Segmentation, targeting, and positioning

The most important strategic decision a business marketing firm must make is choosing the most rewarding market segments. Segmentation is the first of the three-step process, followed by choosing the most effective segment, called targeting, and positioning the firm in the most attractive way toward that market segment. The key points from this chapter are as follows: Consumer marketers segment by geographic, demographic, psychographic, and behavioral characteristics. Only some of these are applicable to business market segmentation. It is dangerous to simply apply consumer marketing segmentation techniques to business markets. A good segment is measurable, substantial, accessible, differentiable, and stable. Identifiers fall into demographic, operations, product, and purchasing situation variables. Response profile variables include product attributes, customer application, and buying center personal characteristics. Infrastructure barriers, process issues, and implementation barriers are the major problems encountered by firms attempting to segment their markets effectively. Segmentation should be continually re-examined to be sure that market conditions have not changed. Each segment requires different capabilities from a firm. Future attractiveness of the segment, demands on the resources of the firm, and the fit with the firm’s strategy are the three major tests to be applied.