuming and unreliable because often I’d have to got to several stores to find the cartridges that I use.

Then I started purchasing online. I tried several suppliers, with unsatisfactory results before I discovered my present supplier Laser Monks. I love this company for several reasons. One, they keep records of the cartridges that I use. Two, I don’t have to find my cartridges and complete a form. I can just call them tell them which printer I need cartridges for, give them my credit card information and they do everything else. Three, they provide good service and fast delivery. Four they often run specials and send thank-you gifts. In other words they meet my needs.

In addition to meeting these practical needs, I feel good about spending my money with Laser Monks because real monks run it and all the “profit” goes to social causes. So, doing business with Laser Monks also meets my need to help others. Plus they are price competitive.

I like everything about Laser Monks, and I tell other business people about them and send business their way. Not because I make money from recommending them. I don’t, but because I’m such a happy customer that I want to spread the word.

If you can match your business with the purchasing situation and needs of a business market segment of customers, you can also develop loyal customers who will evangelize about your business.


Business Market Segment Based On Purchasing Volume and Frequency

Some consistently make small orders while others consistently make large orders. Some may order only one product in your product line while others may consistently buy several products. Some order often while others order infrequently.

You can distinguish business market segments by purchasing volume and size to determine the one that provides your best customers and target market. Using the old 80/20 rule, you may realize that 20 percent of your present customers account for 80 percent of your sales. Identifying that business market segment and concentrating your marketing efforts on other businesses within that same segment reveals your most profitable target market. Concentrating your marketing efforts on that business market segment will increase return on your marketing investments.

Keeping good records is a prerequisite for any market segmentation program. In order to
determine the business market segment that provides most of your sales, you have to look at your customer records, separate your customers into business market segments by purchasing characteristics, and determine the characteristics that relate to the most profit.

Then take good care of those customers, giving them extra attention or gifts. Look for new customers with these same characteristics and cater your marketing efforts to this target market.


Business Market Segment: Purchasing Characteristics Conclusion

Selecting a business market segment based no purchasing characteristics is an easy way to use market segmentation. First because, you already have records to determine which characteristics produce the most profitable business market segment. Second because once you know characteristics that identify that best segment, you can target other businesses with similar characteristics to increase your customer in that business market segment.

To link to the next post in this series, click below:
Business Market Segment Decision Maker Characteristics 1

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Posted 4-18-08: Business market Segment:

Purchasing Characteristics 2

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Apr 17 2008

Business Market Segment: Purchasing Characteristics 1

Posted by: Linda in Business Market Segments, tags: , , ,

Finding the best business market segment for your B2B business involves considering organizational, product, and purchasing characteristics of potential business customers.

This post covers purchasing characteristics, part 1, or the first purchasing characteristic in the list below. Tomorrow’s post will cover part 2, characteristics 2 and 3 from the list below. Friday’s post will cover selecting a business market segment based on decision maker characteristics.


Business Market Segment: Three Types Of Purchasing Information

You need to know three types of purchasing information about any business market segment. They are:

• Business Market Segment Based On Purchasing Approaches

• Business Market Segment Based On Purchasing Situation

• Business Market Segment Based On Purchasing Volume and Frequency


Business Market Segment Based On Purchasing Approaches

Business can be segmented by several purchasing approaches. The first is how the purchasing function in the business is organized. Is it centralized in the business headquarters or decentralized through different branches, stores, etc.? Is payment completed by the same people who do the ordering?

In a business segment using centralized purchasing or payment, it can be more difficult to get a contract or purchase, but once you get your foot in the door, it’s easier to maintain the account. Billing, delivery and getting paid are also often easier.

However, centralized purchasing for large organizations can be less personal and difficult for small vendors. Especially if the function that makes purchasing decisions is not the same as the function making payments.


Purchasing Approaches – An Example

For example, in my textbook business I sell to both private and corporate chain college bookstores. When I started in the business, I shipped books with a 90-day deadline for payment. Most of the privately owned stores paid within that time, but the largest chain was always late sometimes taking more than a year to pay. I’ve had the go back two years and verify all my records over that time before the chain would pay outstanding debts for their bookstores.

