Description
segmentation in B2B markets.Macro Segmentation,micro segmentation,OEM,revenue,industrial product models are covered in this PPT.
?
Industrial market segmentation is? A scheme for categorizing industrial and business customers ? To guide strategic and tactical decision-making The goal for industrial market segmentation scheme is to identify the most significant differences/similarities among current and potential customers that will influence their purchase decisions or buying behavior Segmenting industrial markets is different and more challenging because of greater complexity in buying processes “A homogeneous group of present or potential Customers who share a similar set of preferences or wants and respond similarly to a supplier’s marketing stimuli”.
?
?
?
? ? ? ? ? ? ? ?
Background Need for Segmentation Steps for Segmentation Bases of Segmentation Variables in Segmentation Two-Stage Market Segmentation (Wind & Cardozo Model) Evaluation of Segments Caselet
?
Identifiable Accessible Substantial Unique Needs Durable
?
?
?
?
?
Industrial market segmentation is based on broad two-step classifications – ? Macro-segmentation ? Micro-segmentation This model is one the most common methods applied in industrial markets today Macro Segmentation – Differences between Industries and Organizations
? Size ? Geographic Location ? Product Application, etc
?
?
?
Micro Segmentation – More directly related to
? Purchase Decision Making Process ? Behaviour of those individuals involved in the decision making.
Approach Geographic
Variables Area of Operation SIC Code
Classification Domestic or International, State/Country, Urban/Rural, Distant or close to the supplier Agriculture, Mining, Manufacturing etc Larger or Small - Number of Employees, Sales Volume, Annual Purchase, Average Order Size, Value Added by Manufacturing Advanced or Basic Light / Heavy / Non Users Decentralized or Centralized Industries, Institutions, Government, Resellers Recession, Prosperity etc Rapid or Slow, Stage (Take-off or decline) Degree of Competition (Intense or Moderate), Nature Oligopoly or Monoploy, Customer Loyalty - Weak or Strong
Demographic
Company Size Technology User Status
End Use Markets Function/Organization Business Cycle Economic Industry Growth Competitive Forces
Base
Variables Purchasing Situation Purchasing Stage Customer Experience Stage
Classification New tasks modified re-buy or straight re-buy Problem identification/proposal evaluation/negotitaion etc. Product life cycle stages (Introduction/Growth/Decline)
Organizational
Customer Interaction Needs(Dependence on Supplier More or Less Expertise) Product Innovativeness Organizational Capabilities Inventory Requirements Purchase Importance Innovators or Followers Strong or Weak MRP or JIT High of low degree of purchase risk Local vs Global, Bids vs Contracts, Leasing vs Outright buys Quality or service or price or supplier reputation
Purchase Situation
Purchasing Policies Purchasing criteria
Buying centre-power structure Dominated by whom - Engineering or Production
Base
Variables Buyer-Seller Characteristics Attitude towards Risk exposure
Classification Similar or Different Risk taking or avoiding. First Time prospects, novices or sophisticates Collaboration, Compromise, Avoidance or Coalition formation, Information gathering or intuitive Leader or Follower Adventurous or Conservative Price-Oriented, Solution oriented and strategic value Programmed buyers, Transaction Buyers, Relationship Buyers, Bargain Hunters Switchers or Loyal Full or Nil Single or multiple source buying, heavy or medium or light users
Personal Characteristics
Decision Making Style Cognitive Style Life Style and Image Orientation in Buying Buying Approach
Supplier - Consumer Loyalty Relationship Reciprocity Dependence
Measurable Variables for Segmentation
1.
2.
3.
4. 5.
Service Support Standardized Product Range Type of Industry – Material Handling , -- Factory Automation Expected Revenues/ Volumes Nature of O.E.M
Macro Profiles of Segments:
1.
2.
3.
Geographic: a. Global Customer base:- Sidel India b. Local Customer – PAM Group Demographic: a. User Status: OEM’s / System Integrator b. Company Size: Large/ Medium/ Small c. Technology: Mechanical/ Digital Interface End user Market: a. Economic
b. Competitor's position. SMC/ Commozi
1.
