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Engineering Economics &
Management
Sub : Market segmentation & Basis to segment
Industry/Business Market
Branch : Computer Eng.
Sem : III
Shree Swami Atmanand Saraswati Institute of
technology
Submitted To: Prof. Vidita vithalani
Prof. Vijay Radadiya
Submitted By:
Kapadia Shivani
Makvana Kinjal
Malaviya Neelam
Patel Monika
Nakrani Dharti
(130760107016)
(130760107017)
(130760107018)
(130760107019)
(130760107020)
Market segmentation
“Dividing a market into distinct groups of buyers who
have different needs, characteristics or behaviors
and who might require separate products or
marketing programs”
EXAMPLE
MARUTI UDYOG LIMITED is providing different models
such as 800, Alto, Zen, Wagon R, Versa, Esteem,..Etc.
to provide variety to the different customer segment.
IMPORTANCE OF MARKET
SEGMENTATION
As markets mature, competition becomes more intense
Customers have more varied needs and desires
Technology — micro-segmentation and relationship
marketing
Identifies opportunities for new product development
Helps design of effective marketing programs
Improves strategic allocation of marketing resources
MARKET SEGMENTATION LEVELS
Segment marketing
Individual marketing
Niche marketing
Segment
Marketing
Individual
Marketing
Niche
Marketing
Local
Marketing
Local marketing
BASIS FOR SEGMENTATION
A] BASIS FOR SEGMENTING CONSUMER MARKET
B] BASIS FOR SEGMENTING BUSINESS/INDUSTRY
MARKET
BASIS FOR SEGMENTING
BUSINESS/INDUSTRY MARKET
1] Demographic
Industry
Company
size
Customer
location
2] Operating variables
Company Technology
Customer
capabilities
3] Purchasing approaches
Organization's
Power
purchasing function
structures
Relationships
General
among the buyers and sellers
purchasing policies
4] Situational factors
Urgency
Product
Size
of order fulfillment
application
of the order
5] personal characteristics of the purchasers
Buyer
seller similarity
Attitude toward
loyalty
risk
BASIS FOR
SEGMENTING BUSINESS
Demographic
Operating
variables
Purchasing
approaches
Situational
factors
personal
characteristics of
the purchasers
1] Demographic
Demographics is the simplest method to segment organizational markets.
 Industry
Knowledge of certain industries can help marketers segment their
market.
The needs of different industries are different. Therefore, their
purchasing patterns also different.
Ex:
The financial services industry is one, single industry. But for marketing
computers and related services, it can be further subdivided into smaller
segment such as insurance firms, bank and so on.
 Company Size
For instant , a small manufacturing of chemicals can segment his prospective
buyers on the basis of their size. He will prefer to target small companies,
because he will be able to fulfill their requirements of larger companies may
be more than his installed capacity, which is why he does not target them.

Customer Location
This type of segmentation is variable for industries on which proximity is
critical for carrying out business activities.
Ex
Industries that manufacture low value per unit weight or volume of products,
in which personal services are required.
2] Operating variables

Company Technology
An organization’s purchasing requirements are affected by the
technology it uses in its manufacturing process to produce its products.
Ex
The production process to manufacture color TVs in Japan is
automated, Japanese manufactures use few integrated circuits, while
the same process in US once required discrete components, manual
assembly, etc.

Customer capabilities
Customers requirements depend on their capabilities in various
fields.
Ex
For instance, automobile producers such as Toyota maintain
just-in-time inventory & therefore, they depend on suppliers
who have excellent delivery records or on whom they can rely
for consistent and reliable supply of raw materials.
3] Purchasing approaches

Organization’s Purchasing Function
One may follow a centralized purchasing structure while others
may follow a decentralized one. So, a supplier should devise
strategies to deal with such differences.
Some suppliers maintain national sales accounts to deal with
companies following a centralized purchasing method and
maintain local sales account to deal with companies that follow a
decentralized purchasing method.
 Power structures
The strength of the financial analysis unit of General Motors has
made it stronger in getting better deals from its suppliers.
Therefore, suppliers can segment their customers on the basis of the
level of impact of influential units of organization.

Relationships among the buyers and sellers
With some customers it will be a stronger, while with others, it may
not be as good. Organization can clearly demarcate their relationship
with different customers.
Ex
A bank can find companies which have representatives of
competitors on their boards, an unattractive segment.

General purchasing policies
Some buy while others get them on lease. Similarly, some organizations have a
policy of buying systems rather then individual components.
Government organizations usually buy through bidding.
Therefore, suppliers who have a comparative cot advantage may prefer to target
such markets.
4] Situational factors

Urgency of order fulfillment
Marketers can differentiate their customers on the basis of
products that are to be used on a regular basis, products that
are needed for urgent replacement of exiting parts, etc.
Customers who want quick supplies are usually ready to pay
higher prices.

Product application
The application of the products and its usage also help
in segmenting industrial markets.
Ex
A computer in a software development used
continuously for 18 hours a day, while it may be used
for just two or three hours in the computer lab of a
school.

Size of the order
A supplier with a highly automated manufacturing
process may depend on sales volumes, while a non –
automated manufacture may depend on small quality,
short run products.
Marketers can divide the market on the basis of the
product users and their usage patterns, since customers
may order products from different suppliers for the
same products for different requirements.
5] personal characteristics of the
purchasers

Buyer seller similarity
Purchase decisions in organization are made by
individuals and not the organizations, although the
philosophies and procedures of the organizations
provide them with a framework and restrict the
purchasing patterns.

Attitude toward risk
The risk taking and risk averting nature of a buyers normally do not look for
new suppliers. But some buyers look for several suppliers for their
requirements and split their orders in such way that on time delivery is
ensured.

loyalty
Some Customers depend on their exiting suppliers and loyal them. Such
customer preferences act as a guide for segmenting these markets.
However it is difficult to obtain data on personal characteristics, but the
company’s sales force can be effectively used for gathering such information.