Prof.

Vivekanand Satre

Segmentation, Targeting & Positioning for B2B Markets (Unit 2)

What is B2B market segmentation?
B2B market segmentation involves organizing an entire B2B company’s
target market into sub-categories of people that share certain
characteristics, such as in-product Behavior, industry type, or job role.
Market segmentation helps to improve the effectiveness of marketing
campaigns, sales, and product development by delivering hyper-
personalized experiences that speak directly to a user segment.

What is Macro Segmentation?

Macro Segmentation is when the market is classified or segmented based on variables with
broader scope such as industry and organizational variables. It can also include variables such
as the location, which is an important variable to learn about the communication requirements
and the culture. (Organizational characteristics would include variables such as
demographics, product applications, and end-use markets).
Macro and Micro segmentation are two different methods of segmentation, which is the
process of dividing the entire market into different groups on the basis of different variables.
Variables such as the organizational size would help estimate the buying process and buying
size of these organizations, and other variables like the industry largely determines what these
organizations would buy.
Macro segmentation is always broader in scope than micro segmentation, which focuses the
target on a small customer base.
Micro segmentation, however, employs other variables as the basis of classification, and
these are generally customer oriented variables such as customer experience and
benefits. Micro segmentation and micro segmentation are two terms which stem from the two
stage market segmentation model which was suggested by Yoram Wind and Richard
Cardozo. This model is very commonly used in the industry today.
For example, after segmentation of the industry based on location has been done, a company
may choose to adopt different advertising strategies in different countries.
What Is Macro Segmentation in B2B
Macro segmentation in B2B divides a market into distinct groups of buyers with similar
needs who are likely to respond similarly to marketing initiatives.
It is important for businesses to macro segment their markets because it allows them to tailor
their marketing efforts to specific groups of buyers, which can result in more efficient and
effective marketing campaigns.

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Why Is Macro Segmentation Important?

One of the advantages of macro segmentation is that it allows businesses to tailor their
marketing messages to specific groups of people. By understanding each group's unique
needs and wants, businesses can create more effective marketing campaigns that are more
likely to resonate with their target audience.
Additionally, macro segmentation can help businesses save money by targeting only those
groups of people who are most likely to be interested in their products or services.
Another advantage of macro segmentation is that it can help businesses better understand
their customer base. By understanding the characteristics of each group, businesses can
develop a more detailed understanding of who their customers are and what they are looking
for. This knowledge can then be used to improve the overall customer experience, whether
that means developing new products or services that meet the needs of specific groups or
improving customer service so that it is more responsive to the needs of specific groups.
When done correctly, macro segmentation can be an extremely effective market segmentation
tool that can help businesses improve their marketing efforts and better understand their
customer base. By taking the time to understand the unique needs of each group, businesses
can develop more targeted and effective marketing campaigns that are more likely to result in
sales.
Additionally, by understanding the characteristics of each group, businesses can improve the
overall customer experience and develop a deeper understanding of who their customers are
and what they are looking for.
Ultimately, macro segmentation can help businesses save money while also increasing sales
and improving customer satisfaction.
 In macro segmentation, you divide customers into segments based on their
company’s characteristics, such as business size, location, or industry.

How can macro and micro-segmentation (B2B) improve your product marketing ROI
and contribute to more revenue and product growth?
Segmentation helps you organize your target audience into cohorts that share a characteristic.
That way, you can deliver hyper-personalized experiences that speak directly to their needs.
What are the most common variables for B2B market segments?
Let’s cover the most common variables that B2B companies consider when segmenting their
market.
Demographic segmentation
Organizing your market segments by demographics, such as by industry, geographical
location or an organization’s size, helps you make future decisions on the areas you should
serve.

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For example, if you have a large segment of customers who live in Europe, you should
prioritize expansion in Europe.
Product usage segmentation
Defining segments based on product usage, such as feature usage or user/non-user status, can
help you organize your marketing efforts.
For example, you send out different marketing content to people who are active
customers vs. people who are leads, but not yet customers.
Market segmentation makes this process easier.
Purchasing Behavior segmentation
Purchasing Behavior is another common way to organize B2B market segments.
For example, which customers prefer monthly plans vs. annual plans?
If you notice patterns swinging one way or another, you can make pricing adjustments. Do
your customers have a centralized or decentralized purchasing approach? Your sales team can
make strategy adjustments based on these factors.
Situational factors segmentation
Situational factors cover variables such as urgency, order size, and product use cases.
Understanding your market’s situational factors will also help you to prioritize marketing and
product development.

B2B market segmentation variables.

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Macro and micro-segmentation (B2B): which one should you use?

