Segmentation in B2B Markets
Segmentation in B2B Markets
A White Paper by Paul Hague and Matthew Harrison of B2B International
E-mail Web Blog
info@b2binternational.com www.b2binternational.com www.b2binternational.com/b2b-blog/
WHAT IS MARKETING IF IT IS NOT ABOUT SEGMENTATION?
CVS Pharmacy is one of the most successful drug store chains in America. What is the reason for this success? They understand their market and have approached it through segmentation and targeting. The company looked at its customer base and found that 80 percent are women. With this in mind, CVS redesigned 1,200 of its 6,200 stores to meet the needs of busy, multi-tasking women by offering shorter wait times for prescriptions, wider and better-lit shopping aisles, and more beauty products. In doing so it fulfilled the requirement of all good marketing orientated companies – it identified the needs of its customers and organised its offer to better meet them. This is at the heart of all good marketing – meeting customers’ needs profitably, and allocating finite resources in such a way that profit is maximised. This means not wasting time or resources on customers who would be less profitable, and treating the key targets not as one homogenous population but as distinct groups with distinct needs. It is very rare for even two customers to have identical needs to each other. In a perfect world, we would identify those customers that we deem to be profitable, and then treat each one of those individually according to their unique needs. In any market with a sizeable target audience, even this is likely to require more resources than is practical or profitable. To reiterate, segmentation, like marketing itself, is all about the profitable satisfaction of customers’ needs. It is designed to be a practical tool, balancing idealism against practicality and coming up with a solution that maximises profit. This means we have to be clever in targeting our offers at people who really do want them, need them and are
A White Paper by Paul Hague and Matthew Harrison of B2B International
E-mail Web Blog
info@b2binternational.com www.b2binternational.com www.b2binternational.com/b2b-blog/
WHAT IS MARKETING IF IT IS NOT ABOUT SEGMENTATION?
CVS Pharmacy is one of the most successful drug store chains in America. What is the reason for this success? They understand their market and have approached it through segmentation and targeting. The company looked at its customer base and found that 80 percent are women. With this in mind, CVS redesigned 1,200 of its 6,200 stores to meet the needs of busy, multi-tasking women by offering shorter wait times for prescriptions, wider and better-lit shopping aisles, and more beauty products. In doing so it fulfilled the requirement of all good marketing orientated companies – it identified the needs of its customers and organised its offer to better meet them. This is at the heart of all good marketing – meeting customers’ needs profitably, and allocating finite resources in such a way that profit is maximised. This means not wasting time or resources on customers who would be less profitable, and treating the key targets not as one homogenous population but as distinct groups with distinct needs. It is very rare for even two customers to have identical needs to each other. In a perfect world, we would identify those customers that we deem to be profitable, and then treat each one of those individually according to their unique needs. In any market with a sizeable target audience, even this is likely to require more resources than is practical or profitable. To reiterate, segmentation, like marketing itself, is all about the profitable satisfaction of customers’ needs. It is designed to be a practical tool, balancing idealism against practicality and coming up with a solution that maximises profit. This means we have to be clever in targeting our offers at people who really do want them, need them and are