Major segmentation variables for business markets

We can segment business markets with some of the same variables we use in
consumer markets, such as geography, benefits sought, and usage rate, but business
marketers also use other variables. Demographic variable are the most important,
followed by the operating variables, purchasing approaches, situational factors and
personal characteristics.
Business marketers generally identify segments through a sequential process.
Consider a glass manufacturing company: the company first undertook macro
segmentation. It looked at which end use market to serve: windscreens and
automobile glasses, residential or beverage containers. It chooses the residential
market it needed to determine the most attractive product application: building
components or glass homes. Deciding to focus on building components, it consider
the best customer size and chose large customers. The second stage consisted of micro
segmentation. The company distinguished among customers buying on price, service
or quality. Because it had a high-service profile, the firm decided to concentrate on
the service-motivated segment of the market.

Demographic

Industry : Which industry should we serve?

The company decided to serve the glass manufacturing related

industry.

Company size What size companies should we serve?

The company chooses the segment of building components. Which

consist of governmental as well as private sector

Location What geographical areas should we serve?

On the basis of geographical segmentation the company choose the

metropolitan areas as a segment as in urban areas more residential
buildings and other offices etc. are constructed as compared to
remote areas.

Operating variables

Technology What customer technologies should we focus on?

The question answers that what are the priorities of customers on

the basis of technology. As in above case mostly end user can prefer
the traditional glass blowing technology as compared to the new
technology.
User or Should we serve heavy users, medium users, light users or nonuser?
Nonuser
status. It helps to identify the target customer, which customer we should
serve. Heavy user like a contractor who construct the heavy building
or shopkeepers who sells the product only to end consumers.

Customer Should we serve customer needing many or few services?

capabilities
Operating variables also consist of customer capabilities which are
based on need of customer. For example a in glass industry an end
customer may need glass with some of its other components like
ceramics etc.

Purchasing approaches

Purchasing Should we serve companies wiht a highly centralized of

function decentralized purchasing organization?
organization
This micro segment is based on the organizations internal
purchasing function, which will be served by the company. Means
that choosing organization on bases of their centralized or
decentralized purchasing power.

Power Should we serve companies that are engineering dominated,

structure financially dominated, and so on?

Choosing the organizations on their dominated characteristic. In

above case the company may choose a firm which is financially
dominated rather than engineering or vice versa.

Nature of Should we serve companies with which we have strong

existing relationships or simply go after the most desirable companies?
relationship
Glass manufacturing company can choose the company on
relationships or desire. For example the above mentioned company
choose the private sector on basis of relationship while can choose
governmental sector on basis of desire.

General Should we serve companies that prefer leasing? Service contract?

purchasing Systems purchase? Sealed bidding?
policies
Segmentation can be done on the basis of purchasing policies like
leasing, contract etc.
Purchasing Should we serve companies that are seeking quality? Service?
criteria Price?

Segmentation of target market also based on quality or price

orientation of the companies.

Situational factors

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

Segmentation is done by the emergency delivery system or service.

The glass manufacturing company will serve company who need
quick and sudden delivery or service or not.

Specific Should we focus on a certain application of our product rather than

application all application?

The company which deals in glass may focus only on the certain use
like the residential glass not automobiles.

Size or order Should we focus on large or small order?

This is done by benefit analysis; it is to decide that a large order

takes long time and cannot be profitable while in same time many
small orders can be more beneficial for the company.

Personal characteristics

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

It is based on behavioral segmentation of business market.

Attitude Should we serve risk taking or risk avoiding customers?

toward risk
Company may choose the customer on basis of their behavior
towards risk. For example the transportation of glass to the remote
areas is a huge risk, the company will decide while they should
serve the customer or not.

Loyalty Should we serve companies that show high loyalty to their

suppliers?

Company has to decide that they should serve the organizations that
have high loyalty to suppliers or not.