Segmentation in B2B markets

B2C companies often use segmentation analysis, which is a complex tool that divides the market into distinguishable segments, separated by consumer behaviour or need. The beauty of segmentation analysis is that you can look at the size, value and performance of these segments and decide whom to concentrate your efforts. Although segmentation analysis is a technique more frequently used by B2C companies, B2B firms can use a similar approach too.

I am not an expert in B2B market research. But, I have great respect for a company that specializes on this topic, B2B International. It has a lot experience working with business-to-business brands and they found out that a typical business-to-business market has 4 segments:

  1. A price-focused segment, which has a transactional outlook to doing business and does not seek any ‘extras.’ Companies in this segment are often small, working to low margins and see their product/service as of “low strategic importance” to their business.
  2. A quality and brand-focused segment, which wants the best possible product and is prepared to pay for it. Companies in this segment often work to high margins, are medium-sized or large, and see their product/service as “high strategic importance.”
  3. A service-focused segment, which has high requirements in terms of product quality and range, but also in terms of after sales, delivery, etc. These companies tend to work in time-critical industries and can be small, medium or large. They are usually purchasing relatively high volumes.
  4. A partnership-focused segment, usually consisting of key accounts, which seeks trust and reliability and regards the supplier as a strategic partner. Such companies tend to be large, operate on relatively high margins, and regard the product or service in question as strategically important.

This is a great start. Now, go over your customer database and see which client falls under which segment. You will quickly realize that all clients demand price, quality, service and partnership. That is not the point. The point is to find “the” pain point of every client. If you have difficulty deciding, you can always use this decision-making tool.

Today’s actionable tip: Don’t forget the 80/20 rule: 20% of your customers account for 80% of your turnover. Such key and large accounts should always be a segment on their own.

3 Comments Add yours

  1. Excellent and relevant article. The B2B space is becoming increasingly a B2H space – Business to Human. Segmentation is the beginning of migrating global/demographic based targeting to individual relationships with customers.

    1. Soydanbay says:

      Thanks for your kind words Chris. You are absolutely right. On that note, you may find this article useful. Title B2B Branding http://www.liquidagency.com/blog/category/steal-this-idea/

  2. Soydanbay says:

    Here is a relevant article: http://themezzaninegroup.com/blog/2012/07/segmentation-as-a-tool-for-growth-in-b2b-part-1-of-3-why-do-segmentation-milena-nazaruk/?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+TheMezzanineGroupB2bStrategyMarketingBlog+%28The+Mezzanine+Group+–+B2B+Strategy+%26+Marketing+Blog%29

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