How to Segment Business Markets Step-by-Step

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  • 0:04 Business Markets
  • 0:31 Four Broad Business…
  • 1:25 Segmenting by Company…
  • 2:37 Segmenting by Buying Processes
  • 3:37 Lesson Summary
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Lesson Transcript
Instructor: Jennifer Lombardo
Discover the four segments of business marketing in this lesson. You will also learn the distinguishing characteristics of each segment so you may easily identify each of them.

Business Markets

You may have heard the term 'B2B'. B2B stands for business-to-business marketing. The business market is where companies sell their products or services to other businesses. Business markets can also be segmented into easily identifiable areas. The town expert is Postmaster Joe because he knows the area better than anyone, and he is going to give us a tour of Ninja Town to explain how businesses are segmented.

Four Broad Business Market Segments

Postmaster Joe's territory is huge. He covers the entire southern part of Ninja Town and sells companies metering machines and other mailing products. He also delivers mail to all four different types of business markets, which are producers, resellers, government and institutions. A Ninja Town producer would be the steel factory that produces the material for the local automakers. Postmaster Joe visits a few resellers every day on his route. Resellers buy products and then resell them to other businesses. Some examples include distributors such as food warehouses and brokers. Postmaster Joe's route covers a ton of government markets, such as the navy yard, motor vehicle department and defense contractors. The last segment that the mailman visits every day consists of institutions such as hospitals, prisons, churches and libraries.

Segmenting by Company Characteristics

Postmaster Joe loves his route and all of the businesses in town. He agrees with the business marketing strategy of segmenting according to company characteristics. He divides his route up as well in the same manner. Company characteristics include segmentation variables of company size, product use, geographic location and even type of company. He uses geographic segmentation for his route, as it makes his route efficient and productive to deliver mail in order of location.

A marketer might choose product use and send a sales force out to call based on how companies use their product. For example, a big client requires much more attention. Some companies divide their business market segmentation by type of company. It might be cost effective to group all churches and all schools into one section while keeping all government institutions in another segment. It also allows companies to create custom marketing plans for each segment. For example, banks segment businesses by company characteristics in order to offer specific promotional financial deals based on their size.

Segmenting by company characteristics allows for custom marketing.
Company Characteristic Segmentation

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