Micro-segmentation is the better option for B2B marketing and will generate better results.
Why?
Macro segmentation is not as precise as micro-segmentation. Since macro segmentation is
based on high-level company data, such as geographical location or industry, the segments
end up being larger and less granular.
On the other hand, micro-segmentation relies on customer-specific data such as in-app
Behavior, purchasing patterns, and preferred products. These signals are more useful for
delivering highly-personalized content that’s the most relevant to the customer.
That being said, micro-segmentation is a more difficult task that requires more time, effort,
and resources. But, the precise segments you create will make your marketing campaigns
more effective at generating revenue.
Most companies start with macro segmentation in the early days when time and resources are
limited. As they grow, they get more granular with their marketing segmentation and move
on to micro-segmenting their target audience and existing customers.
Macro and micro-segmentation (B2B) example
Let’s use the project management software, Click Up, as an example to demonstrate macro
and micro-segmentation.
If Click Up wanted to use macro segmentation to divide their users, they would consider
these variables:
 Location – Click Up can create segments based on location, such as one group for
U.S. users, another for Canadian users, and so on.
 Industry –They could divide their users by industry: finance, software, agency, etc.
 Company Size – Customers can be divided by their organizational size. For example,
companies with 1-10 employees, 10-50 employees, and so on.
If Click Up wanted to use micro-segmentation to organize their customers, they would
consider various factors like:
 Feature Usage – Example: Who is using the Goals feature 3+ times per week?
 Integrations – Example: Which users connected Slack to their ClickUp account?
 Product Behaviour – Example: Who uses the mobile app and desktop version vs.
exclusively the desktop version?
How to conduct micro-segmentation in B2B SaaS?
Ready to start using micro-segmentation to improve your marketing actions? Here are three
strategies to try out.

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Monitor customer’s actions in-app and track feature usage

To start with segmentation, you first need to know what customers are actually doing inside
your product.
You need to understand how they’re behaving and engaging with different features.
This will help you group your users depending on which stage of the journey they’re at and
offer tailored suggestions on new features they should discover.
All of those efforts combine to improve product adoption.
Use feature tagging to track customer interactions and sort them by similar in-app behaviours.
These will allow you to also trigger messages that encourage them to engage with new
features.
.
Choose from a variety of segmentation criteria to create precise segments
As we mentioned before, micro-segments are highly targeted and narrowed-down groups of
customers that share a characteristic.
You can and should use different segmentation criteria for every micro-segment that you’re
creating.
In User pilot, you can choose from advanced segmentation options such as firmographic
factors, technographic factors, product Behavior, loyalty levels such as NPS score, and more.
Keep your segments precise to maximize your marketing actions.
Group users into cohorts
Create cohorts of users to get a better understanding of that small group of customers.
Cohort analysis involves grouping users based on behavioural characteristics, such as churn
rate (when a customer stops using your product or leaves).
When you investigate your cohorts, you can notice patterns among segments.
For example, when you create a cohort of users who’ve churned in the last 30 days, you
can analyse that cohort to see which segment has churned the most (eg. users in the finance
industry).
Example of a churned user’s cohort.
How to create hyper-personalized experiences with macro and micro-segmentation
(B2B) strategies
Once you have your micro-segments created, it’s time to create hyper-personalized
experiences that increase customer loyalty and lifetime value (LTV).
Then, reach out to those customers with contextual in-app messages or emails to offer your
help.

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Once they’re back on track, they can continue to get value from your product, turning back
into an active user.
What Is Micro-Segmentation?
Micro-segmentation refers to the process of dividing customers or markets into smaller
groups. These groups or segments share common characteristics and are usually created
based on criteria such as demographics, priorities, needs, and buying preferences.
Similar to macro-segmentation, micro-segmentation starts with the traditionally defined
groups that companies create for marketing purposes. However, micro-segmentation goes a
step further to identify opportunities for retaining potential and existing customers within
those segments. This helps businesses learn more about the products or services customers
prefer, their buying history, and how often they purchase from the brand, thus improving
customer service, and return on investment.
Typically, groups created under micro-segmentation consist of a handful of customers,
helping brands with highly personalized predictive analysis and marketing optimization. As a
result, it becomes easier to forecast the effectiveness of sales and marketing strategies on the
different micro-segments or customers.
Variables of Micro-Segmentation
The variables of micro-segmentation refer to the different categories by which customers are
divided into small groups. This includes segmentation based on demographics, product usage,
buying behavior, and situational factors. Let us understand what these variables mean.
#1. Demographic Segmentation
Demographic segmentation involves segmenting your customer base on the basis of
demographics such as location, age, gender, job profile, income, and so on. If you are a B2B
organization, you can segment your clients based on parameters like industry, company size,
and geographical location.
The rationale behind segmenting consumers based on the demographic approach is that
customers are naturally inclined to purchase goods and services based on their demographic
characteristics. Dividing your customer base on the basis of demographics also enables
your marketing teams to create strategies that are catered to the areas you should serve. For
instance, if most of your clients reside in New York City, your marketing strategies should be
designed to focus on expansion in New York City.
#2. Product Use Segmentation
Product usage segmentation indicates segmenting your customers based on which the
products or services used by them and their user or non-user status. For example, if you are a
cosmetics brand, you can segment your clientele based on what kind of products they
purchase the most, such as skin care products, hair care products, makeup products, and so
on.
You can also segment your clients based on whether they are active customers or not.
Accordingly, you can create and send marketing content to active customers and leads or
inactive customers.

