B2B or B2C? First you have to decide on which market would you like to compete.

Your customers will be other businesses, organizations or end-users? This is a very important question to answer, because business-to-business marketing (shortly B2B) and business-to-consumer marketing (shortly B2C) are completely different. At this section marketing means also the understanding your customers, not only the way to reach and inform them. The following table shows the main differences between business customers and end-users: Comparison between B2B to B2C Marketing Characteristics (Pfoertsch, W. et al, 2007) Business-to-Business Business-to-Consumer (B2B) (B2C) Aimed at intermediate Aimed at end-user value provider Transaction or one Two way Relationship directional "relationship" Small focused target Mass market, large number markets, small number of of consumers customers Buyers can most effectively Buyers are reached through be reached through mass media specialized media Multi-step buying cycles Short sales cycle Relatively complex product Relatively simple product offering offering Never on impulse Purchase can be an impulse Marketing is about Marketing is about educating convincing Brand is about the first Brand can be the reason to impression, it opens the buy door but does not sell Source: Pfoertsch, W., Linder, C., Beuk, F., Bartikowski, B. Luczak, C. A. (2007): B2B Brand Definition - Understanding the Role of Brands in Business and Consumer Markets. [pdf] PFORZHEIMER FORSCHUNGSBERICHTE NR. 9. http://www.hs-pforzheim.de/Dede/Hochschule/Einrichtungen/IAF/Veroeffentlichungen/forschungsberichte/Documents/PF_F B_9_B2B_Brand_Definition.pdf More info about B2B and B2C: http://en.wikipedia.org/wiki/Business-to-business In B2B your customers are other businesses, organizations, they wont purchase on impulse. Your customers are experts in something and you wont be able to sell them anything with a

superstar or a model photo on the packaging. You have to convince them with rational arguments to choose you. In both case, you choose B2B or B2C market you have to make market segmentation, because there are big differences between customers. For example in B2B the needs of small businesses and multinational companies as potential customers are completely different. The situation is the same in case of customers in B2C; the customer needs differ in age, location, gender, lifestyle etc. You have to decide which market will you choose, or if you combine the two, how will you do that. B2C segmentation You can segment consumer markets based on geographic, demographic, and psychographic variables related to consumer characteristics as well as behavioral variables related to consumer response (Kotler, 2002: 148): Geographic segmentation calls for dividing the market into different geographical units such as nations, states, regions, counties, cities, or neighborhoods. The company can operate in one or a few geographic areas or operate in all but pay attention to local variations. For example daily newspapers segment the market to capital and countryside. In demographic segmentation, the market can be divided into groups on the basis of age, family size, family life cycle, gender, income, occupation, education, religion, generation, nationality, social class etc. For example car manufacturers can segment the market based on family life cycle or gender, a big family needs a completely different type than a single urban woman. In psychographic segmentation, buyers are divided into different groups on the basis of lifestyle or personality and values. For example Volvo focused its brand on people for whom safety is very important. In behavioral segmentation, buyers are divided into groups on the basis of their knowledge of, attitude toward, use of, or response to a product. Behavioral variables can be occasions, benefits, user status, usage rate, loyalty status, buyer-readiness stage, and attitude. For example chocolate maker companies can also segment the market based on occasions, at Christmas and Easter the needs are completely different than in the other periods of the year.

Segmentation variables for consumer markets (Kotler, 2002: 149). Geographic Region Pacific, Mountain, West North Central, West South Central, East North Central, East South Central, South Atlantic, Middle Atlantic, New England Density Urban, suburban, rural Demographic Age Under 6, 611, 1219, 2034, 3549, 5064, 65_ Family Size 12, 34, 5_

Family life cycle

Gender Income Occupation

Education Social class Psychographic Lifestyle Personality Behavioral Occasions Benefits User status Usage rate Loyalty status Readiness stage Attitude toward product

Young, single; young, married, no children; young, married, youngest child under 6; young, married, youngest child 6 or over; older, married, with children; older, married, no children under 18; older, single; other Male, female Under $9,999; $10,000$14,999; $15,000$19,999; $20,000$29,999; $30,000$49,999; $50,000$99,999; $100,000 and over Professional and technical; managers, officials, and proprietors; clerical, sales; craftspeople; forepersons; operatives; farmers; retired; students; homemakers; unemployed Grade school or less; some high school; high school graduate; some college; college graduate Lower lowers, upper lowers, working class, middle class, upper middles, lower uppers, upper uppers Straights, swingers, longhairs Compulsive, gregarious, authoritarian, ambitious Regular occasion, special occasion Quality, service, economy, speed Nonuser, ex-user, potential user, first-time user, regular user Light user, medium user, heavy user None, medium, strong, absolute Unaware, aware, informed, interested, desirous, intending to buy Enthusiastic, positive, indifferent, negative, hostile

B2B segmentation Business markets can be segmented with some variables that are employed in consumer market segmentation, such as geography, benefits sought, and usage rate. Yet business marketers can also use several other variables (Kotler, 2002: 152). For example demographic variables are very important; the industry, company size or location. In the following table you can see the major segmentation variables for business markets. Segmentation variables for business markets (Kotler, 2002: 153): Demographic 1. Industry: Which industries should we serve? 2. Company size: What size companies should we serve? 3. Location: What geographical areas should we serve? Operating Variables 4. Technology: What customer technologies should we focus on?

5. User or nonuser status: Should we serve heavy users, medium users, light users, or nonusers? 6. Customer capabilities: Should we serve customers needing many or fewer services? Purchasing Approaches 7. Purchasing-function organization: Should we serve companies with highly centralized or decentralized purchasing organizations? 8. Power structure: Should we serve companies that are engineering dominated, financially dominated, and so on? 9. Nature of existing relationships: Should we serve companies with which we have strong relationships or simply go after the most desirable companies? 10. General purchase policies: Should we serve companies that prefer leasing? Service contracts? Systems purchases? Sealed bidding? 11. Purchasing criteria: Should we serve companies that are seeking quality? Service? Price? Situational Factors 12. Urgency: Should we serve companies that need quick and sudden delivery or service? 13. Specific application: Should we focus on certain applications of our product rather than all applications? 14. Size of order: Should we focus on large or small orders? Personal Characteristics 15. Buyerseller similarity: Should we serve companies whose people and values are similar to ours? 16. Attitudes toward risk: Should we serve risk-taking or risk-avoiding customers? 17. Loyalty: Should we serve companies that show high loyalty to their suppliers?