Organizational: a. Purchase situation:- OEM – Straight Re-buy New Customer/ Switcher – Mod Re-buy b. Customer Experience:- Product Offer – General/ Specific c. Product Innovation :Seg–I-- Pioneers/ Innovators : NPD using FESTO Seg-II– Followers : Using run of the mill products
2. Personal Characteristics:- Customer-Festo relationship a. Seg I :- Relationship based b. Seg II :- Price conscious c. Seg III :- Brand conscious / Quality conscious
3. Purchase situation: a.Inventory:- Seg I – Organized – Inventory control (JIT)
Seg II – Less Organized – Need based buying b.Purchase Policy :- Global (Volumes) & Local (Price Premium)
c. Buying Centre :Seg–I – Small OEM : Individual decision makers Seg-II– Corporate: Joint Decision (Interactive, customization)
4. Supplier Customer Interaction
a. Buying Approach :- Seg I – Cylical / Seg II - Transactional b. Loyalty :- Seg I – Brand loyal / Seg II - Switchers c. Dependence:- Seg I –Complete / Seg II – Critical / Seg III -Low
Given a generic product/service Identify Macro segments based on key organizational characteristics
Corporate objectives and resources
Select a set of acceptable macro segments
Evaluate each of the selected macro segments on whether it exhibits distinct response to the firms marketing stimuli. If it does, stop and use the macro segment as the target segment
If it does not, identify within each acceptable macro segment the relevant micro segment based on the key decision making unit (DMU) Select the desired target micro segment based on the cost and benefits associated with reaching the segments. Identify the complete profile of the segment based on the organizational and DMU characteristics.
Develop macro segments of organizations Develop a Decision Matrix Removal of outliers Develop micro segments using cluster analysis Assess relationship between micro segment and characteristics of the organization in the micro segment
Bonoma and Shaprio’s Nested Approach
Specific, Organization Demographics •Location • Industry •Company Size Operating variables •Technology •User- Non users status •Customer’s capability (Finances) Purchasing approaches • Buying centre structure •Purchasing policies • Purchasing Criteria Situational Factors •Urgency •Application •Size of order Personal Characteristics •Motivation •Buyer-seller Dyad •Risk perceptions
Subtle (Micro)
General, Observable (macro)
IS SEGMENTATION APPROPRIATE? Are segments •Measurable •Accessible •Homogenous •Consistent with the company overall market approach
Which Segments should we go after? Apply cost benefit analysis to each level of segmentation MACRO BASES (Organisational Demographics) INTERMEDIATE BASES (Operating Variables, purchasing approaches, situational factors) MICRO BASES (Personal Characteristics) BENEFITS Sales Revenue Image Competitive Insulation Economies of Scale Control COSTS R&D Production Cost Overhead Cost Transportation & Storage Cost\ Risk
HOW SHOULD RESOURCES BE ALLOCATED TO SEGMENTS? Prioritize Target Segment based on net benefit •Highest •Second Highest •Third Highest
?
Operating Division: ? Electrical/Electronic Business group (EBG)
Background ? Leading Engineering Company ? Various Operating Division ? Electrical Business Group o L&T is into manufacturing of various kinds of Electrical and Electronic products like Air Circuit Breakers, Moulded Case Circuit Breakers, Switch Disconnector, Fuse Units, Fuses, Starters, Contactors, Relays, Auxiliaries such as control contactors, push buttons, indicating lamps, etc.. o Competitors: ABB, Siemens, Crompton & Grieves, Schneider, BHEL
?
?
End Consumer Products: Switches, batteries, data storage, printer, CRT screens, Fan, Light, Bulbs
?
Industrial Products – Circuit-brakers, HV switches, Contactors, relays, Energy meter
Base: End User Market
Approach Geographic
Variables Area of Operation SIC Code
Classification Domestic or International, State/Country, Urban/Rural, Distant or close to the supplier Agriculture, Mining, Manufacturing etc Larger or Small - Number of Employees, Sales Volume, Annual Purchase, Average Order Size, Value Added by Manufacturing Advanced or Basic Light / Heavy / Non Users Decentralized or Centralized Industries, Institutions, Government, Resellers Recession, Prosperity etc Rapid or Slow, Stage (Take-off or decline) Degree of Competition (Intense or Moderate), Nature Oligopoly or Monoploy, Customer Loyalty - Weak or Strong
Demographic
Company Size Technology User Status
End Use Markets Function/Organization Business Cycle Economic Industry Growth Competitive Forces
?
