Industrial Market Segmentation

Group 1

Consumer Market Segmentation

=B2C Market Segmentation

Industrial Market Segmentation

=B2B Market Segmentation

But we will continue on B2B Market Segmentation

How shall we proceed?1. Segmentation Variables for

Business Markets1. Demographic2. Operating Variables3. Purchasing Approaches4. Situational Factors5. Personal Characteristics

2. Effective Segmentation Criteria1. Measurable2. Substantial3. Accessible4. Differentiable5. Actionable

3. Steps in Segmentation Process1) Needs-Based Segmentation2) Segment Identification3) Segment Attractiveness

Porter’s Five Force Model4) Segment Profitability5) Segment Positioning6) Segment “Acid Test”7) Marketing-Mix Strategy

1. Segmentation Variables for Business Markets

Snapdragon (by Qualcomm) [S]

Tata Steel [T]

Industry: Which Industries should we serve?S: Mobile Phones Manufacturing Industries. Companies like Sony, Motoroala, etc. are part of this industry.T: Automobile, Aerospace, Rail and Other Manufacturing Industries.

Companies like Maruti, Godrej Interio

Company Size: What size companies should we serve?S: Medium to Large sized companies. From Karbonn to SamsungT: Medium to Large sized companies. From Godrej Interio to L&T

Location: What geographical areas should we serve?S: All areas in the worldT: South-East Asian, Indian, and European regions.

1) Demographic

Technology: What Customer Technologies should we focus on?S: Octa-core, faster processing e.g. Krait processorsT: Different grades of steel for different companies according to their manufacturing requirements

User / Non-User Status: Should we serve heavy users, medium users, light users, or non users?

S: Focus more on Heavy users and cater to other users as wellT: Focus more on Heavy users and Medium users

Customer Capabilities: Should we serve customers needing many or few services?

S: Few Services.T: Few Services.

2) Operating Variables

Purchasing-function organization: Should we serve companies with a highly centralized or decentralized purchasing organization?

S: Highly CentralizedT: Both, Highly Centralized and Decentralized

Power Structure: Should we serve companies that are engineering dominated, financially dominated, and so on?

S: Engineering DominatedT: Financially Dominated and Engineering Dominated

Nature of Existing Relationship: Should we serve companies with which we have strong relationships or simply go after the most desirable companies?

S: Most Desirable companiesT: Both

3) Purchasing Approaches

General Purchasing Policies: Should we serve companies that prefer leasing? Service contract? Systems purchases? Sealed bidding?

S: Systems PurchasesT: Systems Purchase, Service Contract

Purchasing Criteria: Should we serve companies that are seeking Quality? Service? Price?

S: Quality. Snapdragon, unlike MediaTek, focuses on Quality rather than PriceT: Depends company to company. Some might require Quality, some Service while others Price.

3) Purchasing Approaches

Urgency: Should we serve companies that need quick and sudden delivery or service?

S: NoT: Can cater to Sudden Delivery demands if it has enough inventory in place.

Specific Application: Should we focus on a certain application of our product rather than all applications?

S: All ApplicationsT: Certain Application or All Application, this doesn’t matter

Size or Order: Should we focus on large or small orders?S: Large OrdersT: Medium sized Orders to Large

4) Situational Factors

Buyer-seller similarity: Should we serve companies whose people and values are similar to ours?

S: Yes, but not necessaryT: Not at all necessary because Tata it is a product based company and not service based, hence the transactions with people will be lower in number

Attitude towards risk: Should we serve risk-taking or risk-avoiding customers?S: Risk TakingT: Both, Risk-Taking and Risk-Avoiding

Loyalty: Should we serve companies that show high loyalty to their suppliers?S: High Loyalty (Repeat orders)T: Same for Tata Steel, High Loyalty

5) Personal Characteristics

2. Effective Segmentation Criteria

1) Measurable

2) Substantial

3) Accessible

The size, purchasing power, and characteristics of the segments can be measured.

The segments are large and profitable enough to serve. A segment should be the largest possible homogenous group worth going after with a tailored marketing program. It would not pay, for example, for an automobile manufacturer to develop cars for people who are less than four feet tall.

The segments can be effectively reached and served.

4) Differentiable

5) Actionable

• The segments are conceptually distinguishable and respond differently to different marketing-mix elements and programs.

• Example: Married and unmarried women respond differently to different products such as dress materials, cosmetics, households products, etc.

• Effective programs can be formulated for attracting and serving the segments.

• Example : Cigarette manufactures cannot promote their product directly through the different medias such as television, newspaper, internet, etc. therefore they have to take different approach to promote their product.

3. Steps in Segmentation Process

1) Needs-Based Segmentation

2) Segment Identification

Group customers into segments based on similar needs and benefits sought by customers in solving a particular consumption problem.

For each needs-based segment, determine which demographics, lifestyles, and usage behaviors make the segment distinct and identifiable.

3) Segment Attractiveness

Competitive Rivalry

Threat of New

Entrants

Bargaining

Power of

Suppliers

Threat of Substitut

es

Bargaining

Power of

Buyers

Using predetermined segment attractiveness criteria (such as market growth, competitive intensity, and market access), determine the overall attractiveness of each segment.

Porter’s Five Force model is the ideal choice to determine the market attractiveness

4) Segment Profitability

5) Segment PositioningDetermine Segment profitability

For each segment, create a “value proposition” and product-price positioning strategy based on that segment’s unique customer needs and characteristics. 6) Segment “Acid Test”Create “segment storyboard” to test the attractiveness of each segment’s positioning strategy.

7) Marketing-Mix StrategyExpand segment positioning strategy to include all aspects of the marketing mix: product, price, promotion, and place.

Thank you !!

Suggestions? Questions? Doubts?Please ask!

Group 1