B2B Market Segmentation

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2.1.4 B2B markets segmentation and Positioning

The market segmentation concept presented for the first time by Wendell Smith in 1956, and from that time companies have used this concept to segment customers and choose the most profitable parts of them as a target market. As a complete description, market segmentation is splitting out a market into segments which have similar characteristics, and then finding and targeting the most beneficial group of them (cf. Blythe, et al., Business to Business Marketing Management, p. 85).
Market segmentation brings some critical advantages to the every company:
The first advantage is that, through choosing the most beneficial group of customers, the company creates and expands special marketing strategies
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The segmentation can be geographically, by industry, by company size, by rate of usage, and loyalty status. Companies also utilize some additional variables, such as customer operating characteristics, purchasing approaches, situational factors, and personal characteristics. Through this way, companies provide just the right value proposition to each targeted segment and obtain more possible value reciprocally (cf. Kotler, P., Armstrong, G., Principles of Marketing, 14th Edition, p. 222).
Business markets segmentation has a very complex process, so to be successful in this process, the companies first have to recognize and evaluate the absorbing segments; and then target the most beneficial segments to delivering the value; then companies have to create and deliver a positioning strategy which makes differentiation in the company offerings from others (cf. Bingham, F. G., Gomes, R., Knowles, P. A., Business Marketing, 3rd ed., p. 204-205).

Five primary ways of segmenting business markets include: type of economic activity; size of organization; geographic location; product usage; and structure of the procurement function (cf. Bingham, F. G., Gomes, R., Knowles, P. A., Business Marketing, 3rd ed., p.
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Six main approaches to positioning strategy are positioning by technology, quality, price, distribution, image and service (cf. Bingham, F. G., Gomes, R., Knowles, P. A., Business Marketing, 3rd ed., p. 204-205).

Positioning strategy consist a lot of aspects which focus on product features, and its benefits, so it can be a very crucial marketing decision which have a big effect on all of company marketing activities. Generally, companies can choose one or more of six following positioning options:
• Features: focus on attributes, features and benefits of product.
• Product Class/Benefits: focus on advantages which a product can provide for users that raise the consumers comfort, interest and happiness.
• Use/Application: focus on the particular function of the product.
• User/Usage: focus on specific products which are suitable for specific occasion or user.
• Competitors: focus on competitor’s product features to obtain the favorable position in the consumer mind instead of their

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