How to Segment Business Markets Step-by-Step

Lesson Transcript
Instructor: Jennifer Lombardo

Jennifer Lombardo received both her undergraduate degree and MBA in marketing from Rowan University. She spent ten years in consumer marketing for companies such as Nielsen Marketing Research, The Dial Corporation and Mattel Toys. She is currently an adjunct professor of marketing at Rowan University and a social media marketing consultant.

There are four main types of business markets: producers, resellers, government, and institutions. Learn how to segment business markets step-by-step by identifying company characteristics and buying processes, and how these segments help businesses develop marketing strategies. Updated: 08/19/2021

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.

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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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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.

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How to Segment Business Markets Step-by-Step Quiz

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You want to find an efficient way to segment the business market. Which of the following is NOT an example of how you should segment a market according to company characteristics?

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