Industrial Products
o Agricultural o Services o Manufacturing
o Steel industry, Sugar industry, Cement industry, Textile
industry, Automobile industry, Pharmaceutical industry, Household appliances industry, Food industry and many more…
?
Stage of Usage
Basic Hardware ? Building of Control panels ? Integrating Multiple control panels ? Entire System Integration ? Stand alone use
?
Other Direct applications
Stand alone products
Customized integrated Systems
Complete Design, Integration and Installation solution (Customized)
Integrated Multiple Panel system Control Panels Electrical & Electronic Hardware
Industrial Power Distribution systems Panel Makers, Starters, etc. Small Scale Industries, Entrepreneurs- Panel makers, Electricians, Maintenance
Base: Organization
Base
Variables Purchasing Situation Purchasing Stage Customer Experience Stage
Classification New tasks modified re-buy or straight re-buy Problem identification/proposal evaluation/negotitaion etc. Product life cycle stages (Introduction/Growth/Decline)
Organizational
Customer Interaction Needs(Dependence on Supplier More or Less Expertise) Product Innovativeness Organizational Capabilities Inventory Requirements Purchase Importance Innovators or Followers Strong or Weak MRP or JIT High of low degree of purchase risk Local vs Global, Bids vs Contracts, Leasing vs Outright buys Quality or service or price or supplier reputation
Purchase Situation
Purchasing Policies Purchasing criteria
Buying centre-power structure Dominated by whom - Engineering or Production
? Switchgear Products
? Electrical Systems ? Control & Automation ? Petroleum Dispensers & Systems ? Medical Equipment ? Energy Meter
Other Direct applications Customized integrated Systems Integrated Multiple Panel system Control Panels Electrical & Electronic Hardware
End User Market
Industrial Manufacturing Stage of Use Consumer
Agricultural
Services
Electrical/Elex Hardware
Control Panels System Integration Direct Application
Switchgear Products division
Electrical Systems Control and Automation
Petrol pumps Energy Meter Medical Equipments
doc_782300781.ppt
segmentation in B2B markets.Macro Segmentation,micro segmentation,OEM,revenue,industrial product models are covered in this PPT.
?
Industrial market segmentation is? A scheme for categorizing industrial and business customers ? To guide strategic and tactical decision-making The goal for industrial market segmentation scheme is to identify the most significant differences/similarities among current and potential customers that will influence their purchase decisions or buying behavior Segmenting industrial markets is different and more challenging because of greater complexity in buying processes “A homogeneous group of present or potential Customers who share a similar set of preferences or wants and respond similarly to a supplier’s marketing stimuli”.
?
?
?
? ? ? ? ? ? ? ?
Background Need for Segmentation Steps for Segmentation Bases of Segmentation Variables in Segmentation Two-Stage Market Segmentation (Wind & Cardozo Model) Evaluation of Segments Caselet
?
Identifiable Accessible Substantial Unique Needs Durable
?
?
?
?
?
Industrial market segmentation is based on broad two-step classifications – ? Macro-segmentation ? Micro-segmentation This model is one the most common methods applied in industrial markets today Macro Segmentation – Differences between Industries and Organizations
? Size ? Geographic Location ? Product Application, etc
?
?
?
Micro Segmentation – More directly related to
? Purchase Decision Making Process ? Behaviour of those individuals involved in the decision making.
