Industrial Market Segmentation

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Industrial Market Segmentation

• Yoram Wind and Richard Cardozo

Bastien BART Hugo VALLET
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Introduction

• This paper is about a conceptual approach of the
  segmentation of industrial markets.
• They present two examples to encourage
  appropriate use of market segmentation.
• There are three main purpose of this paper
• Outline theoretically sound segmentation
  strategies.
• Explore the current market segmentation
  practices.
• Contrast theoretically-derived strategies with
  current practice.

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Introduction

• They will describe an  ideal  model, developped
  from the literature on market segmentation by
  understanding and questioning the current
  industrial segmentation practices.
• To their mind this concept is as conceptually as
  applicable in industrial marketing as it is for
  the marketing of consumer goods.
• The example of D. Yankelovich showed the
  usefulness of segmentation in industrial markets.

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Introduction

• It is also a crucial ingredient in the design of
  industrial marketing strategies.
• Their research indicates that industrial
  marketers by no means use market segmentation
  strategies as widely as they might.
• Yet two main examples which will be described
  make it clear that market segmentation can indeed
  be a profitable strategy for industrial marketers.

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The concept and importance of market segmentation.

• A market segment is simply a group of present or
  potential customers with some common
  characteristics which is relevant in explaining
  their response to a suppliers marketing stimuli.
• From their point of view buyers of many products
  may usefully be segmented into two groups
• Repeat buyers.
• First-time buyers.
• This concept as a marketing strategy, involves
  first identifying particular segments, and then
  developing differentiated marketing programs for
  each of those segments.

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The concept and importance of market segmentation.

• To be useful to marketers, segments must be
  sufficiently different from one another and
  sufficiently large and profitable to make such
  tailoring of marketing programs worthwhile.
• According to them the identification may
  sometimes be very difficult or economically
  unfeasible, in which case the industrial marketer
  faces essentially one undifferentiated set of
  buyers. But at the other extreme, each individual
  customer might constitute a segment.

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The concept and importance of market segmentation.

• Wind and Cardozo purpose what they call an
  ideal segmentation model.
• This model is based on an industrial markets made
  of two different stages
• The first involves formation of macrosegments,
  based on characteristics of the buying
  organization and the buying situation.
• The second stage involves dividing those
  macrosegments into microsegments , based on
  characteristics of decision-making units(DMU).

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The concept and importance of market segmentation.

• DMU A buying center in marketing, and organiz
  ational studies, is a group of employees, or
  members of any type of organization responsible
  for finalizing major decisions, usually involving
  a purchase.

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The concept and importance of market segmentation.

• This hierarchical approach enables an initial
  screening of organizations and selection of these
  macrosegments which provide potentially
  attractive market opportunities.
• This method also provides a reduction in the
  total research effort and cost. Cause the deep
  research is limited only to macrosegments which
  passed the initial screening.

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The concept and importance of market segmentation.

• Finally we can notice they explain that marketers
  may choose key segmentation variables from an
  array of several dozen research to identify the
  most appropriate of those variables may be well
  worthwhile.
• Its also important to know that customers needs
  and competitors activities are constantly
  changing, so the segmentation strategy must be
  reviewed periodically.

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The macro-micro model of industrial market
segmentation by Y. Wind and R. Cardozo
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Macrolevel Bases of Segmentation

• Macrolevel bases of segmentation are concerned
  with general characteristics of the buying
  organization, the nature of the product
  application, and the characteristics of the
  buying situation.

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Microlevel Bases of Segmentation
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The industrial segmentation approach by Wind and
Cardozo
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Conclusion

• For Wind and Cardozo, Industrial Marketers, in
  1974, fail to employ market segmentation  as a
  foundation for planning and control of Marketing
  program . Sometime he used only a single stage
  segmentation but never a sub-divised segmentation
  which could be use profitably.
• They consider segmentation as the basis of each
  Marketing research and strategy.
• They also think, that in using their strategies,
  marketers could improve the efficient of their
  sales, and focus their ressources directly at
  particular target firms.