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B2B B2B

1. Market Segmentation, 1. Market Segmentation, Targeting, & PositioningTargeting, & Positioning

2. Demand Projection2. Demand Projection

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General Market Segmentation StrategyGeneral Market Segmentation Strategy Business Marketing Segmentation Versus Consumer Business Marketing Segmentation Versus Consumer

Marketing SegmentationMarketing Segmentation Market Strategies for Business SegmentationMarket Strategies for Business Segmentation Approaches to Market SegmentationApproaches to Market Segmentation Segmenting Business MarketsSegmenting Business Markets Evaluating Potential Market SegmentsEvaluating Potential Market Segments Product Positioning StrategyProduct Positioning Strategy Business Demand ProjectionBusiness Demand Projection Selecting Forecasting MethodsSelecting Forecasting Methods

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Why Segment Markets?Why Segment Markets?

To group customers with similar needs so one To group customers with similar needs so one marketing mix can be used to meet the group’s marketing mix can be used to meet the group’s needs without having a separate marketing mix needs without having a separate marketing mix for each customer (and still create a differential for each customer (and still create a differential advantage). advantage).

Given limited resources, to strategically target Given limited resources, to strategically target which groups to serve.which groups to serve.

As in all marketing activity, to better serve As in all marketing activity, to better serve customer needs.customer needs.

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Segmentation BenefitsSegmentation Benefits

• 1. for the marketer to become more attuned 1. for the marketer to become more attuned to the unique needs of customer segments.to the unique needs of customer segments.

• 2.2. to focus product development efforts, to focus product development efforts, develop profitable pricing strategies, select develop profitable pricing strategies, select appropriate channels of distribution.appropriate channels of distribution.

• 3. provides guidelines that are of significant 3. provides guidelines that are of significant value in allocating marketing resources.value in allocating marketing resources.

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General Market Segmentation General Market Segmentation StrategyStrategy

Analyze buyer behavior of each segment…Analyze buyer behavior of each segment…

Analyze buyer decision process of each segment…Analyze buyer decision process of each segment…

Analyze the demographics of each segment…Analyze the demographics of each segment…

Pick targets, forecast sales, calculate pro forma Pick targets, forecast sales, calculate pro forma profitability, and design a marketing mix for each profitability, and design a marketing mix for each segment based on above…segment based on above…

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General Market Segmentation General Market Segmentation StrategyStrategy

A Good Market Segment IsA Good Market Segment Is• Measurable Measurable • Differentiable Differentiable • SubstantialSubstantial• Actionable Actionable • AccessibleAccessible

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Business Marketing Segmentation Vs. Business Marketing Segmentation Vs. Consumer Marketing SegmentationConsumer Marketing Segmentation

Business market segmentation can help in:Business market segmentation can help in:• Market analysisMarket analysis• Market selectionMarket selection• Marketing managementMarketing management

Segment business markets even if we are Segment business markets even if we are selling consumer productsselling consumer products

• B2C marketers must market to distributors or B2C marketers must market to distributors or retail chainsretail chains

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Market Strategies for Business Market Strategies for Business SegmentationSegmentation

Undifferentiated Marketing StrategyUndifferentiated Marketing Strategy• Market aggregationMarket aggregation• Total market is treated as one homogeneous market Total market is treated as one homogeneous market

segmentsegment Differentiated Marketing StrategyDifferentiated Marketing Strategy

• Developing a different marketing mix for many Developing a different marketing mix for many different market segmentsdifferent market segments

Concentrated Marketing StrategyConcentrated Marketing Strategy• Selects one or a relatively few segments to pursueSelects one or a relatively few segments to pursue

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Approaches to Market SegmentationApproaches to Market Segmentation

Macro/Micro SegmentationMacro/Micro Segmentation• Macro segmentation Macro segmentation

dividing the market into subgroups based on overall dividing the market into subgroups based on overall characteristics of the prospect organization, e.g., characteristics of the prospect organization, e.g., usage rates, NAICS categoryusage rates, NAICS category

• Micro segmentation Micro segmentation Dividing the market into subgroups based on specific Dividing the market into subgroups based on specific

characteristics of the decision-making process and characteristics of the decision-making process and buying structure of the prospect organization, e.g., buying structure of the prospect organization, e.g., buying-center authority, attitudes toward vendors.buying-center authority, attitudes toward vendors.