This large chain was my highest maintenance and the slowest paying customer. Its account executives were difficult to work with and as soon as I established a relationship with one, she would be gone and I had to start all over with another.

Now several of my bookstore customers belonged to the chain. Orders came directly from the bookstores, but payment came from corporate headquarters. The bookstore managers were easy to get along with and nice to deal with, but getting paid by their corporate office was a bear. I eventually starting requiring prepay for all my customers primarily due to the difficulty in collecting from this major chain.


Purchasing Approaches – Your Take Away

If you’re facing a similar situation, you could just segment the corporate stores from the privately-owned stores and treat them differently or just don’t serve the high-maintenance, low- pay customers. But in book publishing, regulations require all bookstores be treated the same. Plus, the stores in that corporation amounted to a large share of my customer base so I couldn’t just segment that business market segment out.

Still this example illustrates many of the purchasing approaches that produce different business market segments that you may want to consider as you make segmentation decisions for your B2B business.

To access my next post on Business Market Segment: Purchasing Characteristics 2, click the link.

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Posted 4-17-08: Business market Segment:

Purchasing Characteristics 1

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Apr 16 2008

Business Market Segment: Product Characteristics

Posted by: Linda in Business Market Segments, tags: , ,

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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Apr 02 2008

Market Segmentation: Media

Posted by: Linda in Promotion, tags: ,

Market segmentation helps you to determine the best media to reach your target market. For example, consider the differences below for men.

Market segmentation enables you to determine the best media to reach your target market. For example:

• Traditionalists read magazines about cars and hunting.

• Searchers prefer to watch science fiction shows on television.

• Achievers read business, newsweekly and computer magazines.

• Young Urban Techies like newsweeklies, but also read home electronics and political magazines.


Market Segmentation Reveals Media Preferences

My matrix market segmentation research also reveals differences in media preferences by national origins. For example:

  • The best media for the Asian market are in-flight magazines and Internet news.
  • Hispanic market research reveals that the best media for the Hispanic market include Hispanic magazines, direct mail, telemarketing, and door-to-door sampling.

    • To read more about benefits of market segmentation, click the link in this sentence.

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    Posted 4-2-08: Market Segmentation:

    Media

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    Mar 24 2008

    Market Segmentation: Target Market Profile

    Posted by: Linda in Target Markets, tags: ,

    Market segmentation theory holds that people differ due to the market segments that they belong to. So knowing your target market’ segments enables you to learn loads about its members.

    The problem with market segmentation is that it has, in the past, taken lots of time and/or money to discover enough about your target market to improve your marketing.

    My matrix market segmentation process changes that. It uses matrices to visually separate market segments and to easily show target market characteristics that are repeated across segments. These characteristic provide the best appeals for your target market.

    To do so, matrix market segmentation utilizes secondary research about different market segments and combines all relevant segments into a profile for the target market.

    The process is simple and relatively quick to use with the secondary research provided in my e-book: Know ‘em Sell ‘em: How To Discover The Best Appeals for Your Target Market.

    This site also offers the following individual target market profiles. Some of them provide in-depth looks at a particular market segment. For instance, each of the four adult generations in America today is included as an individual profile.

    Other profiles use matrix market segmentation to include characteristics across segments to provide a target market profile, not available elsewhere.

    To read more about any of these target market profiles, just click on your selected title below:

    1. Targeting the WWII Generation,
    2. Segmenting Baby Boomers,
    3. Targeting Generation X,
    5. Targeting Generation Y,
    4. Targeting the Upper (Elite) Class,
    5. Targeting the Middle Class,
    6. Targeting the Working Class,
    7. Targeting African Americans,
    8. Targeting Asian Americans,
    9. Targeting Hispanic Americans,
    10. Targeting Native Americans,
    11. Targeting Arab Americans,
    12. Targeting College Students,
    13. Targeting University Faculty,
    14. Targeting Professional Boomer Women,
    15. Targeting Mid-Life Men,
    16. Targeting CEO’s,
    17. Targeting State Legislators,
    18. Targeting Investors,
    19. Targeting Retirees.

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    Posted: Market Segmentation:
    Target Market Profiles

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