The time taken to identify target customers in B2B markets is rarely wasted. It can be all too easy for a sales department to lack focus and to chase the easy target, the ones the competitor’s chase, or those always open for a visit. It is important to focus resources on the customers most likely to generate the best long term returns.

The result of trying to please/relate to as many customers as possible is an undifferentiated offering that fails to please anyone. The objective must be to avoid competing on price wherever possible.

The key is to focus on the business strengths and use this as a basis to identify appropriate customer groups. The focus here is the fundamental core service the business provides. It is not individual products or product categories. What basic need does the business satisfy?

Segment The Available Market

With a set of needs identified it is possible to profile those who have each distinct set of needs, to give them an identity and make them real. Only when this is in place is it possible to fit the business (and competitor) products into each group of needs. Market segments can then be defined.

Market and customer segmentation can be complex and time-consuming. It is best not to start unless willing AND able to allocate the appropriate resources and act upon the outcome. Buy in and inclusion is essential as is a risk assessment. The result of getting the segmentation process wrong is lost customers and business.

Research shows that most markets can be broken down into between 5 and 8 segments. Each can then be evaluated against a set of basic rules.

  • Members of the segment must react in the same way when delivered with the same offer.
  • Each segment must be unique and serviceable via a unique marketing strategy.
  • The segment must have sufficient potential size to justify a unique marketing strategy.
  • The segment must be reachable.

It is therefore important not to define too broad or too narrow a definition for a segment. With segments identified each must be examined in detail and either modified or discarded if not a perfect fit.

With a final list of market segments are in place it is possible to devise a B2B marketing strategy for each and to identify target customers in each segment to attack. Sales resources can then be allocated to customers with the most potential long term value to the business.

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