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Market Segmentation: B2B Marketing

Why is Segmenting Your Market Useful?

In most cases, it is useful to analyse your market to see if it divides into groups or segments that have like needs. You may find that the requirements one segment has for your product or service are different to those of another. Then, based on the market segmentation and the needs of various market segments, you can plan your Business to Business (B2B) marketing strategy and tailor your offers and communication messages in a far more targeted and meaningful way.

In regard to B2B marketing, segmentation of your market may also go beyond the level of an overall business customer and down to a division or department level of individual business customers.

For instance, if you are selling components to an original equipment manufacturer (OEM) that also has a service division, you may find the lead times required are quite different for the two divisions. A short lead time may be a key requirement of the service department but may not be a priority for the production department. Therefore, you will need to adapt your offer and the presentation of your value proposition to suit the specific department and/or market segment. You may even need to use different distribution channels.

You could find that your market does segment neatly by industry or customer type, size or geography. In most B2B markets, this is generally the way customers are divided into groups, however, unless the segmentation provides you with a group with similar needs and buying behaviours, the grouping is unlikely to be very useful. For instance, if you are selling a product to dry food warehouses and cold stores, but their needs are the same, segmenting by industry is not particularly useful.

The key things to look for when segmenting your market are that the segments are:

  • Meaningful – grouped on parameters that will determine how you approach them,
  • Identifiable – actually recognisable and reachable in real life – not just a conceptual grouping,
  • Substantial – a group that is large enough to warrant having resources specifically applied to it, and
  • Accessible – you can reach them in a practical and cost effective way.

The aim of segmenting your B2B market is to ensure you are specifically aiming your offer at a group of business customers who have like needs and are not just taking a shotgun approach to the market as a whole.