Effective B2B Marketing Strategies: Segmentation and Targeting
Characteristics of Marketing Strategy in the Business Market Context
5P’s of Strategy
- Strategy as a plan: Direction or path to get the company from point 1 to point 2
- Strategy as a pattern: Consistency over time
- Strategy as a position: The place of a particular product/company in a particular market.
- Strategy as a perspective: Fundamental way of doing things
- Strategy as a ploy: Maneuver to outwit competitors
Strategy
Policies and key decisions adopted by management that have a major impact on financial performance and that involve significant resource commitment and are not easily reversible. There is business unit strategy and corporate strategy
Strategy Approaches
- Rational planning approach
- The resource-based strategy
- Strategy as the management of relationships and networks
Segmentation, Targeting, and Positioning
Segmentation in B2B
The understanding that while all customers are different, some may share similar needs and behaviors is at the heart of segmentation. Creation of like-minded groups or like-behaved groups. It enables the marketer to research the needs of specific groups, make choices about which groups in the market are worth the investment of marketing effort from the firm, and decide how exactly that effort needs to be managed.
Segmentation Bases
The process of segmentation requires the application of criteria that can support the classification activity:
- Firmographics: Industry, customer location, customer size
- Operating variables: Company technology, product and brand use status, strategic type.
- Purchasing approach: Organization, power structures, buyer-seller relationships, purchasing policies, purchasing criteria
- Situational factors: Urgency, size, scarcity,
- Personal characteristics of buyers: Buyer motivation, buyer risk management behavior, buyer relationship style
Whatever bases are applied, there are a series of tests that business marketers can use to establish the quality of the segmentation process and the usefulness of the segments that are proposed:
- Measurable/distinctive: The segments can be distinguished conceptually and respond differently to different marketing mixes, elements, and programs.
- Accessible: The segments can be effectively reached and served, which requires them to be characterized by means of observable variables.
- Substantial/profitable: The markets are large and profitable enough to serve.
- Actionable: Effective programs can be formulated to attract and serve the segments
Target Segment Selection
- B2B markets have a more complex decision-making unit
- B2B buyers are more “rational”
- B2B products are often more complex
- B2B target audiences are smaller than consumer target audiences
- Personal relationships are more important in B2B markets
- B2B buyers are longer-term buyers
- B2B markets have fewer behavioral and needs-based segments
Factors to Consider
- Estimates of segment size
- Growth rate
- Customer product/service needs and fit with the company’s competence in meeting that need
- The structure and nature of competition in the segment such that a competitive advantage could be obtained
- Proximity
- How the activities of important constituencies such as government or the public at large may affect the segment
- How technology impacts it
- How relationships with others affect it or would be affected by it.