b2b mktg
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Vitale, Giglierano and Pförtsch. B2B MKTG. 2007 Edition. Chapter 7 Segmenting, Targeting, and Positioning. 3 Basic Concepts in B2B Marketing. Segmenting. Targeting. Positioning. Basic Ideas of Segmentation. Measureability. - PowerPoint PPT PresentationTRANSCRIPT
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2007 Edition
Vitale, Giglierano and Pförtsch
Chapter 7Segmenting, Targeting, and Positioning
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3 Basic Concepts in B2B Marketing
Segmenting Targeting Positioning
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Basic Ideas of Segmentation
Marketers seek to create market segments that have the characteristics of
Measureability
Accessibility
Substantiality
Actionability
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MeasureabilityCan we understand the size and needs of the market segment?
AccessibilityCan we communicate with the segment so that serving the segment is possible?
SubstantialityDoes the segment desire that values that an offering presents?
ActionabilityCan we create a competitive advantage with respect to the needs of the segment?
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Common Bases for
Segmentation
By product offered
By industry in which the customer
participates
By size of the customer’s
company
By buying behavior
By technologyused by thecustomer
By size of account
By geographicregion
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Value-Based Segmentation
Value: the sum of the benefits minus the sum of the costs
Companies should try to choose and address segments that are homogenous in the kinds of value sought.
HomogenousSegments
HeterogenousSegments
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Analytic Approach to Segmentation
Analytic approaches need two sets of data:1) Information about segment size and growth
• Standard Industrial Classification (SIC) and North American Industrial Classification System (NAICS) codes are useful.
2) Information about each targeted segments needs and buying behavior.
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Hypothetical Segmentation Data
• From secondary data (US Census data)– Number of business with 50-500 employees 375,000
• From quick survey of consultants– Seg 1: Major turnaround 10%– Seg 2: Stopping deterioration 20%– Seg 3: Competitive improvement 30%– Seg 4: Specific area improvement1 50%
• From Delphi estimate of small business consultants:– Seg 1: Change in major turnaround by 2002 +100%– Seg 2: Change in stopping deterioration by 2002 +100%– Seg 3: Change in competitive improvement by 2002 -50%– Seg 4: Change in specific area improvement by 2002 +150%
1 – can overlap with other categories
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Hypothetical Sizes of Market SegmentsSegment # of Small
Businesses in 2000
# of Small Businesses
in 2002
Change, 2000 to 2002
Segment 1 – Major turnaround
37,500 75,000 100%
Segment 2 - Stopping deterioration
75,000 150,000 100%
Segment 3 - Competitive improvement
112,500 56,250 (50%)
Segment 4 – Specific area improvement
112,500 281,250 150%
•This shows how an analytic approach can be used to estimate segment size and growth.•To complete the analysis, data is also needed on the needs and buying behavior for each segment. Go to Exhibit 7-6
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Segmentation by Discovery
• Sometimes, a business starts serving only 1-2 large customers.
• Over time, additional customers who seek something similar to the original offering are recruited/attracted. In this way, a new segment is “discovered.”
• Field marketing personnel must be coached to recognize such discovery opportunities.
• Proprietary information of different customers must be respected.
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Factors in Assessing Segment Attractiveness
•Size of segment•Growth rate of segment•Intensity of unmet needs•Reachability of segment through communication channels•Readiness of segment to reach and adopt a solution•Likelihood of competitive intensity•Sufficiency of channel reach•Likely value contribution by channel(s)•Match between segment needs and supplier’s strengths•Differentiability of supplier’s offering•Opportunity to achieve strategic goal by addressing segment•Opportunity to achieve learning goal by addressing segments
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Attractiveness of SegmentsMarket
Attractiveness
Competitive Attractiveness
Channel Attractiveness
Internal Attractiveness
Attractiveness – OtherConsiderations
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Market AttractivenessMarket
Attractiveness
Competitive Attractiveness
Channel Attractiveness
Internal Attractiveness
Attractiveness – OtherConsiderations
•Large and fast growing segments are more attractive than smaller and slow-growing segments•This necessitates accurately predicting future growth.•Other issues include
•Adaptability of market segments,•Existing relationships with the buying center members, and•Available customer’s budget
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Competitive AttractivenessMarket
Attractiveness
Competitive Attractiveness
Channel Attractiveness
Internal Attractiveness
Attractiveness – OtherConsiderations
•What is the likely existence or emergence of competition in the market segment?•Are there barriers to entry facing competitors?•Does being first to market provide an advantage?
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Channel AttractivenessMarket
Attractiveness
Competitive Attractiveness
Channel Attractiveness
Internal Attractiveness
Attractiveness – OtherConsiderations
•It is preferable to target customers already served by well-established marketing channels, or if an existing channel can be adapted, it may serve the segment.•When there is no suitable existing channel, a market view of competition may be necessary.
•How is the existing need being met?•Will customers switch?
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Internal AttractivenessMarket
Attractiveness
Competitive Attractiveness
Channel Attractiveness
Internal Attractiveness
Attractiveness – OtherConsiderations
•A segment is more attractive when the segment’s needs can be met by the firm’s core competencies.•This is identified through environmental analysis.
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Segment AttractivenessSegment 1
Major Turnaround
Segment 2: Stopping
Deterioration
Segment 3: Competitive
Improvement
Segment 4: Specific Area Improvement
Potential Size in 2000 (in millions)
2
$187.5
3
$375.0
4
$562.5
4
$562.5
Growth, % by 2002 4
+100%
4
+100%
1
-50%
5
+150%
Need strength 5 4 3.5 3.5
Competitive strength 3 3 4 3
Channel reach 5 5 5 5
Communications reach
4 4 4 4
Capability fit 2 5 5 2
Price sensitivity 2 3 4 3
Overall attractiveness (sum of attribute scores)
27 31 30.5 29.5
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Attractiveness – Other Considerations
Market Attractiveness
Competitive Attractiveness
Channel Attractiveness
Internal Attractiveness
Attractiveness – OtherConsiderations
•Other factors that might cause a segment to rated higher or lower include:
•Public policy (excessive government regulation can cause a segment to be downgraded)•Organizational goals (market share goals may make firms more aggressive in targeting)