Approach Geographic
Variables Area of Operation SIC Code
Classification Domestic or International, State/Country, Urban/Rural, Distant or close to the supplier Agriculture, Mining, Manufacturing etc Larger or Small - Number of Employees, Sales Volume, Annual Purchase, Average Order Size, Value Added by Manufacturing Advanced or Basic Light / Heavy / Non Users Decentralized or Centralized Industries, Institutions, Government, Resellers Recession, Prosperity etc Rapid or Slow, Stage (Take-off or decline) Degree of Competition (Intense or Moderate), Nature Oligopoly or Monoploy, Customer Loyalty - Weak or Strong
Demographic
Company Size Technology User Status
End Use Markets Function/Organization Business Cycle Economic Industry Growth Competitive Forces
Base
Variables Purchasing Situation Purchasing Stage Customer Experience Stage
Classification New tasks modified re-buy or straight re-buy Problem identification/proposal evaluation/negotitaion etc. Product life cycle stages (Introduction/Growth/Decline)
Organizational
Customer Interaction Needs(Dependence on Supplier More or Less Expertise) Product Innovativeness Organizational Capabilities Inventory Requirements Purchase Importance Innovators or Followers Strong or Weak MRP or JIT High of low degree of purchase risk Local vs Global, Bids vs Contracts, Leasing vs Outright buys Quality or service or price or supplier reputation
Purchase Situation
Purchasing Policies Purchasing criteria
Buying centre-power structure Dominated by whom - Engineering or Production
Base
Variables Buyer-Seller Characteristics Attitude towards Risk exposure
Classification Similar or Different Risk taking or avoiding. First Time prospects, novices or sophisticates Collaboration, Compromise, Avoidance or Coalition formation, Information gathering or intuitive Leader or Follower Adventurous or Conservative Price-Oriented, Solution oriented and strategic value Programmed buyers, Transaction Buyers, Relationship Buyers, Bargain Hunters Switchers or Loyal Full or Nil Single or multiple source buying, heavy or medium or light users
Personal Characteristics
Decision Making Style Cognitive Style Life Style and Image Orientation in Buying Buying Approach
Supplier - Consumer Loyalty Relationship Reciprocity Dependence
Measurable Variables for Segmentation
1.
2.
3.
4. 5.
Service Support Standardized Product Range Type of Industry – Material Handling , -- Factory Automation Expected Revenues/ Volumes Nature of O.E.M
Macro Profiles of Segments:
1.
2.
3.
Geographic: a. Global Customer base:- Sidel India b. Local Customer – PAM Group Demographic: a. User Status: OEM’s / System Integrator b. Company Size: Large/ Medium/ Small c. Technology: Mechanical/ Digital Interface End user Market: a. Economic
b. Competitor's position. SMC/ Commozi
1.
Organizational: a. Purchase situation:- OEM – Straight Re-buy New Customer/ Switcher – Mod Re-buy b. Customer Experience:- Product Offer – General/ Specific c. Product Innovation :Seg–I-- Pioneers/ Innovators : NPD using FESTO Seg-II– Followers : Using run of the mill products
2. Personal Characteristics:- Customer-Festo relationship a. Seg I :- Relationship based b. Seg II :- Price conscious c. Seg III :- Brand conscious / Quality conscious
3. Purchase situation: a.Inventory:- Seg I – Organized – Inventory control (JIT)
Seg II – Less Organized – Need based buying b.Purchase Policy :- Global (Volumes) & Local (Price Premium)
c. Buying Centre :Seg–I – Small OEM : Individual decision makers Seg-II– Corporate: Joint Decision (Interactive, customization)
4. Supplier Customer Interaction
a. Buying Approach :- Seg I – Cylical / Seg II - Transactional b. Loyalty :- Seg I – Brand loyal / Seg II - Switchers c. Dependence:- Seg I –Complete / Seg II – Critical / Seg III -Low
Given a generic product/service Identify Macro segments based on key organizational characteristics
Corporate objectives and resources
Select a set of acceptable macro segments
Evaluate each of the selected macro segments on whether it exhibits distinct response to the firms marketing stimuli. If it does, stop and use the macro segment as the target segment
If it does not, identify within each acceptable macro segment the relevant micro segment based on the key decision making unit (DMU) Select the desired target micro segment based on the cost and benefits associated with reaching the segments. Identify the complete profile of the segment based on the organizational and DMU characteristics.