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Meaningful MicrosegmentsMeaningful Microsegments Importance of Purchase -- Importance of Purchase -- appropriate when the product is appropriate when the product is

applied in various ways by various customers.applied in various ways by various customers. Attitudes toward Vendors – Attitudes toward Vendors – an analysis of how various an analysis of how various

clusters of buyers view alternative sources of supply often clusters of buyers view alternative sources of supply often uncovers opportunities.uncovers opportunities.

Organizational Innovativeness – Organizational Innovativeness – some organizations are some organizations are more innovative and willing to purchase new industrial more innovative and willing to purchase new industrial products than others.products than others.

Personal Characteristics – Personal Characteristics – although some interesting studies although some interesting studies have shown the viability of segmentation on the basis of have shown the viability of segmentation on the basis of individual characteristics, further research is needed to explore individual characteristics, further research is needed to explore its potential as a firm base for microsegmentation.its potential as a firm base for microsegmentation.

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Approaches to Market SegmentationApproaches to Market Segmentation

Nested ApproachNested Approach• Stresses segmentation according to the amount of Stresses segmentation according to the amount of

investigation required to identify and evaluate different investigation required to identify and evaluate different criteria. criteria.

Layers of the nest begins with organization Layers of the nest begins with organization demographicsdemographics

More specific customer characteristics are nested More specific customer characteristics are nested inside the broader organizational basis.inside the broader organizational basis.

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Approaches to Market SegmentationApproaches to Market Segmentation

Other Approaches to Market SegmentationOther Approaches to Market Segmentation• Segmenting on size, industry, or products aloneSegmenting on size, industry, or products alone

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Segmenting Business MarketsSegmenting Business Markets

Type of Economic ActivityType of Economic Activity

Size of OrganizationSize of Organization

Geographic LocationGeographic Location

Product UsageProduct Usage

Structure of the Procurement FunctionStructure of the Procurement Function

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Evaluating Potential Market SegmentsEvaluating Potential Market Segments

Market Profitability AnalysisMarket Profitability Analysis

Market Competitive AnalysisMarket Competitive Analysis

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Product Positioning StrategyProduct Positioning Strategy

IntroductionIntroduction

• Product Positioning Product Positioning

The way a product is defined by customersThe way a product is defined by customers

• Product DifferentiationProduct Differentiation

Involves meaningful differences in the product, Involves meaningful differences in the product, services offered, personnel, etc. services offered, personnel, etc.

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Why Strategically Position Why Strategically Position Products and Services?Products and Services?

So they are perceived as different from competitors in ways that represent value So they are perceived as different from competitors in ways that represent value to customer segmentsto customer segments

As a tool to help marketers visualize the customer’s perceptions of the As a tool to help marketers visualize the customer’s perceptions of the competitive offerings available according to various variables (axes) of competitive offerings available according to various variables (axes) of importanceimportance

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How Can Product Positioning Be How Can Product Positioning Be Misused?Misused?

One common error is to create a map of where you One common error is to create a map of where you would would likelike your products to be positioned or where your products to be positioned or where they are positioned in your perception of the market, they are positioned in your perception of the market, then treat the resulting map strategically then treat the resulting map strategically as if it is a map of the as if it is a map of the actualactual perceptions of the perceptions of the customers in the market.customers in the market.

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Product Positioning StrategyProduct Positioning Strategy

Approaches to PositioningApproaches to Positioning

• TechnologyTechnology

• QualityQuality

• PricePrice

• DistributionDistribution

• ImageImage

• ServiceService

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Product Positioning StrategyProduct Positioning Strategy

Successful PositioningSuccessful Positioning• Consider what position the firm presently owns.Consider what position the firm presently owns.

• Decide what position the firm wants to own.Decide what position the firm wants to own.

• Decide who the firm must outflank to gain that position.Decide who the firm must outflank to gain that position.

• Consider if the firm has the necessary resources.Consider if the firm has the necessary resources.

