Segmentation in the industrial market
After studying this chapter, the student must:
• concepts of "segmentation of the market", "market niche":
• Basic segmentation criteria;
• the specifics of the organization of purchases in the B2B market;
be able to
• identify the most significant segmentation criteria for a particular enterprise in the industrial market;
• choose market niches for an enterprise in the industrial market;
• Specificity of segmentation of the industrial market;
• the main approaches to determining market niches;
• skills in organizing purchases in the industrial market;
• the basics of building relationships with suppliers.
Features of segmentation and the main approaches to identifying the company's market niches in the B2B market
In conditions of increasing competition in the B2B market, segmentation is the basis for determining the concentration of the company's efforts in a certain direction of its business, which allows to rationalize the company's expenses for the development of the production program, production and sale of products.
Therefore, segmentation of the market is an activity to identify potential groups of consumers of a particular product of the manufacturer.
It's important to remember!
Segmentation ( segmentation) - on groups of consumers but in advance to certain signs, allows to concentrate means on the most effective direction.
The main goal of segmenting the market is to identify the most important customer needs for goods in each group of companies and to orient their product policies to meet demand.
With the segmentation process, concepts such as the "market segment", "target market segment", "market niche" are closely related.
Usually, a uniform collection of consumers responding to the product and marketing actions is accepted under market segment Target segment (market) of the company is a segment that the company has chosen for itself based on marketing research for a particular type of its products, characterized by minimal marketing costs and providing the company with the planned level of sales and profit.The company's target market is a potential market of a firm that is defined by a set of people with similar needs for a particular product or service, sufficient resources, and willingness and ability to buy. Target segment is a homogeneous group of consumers of the target market of the company, having similar needs and buying habits in relation to the product of the firm.
In practice, along with the identification of the market segment, the company's management also actively searches for and chooses its market niche. Two concepts segment and niche are closely related, but are not synonymous. To determine and identify the main differences between them, consider them in more detail.
As already defined above, a segment is understood to be a part of the market, with a clearly defined group of buyers who have similar needs and the same reaction to the marketing mix of a certain product.
Market niche is an unoccupied or not fully occupied place in the market that allows an enterprise to show its advantages over competitors and is determined by the product of the company, which is exclusive in its characteristics and advantages in comparison with products of other manufacturers . In the process of choosing the market niche of the company, management takes into account the production capabilities of the enterprise, the knowledge and skills of its employees, the basing of the production of goods.
Market niches can be vertical and horizontal.
If the manufacturing company is focused on the vertical niche , , then it seeks to meet the needs of different consumer groups with this product or group of similar products.
As an example, manufacturers of computers - Dell, HP, Fujitsu etc. Leading computer manufacturers are trying to produce computers of general value, able to perform various tasks depending on the scope of their application due to the variety of procedures and software intended for companies, small businesses, transnational corporations and end-users through retail stores. Thus, a kind of vertical market niche is formed in which trading and marketing intermediaries operate.
In the case of a company's orientation to a horizontal market niche , , it is important to focus on satisfying the consumer's need for a whole range of different goods in which they need, The range of products offered by the manufacturer for consumer companies, regardless of whether there is a close relationship between these goods or services. Consequently, unlike the marketing of a company focused on the vertical niche of the market, in this case, it is assumed that the manufacture of the manufacturer is diversified, it releases an ever wider range of products or provides an increasingly comprehensive set of services to its customers, regardless of whether there is between these products or services a close functional relationship.
It's important to remember!
The capacity of a market niche is always less than the capacity of a market segment. Niches are always relative in time, and as the company is saturated with competitors, the market niche turns into a market segment.
The process of segmentation of the business market has a certain share of the specifics in comparison with the market of consumer goods.
One of the main specific features of the B2B market segmentation is the relatively limited number of segmentation criteria . Let's emphasize that often these criteria will be mandatory for the company, as they allow you to clearly differentiate the needs of the buyer. When segmenting its market, the producer pays special attention to the production and economic criteria for consumer segmentation , which include:
• the industry to which the consumer enterprise belongs;
• the technological process used in the enterprise;
• the size of the consumer company.
The role of such a criterion as technology, , which, in fact, is decisive when choosing a supplier by the consumer. Thus, large companies that use advanced technology are oriented primarily to the leading suppliers of equipment and materials, whose products have proven themselves in the market. They demand for the most complex types of equipment, electronic equipment, etc., prefer to purchase more expensive equipment and raw materials, if they are higher in quality. Conversely, segments that use traditional technology (companies from developing countries, small firms, etc.) are oriented toward cheaper means of production, in part to the detriment of qualitative indicators.
Another specific feature of segmentation in the B2B market is the fractional nature of this process, because of the scarcity of the number of consumers and their significance for the supplier and producer, and also the significance of their specific requirements for the delivered product, the identified market segments may be narrower than in the market B2C. For this reason, the manufacturer carefully plans and discusses with customers the speed and completeness of delivery, specifies the specific requirements for the parameter equipment, and materials, specifies payment terms, settlement methods, centralization or decentralization of procurement operations, etc. Particular attention is paid to the form of the relationship with the customer: a contractual long-term basis or one-off supplies.
The third feature of segmentation in the business market is that the target segment of the company can be expressed only by one consumer, which represents the whole economic region or even the country. In such conditions, the supplier company develops a special marketing strategy for each individual customer. This takes into account not only the individual characteristics of the buyer but the above criteria, but also the personal qualities of the manager, including the tendency to take risky technically new solutions; attitude to the change in marketing policy; approach to choosing a supplier.
When identifying market niches, companies can use the following methods:
1) discussion of such issues with firms representing the most promising segments of the market;
2) Problem the approach is to develop a list of problems encountered by users of this type of product, then 100-200 customer firms (or individual consumers) are asked to rank the identified problems in terms of their importance and, according to such a ranking, measures are taken to improve the product;
3) the third approach is characterized by an analysis of the structure of the required qualities and the degree of their availability in the supplied product.
Special note that the identification and consideration of customer requirements leads not only to a more complete satisfaction of their needs, but also contributes to the emergence of new types of products.
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