MARKETING STRATEGY

Segmenting Business Markets

Competition2

Identify competitors‘ strategies, objectives, strengths, weaknesses and reaction patterns

Manage a good balance of consumer and competitor monitoring

Segmentation variables for business customers Demographics: industry, company size,

location Operating variables: technology, user status,

customer capabilities Purchasing approaches: centralized,

dezentralized, power structure, relationships, purchasing policies and criteria

Situational factors: urgency, specific applications, size of order

Personal characteristics: focus on companies whose people/values are similar to the buyer‘s, risk taking/risk avoiding customers; high/low loyalty customers

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Five different target market strategies Single-segment concentration Selective specialization Product specialization Market specialization Full market coverage

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Single-segment strategy

concentrated strategy: one market segment is served with one market mix;

The choice for smaller companies with limited resources

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Selective specialization

Multiple segment strategy = differentiated strategy

Different marketing mixes are offered to different segments

The product itself may or may not be different

In many cases only the promotional message or the distribution channel vary

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Product specialization

The firm specialises in a particular product and tailors it to different market segments

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Market specialization

A firm specializes in serving a particular market segment and offers that segment an array of different products

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Full market coverage

Mass marketing strategy offering a single undifferentiated marketing mix to the entire market

Differentiated strategy offering a separate marketing mix to each segment

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Differentiated marketing costs Product modification costs: R&D, engineering Manufacturing costs: producing 10 units of

10 different products is more expensive than 100 units of one product

Administrative costs: separate marketing plans for each segment – extra marketing research, forecasting, sales analysis, promotion, planning and channel management

Promotion costs: increased promotion planning costs and media costs

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