• Consider if the firm is committed to achieving the Consider if the firm is committed to achieving the objective.objective.

• Determine if the firm can create a marketing mix to Determine if the firm can create a marketing mix to achieve the desired position.achieve the desired position.

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Business Demand ProjectionBusiness Demand Projection Strategic Importance of Forecasting in Decison Strategic Importance of Forecasting in Decison

MakingMaking• Companies must plan in order to have Companies must plan in order to have

materials/resources on hand to meet customer needs.materials/resources on hand to meet customer needs.• It is required by top management, just as engineers It is required by top management, just as engineers

must design and accountants must add numbers.must design and accountants must add numbers.• It is a basic marketing function.It is a basic marketing function.• Other functional areas use demand forecasts to make Other functional areas use demand forecasts to make

their own forecasts and budgets, make purchases, set their own forecasts and budgets, make purchases, set goals, etc.goals, etc.

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Business Demand ProjectionBusiness Demand Projection Common Forecasting ProblemsCommon Forecasting Problems

• Mystique (to those who are not trained)Mystique (to those who are not trained)

• Accuracy (marketers tend to be can-do, optimistic Accuracy (marketers tend to be can-do, optimistic types)types)

• Inconsistency (continual subjective modifications)Inconsistency (continual subjective modifications)

• Accountability (developing forecast versus Accountability (developing forecast versus achieving forecast)achieving forecast)

• Implementation (mixing forecasts, goals, quotas)Implementation (mixing forecasts, goals, quotas)

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Selecting Forecasting MethodsSelecting Forecasting Methods The importance and nature of forecast impacts The importance and nature of forecast impacts

method chosen. method chosen.

Different methods are appropriate for long-term vs. Different methods are appropriate for long-term vs. medium-term vs. short-term forecasts.medium-term vs. short-term forecasts.

Different methods are appropriate for different types Different methods are appropriate for different types of data (e.g., amount of cycle, trend, noise).of data (e.g., amount of cycle, trend, noise).

The right method for the right type situation and the The right method for the right type situation and the right type data improves accuracy.right type data improves accuracy.

Forecasting is not guessing.Forecasting is not guessing.

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Selecting Forecasting MethodsSelecting Forecasting Methods Forecasting requires a pattern or relationship Forecasting requires a pattern or relationship

that is present in past data and will repeat.that is present in past data and will repeat.

Forecasting is a lot more than averaging. It’s Forecasting is a lot more than averaging. It’s an academic area with its own theory, an academic area with its own theory, textbooks, and journals. textbooks, and journals.

Companies routinely hire expert consultants to Companies routinely hire expert consultants to improve their forecasting accuracy by a improve their forecasting accuracy by a percentage point or two and save them millions percentage point or two and save them millions of dollars.of dollars.

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Selecting Forecasting MethodsSelecting Forecasting Methods

General Approaches to ForecastingGeneral Approaches to Forecasting

• Top-down method Top-down method – management develops an – management develops an aggregate measure of sales potential then sales aggregate measure of sales potential then sales quotas are developed and a sales forecast is quotas are developed and a sales forecast is constructedconstructed

• Bottom-up method (Build-up) Bottom-up method (Build-up) – sales force – sales force develops estimates of sales by product lines, develops estimates of sales by product lines, geographic area, or customer group and management geographic area, or customer group and management adds these estimates together to get sales forecastadds these estimates together to get sales forecast

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Selecting Forecasting MethodsSelecting Forecasting Methods

Qualitative ApproachesQualitative Approaches

• Jury of Executive OpinionJury of Executive Opinion

• Sales Force CompositeSales Force Composite

• Survey of Buyer IntentionsSurvey of Buyer Intentions

• The Delphi MethodThe Delphi Method

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Selecting Forecasting MethodsSelecting Forecasting Methods

Quantitative ApproachesQuantitative Approaches

• Causal TechniquesCausal Techniques RegressionRegression

EconometricsEconometrics

Leading IndicatorsLeading Indicators

Diffusion IndexDiffusion Index

Input-Output AnalysisInput-Output Analysis

Life-Cycle AnalysisLife-Cycle Analysis

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