Marketing Strategy and Competitive Positioning pdf ebook

CHAPTER 7 SEGMENTATION AND POSITIONING PRINCIPLES
particularly on differences in why customers buy. Its strength is that it is segmentation based 
on customer needs. In the business market, the same logic applies to the purchasing criteria 
of different customers and product applications.
This may be reflected, for example, in urgency of order fulfilment – the urgency of a 
customer’s need to keep a plant in operation or to solve a problem for its own customers 
may change both the purchase process and the criteria used. Urgent replacements may be 
bought on the basis of availability, not price. A chemical plant needing to replace broken 
pipe fittings will pay a premium price for a supplier’s applications engineering, flexible 
manufacturing capacity, speed of delivery and installation skills, while a plant buying pipe 
fittings to be held in reserve would behave quite differently.
One corporate bank struggled to find a way of segmenting the UK market for corporate 
financial services; they concluded that the most insightful approach was to examine their cus-
tomers’ own strategies as a predictor of financial service product need and purchasing priorities.
An added complication in business markets, however, is the decision-making unit (DMU) 
(see Chapter 4). For many business purchases, decisions are made or influenced by a group 
of individuals rather than a single purchaser. Different members of the DMU will often have 
different perceptions of what the benefits are, both to their organisation and to themselves.
In the purchase of hoists, for example, the important benefit to a user may be lightness 
and ease of use, whereas the purchasing manager may be looking for a cheaper product to 
make their purchasing budget go further. Architects specifying installations for a new plant 
may perceive greater benefit in aesthetically designed hoists while maintenance personnel 
may look for easy maintenance as a prime benefit.
Benefit segmentation is at the centre, however, of conventional wisdom on selling in 
business markets. Here the emphasis is on selling benefits rather than features of the product 
or service. In communicating with the different members of the DMU, different benefits 
may be emphasised for each.
7.6.3 Behavioural characteristics
Behavioural issues relevant to segmenting business markets may include buyers’ personal 
characteristics and product/brand status and volume.