Develop macro segments of organizations Develop a Decision Matrix Removal of outliers Develop micro segments using cluster analysis Assess relationship between micro segment and characteristics of the organization in the micro segment
Bonoma and Shaprio’s Nested Approach
Specific, Organization Demographics •Location • Industry •Company Size Operating variables •Technology •User- Non users status •Customer’s capability (Finances) Purchasing approaches • Buying centre structure •Purchasing policies • Purchasing Criteria Situational Factors •Urgency •Application •Size of order Personal Characteristics •Motivation •Buyer-seller Dyad •Risk perceptions
Subtle (Micro)
General, Observable (macro)
IS SEGMENTATION APPROPRIATE? Are segments •Measurable •Accessible •Homogenous •Consistent with the company overall market approach
Which Segments should we go after? Apply cost benefit analysis to each level of segmentation MACRO BASES (Organisational Demographics) INTERMEDIATE BASES (Operating Variables, purchasing approaches, situational factors) MICRO BASES (Personal Characteristics) BENEFITS Sales Revenue Image Competitive Insulation Economies of Scale Control COSTS R&D Production Cost Overhead Cost Transportation & Storage Cost\ Risk
HOW SHOULD RESOURCES BE ALLOCATED TO SEGMENTS? Prioritize Target Segment based on net benefit •Highest •Second Highest •Third Highest
?
Operating Division: ? Electrical/Electronic Business group (EBG)
Background ? Leading Engineering Company ? Various Operating Division ? Electrical Business Group o L&T is into manufacturing of various kinds of Electrical and Electronic products like Air Circuit Breakers, Moulded Case Circuit Breakers, Switch Disconnector, Fuse Units, Fuses, Starters, Contactors, Relays, Auxiliaries such as control contactors, push buttons, indicating lamps, etc.. o Competitors: ABB, Siemens, Crompton & Grieves, Schneider, BHEL
?
?
End Consumer Products: Switches, batteries, data storage, printer, CRT screens, Fan, Light, Bulbs
?
Industrial Products – Circuit-brakers, HV switches, Contactors, relays, Energy meter
Base: End User Market
Approach Geographic
Variables Area of Operation SIC Code
Classification Domestic or International, State/Country, Urban/Rural, Distant or close to the supplier Agriculture, Mining, Manufacturing etc Larger or Small - Number of Employees, Sales Volume, Annual Purchase, Average Order Size, Value Added by Manufacturing Advanced or Basic Light / Heavy / Non Users Decentralized or Centralized Industries, Institutions, Government, Resellers Recession, Prosperity etc Rapid or Slow, Stage (Take-off or decline) Degree of Competition (Intense or Moderate), Nature Oligopoly or Monoploy, Customer Loyalty - Weak or Strong
Demographic
Company Size Technology User Status
End Use Markets Function/Organization Business Cycle Economic Industry Growth Competitive Forces
?
Industrial Products
o Agricultural o Services o Manufacturing
o Steel industry, Sugar industry, Cement industry, Textile
industry, Automobile industry, Pharmaceutical industry, Household appliances industry, Food industry and many more…
?
Stage of Usage
Basic Hardware ? Building of Control panels ? Integrating Multiple control panels ? Entire System Integration ? Stand alone use
?
Other Direct applications
Stand alone products
Customized integrated Systems
Complete Design, Integration and Installation solution (Customized)
Integrated Multiple Panel system Control Panels Electrical & Electronic Hardware
Industrial Power Distribution systems Panel Makers, Starters, etc. Small Scale Industries, Entrepreneurs- Panel makers, Electricians, Maintenance
Base: Organization
Base
Variables Purchasing Situation Purchasing Stage Customer Experience Stage
Classification New tasks modified re-buy or straight re-buy Problem identification/proposal evaluation/negotitaion etc. Product life cycle stages (Introduction/Growth/Decline)
Organizational
Customer Interaction Needs(Dependence on Supplier More or Less Expertise) Product Innovativeness Organizational Capabilities Inventory Requirements Purchase Importance Innovators or Followers Strong or Weak MRP or JIT High of low degree of purchase risk Local vs Global, Bids vs Contracts, Leasing vs Outright buys Quality or service or price or supplier reputation
Purchase Situation
Purchasing Policies Purchasing criteria
Buying centre-power structure Dominated by whom - Engineering or Production
? Switchgear Products
? Electrical Systems ? Control & Automation ? Petroleum Dispensers & Systems ? Medical Equipment ? Energy Meter
Other Direct applications Customized integrated Systems Integrated Multiple Panel system Control Panels Electrical & Electronic Hardware
End User Market
Industrial Manufacturing Stage of Use Consumer
Agricultural
Services
Electrical/Elex Hardware
Control Panels System Integration Direct Application
Switchgear Products division
Electrical Systems Control and Automation
Petrol pumps Energy Meter Medical Equipments
doc_782300781.ppt