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#3. Buying Behavior Segmentation

Buying or purchasing behavior is another way B2B companies segment their clients. Under
this category, segmentation takes place based on the customers’ purchase frequency, whether
they prefer monthly or annual plans, or whether they have a centralized or decentralized
approach to buying.
#4. Situational Factors Segmentation
Customer segmentation based on situational factors includes segregating your clients on
variables such as buying urgency, order size, product use cases, etc. In such cases, the
segmentation further divides buyers into smaller groups, owing to the fact that each
customer’s situation is unique.

Targeting-
Selecting Target Markets
After you segment buyers and develop a measure of consumer insight about them, you can
begin to see those that have more potential. Now you are hunting with a rifle instead of a
shotgun. The question is, do you want to spend all day hunting squirrels or ten-point bucks?
An attractive market has the following characteristics:
 It is sizeable (large) enough to be profitable given your operating cost. Only a tiny
fraction of the consumers in China can afford to buy cars. However, because the
country’s population is so large (nearly 1.5 billion people), more cars are sold in
China than in Europe (and in the United States, depending on the month). Three
billion people in the world own cell phones. But that still leaves three billion who
don’t (Corbett, 2008).
 It is growing. The middle class of India is growing rapidly, making it a very
attractive market for consumer products companies. People under thirty make up the
majority of the Indian population, fueling the demand for “Bollywood” (Indian-made)
films.
 It is not already swamped by competitors, or you have found a way to stand out
in a crowd. IBM used to make PCs. However, after the marketplace became crowded
with competitors, IBM sold the product line to a Chinese company called Lenovo.
 Either it is accessible or you can find a way to reach it. Accessibility, or the lack of
it, could include geographic accessibility, political and legal barriers, technological
barriers, or social barriers. For example, to overcome geographic barriers, the
consumer products company Unilever hires women in third-world countries to
distribute the company’s products to rural consumers who lack access to stores.
 The company has the resources to compete in it. You might have a great idea to
compete in the wind-power market. However, it is a business that is capital intensive.
What this means is that you will either need a lot of money or must be able to raise it.
You might also have to compete with the likes of T. Boone Pickens, an oil tycoon

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who is attempting to develop and profit from the wind-power market. Does your
organization have the resources to do this?

Target-Market Strategies: Choosing the

Number of Markets to Target
Henry Ford proved that mass marketing can work—at least for a while. Mass marketing is
also efficient because you don’t have to tailor any part of the offering for different groups of
consumers, which is more work and costs more money. The problem is that buyers are not all
alike. If a competitor comes along and offers these groups a product (or products) that better
meet their needs, you will lose business.

Multisegment Marketing
Most firms tailor their offerings in one way or another to meet the needs of different
segments of customers. Because these organizations don’t have all their eggs in one basket,
they are less vulnerable to competition. Marriott International is an example of a company
that operates in multiple market segments. The company has different types of facilities
designed to meet the needs of different market segments. Marriott has invested in unique
brands so consumers don’t confuse the brand and the brand is not diluted. Some of the
Marriott brands and their target markets are as follows:

 Marriott Courtyard. Targeted at over-the-road travellers.

 Ritz-Carlton Hotels. Targeted at luxury travellers.
 Marriott Conference Center. Targeted at businesses hosting small- and midsized meetings.
 Marriott ExecuStay. Targeted at executives needing month-long accommodations.
 Marriott Vacation Clubs. Targeted at travellers seeking to buy timeshares.

A multisegment marketing strategy can allow firms to respond to demographic changes and
other trends in markets. For example, the growing number of people too old to travel have the
option of moving into one of Marriott’s “Senior Living Services” facilities, which cater to
retirees who need certain types of care. A multisegment strategy can also help companies
weather an economic downturn by allowing customers to trade up or down among brands and
products. Suppose you take a pay cut and can’t afford to stay at Marriott’s Ritz-Carlton hotels
anymore. A room at a JW Marriott—the most luxurious of the Marriott-brand hotels but
cheaper than the Ritz—is available to you. A multisegment strategy can also help companies
deal with the product life cycle issues. If one brand or product is “dying out,” the company
has others to compete.

Concentrated Marketing
Some firms—especially smaller ones with limited resources—engage in concentrated
marketing. Concentrated marketing involves targeting a very select group of customers.

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Concentrated marketing can be a risky strategy because companies really do have all their
eggs in one basket. The auto parts industry is an example. Traditionally, many North
American auto parts makers have supplied parts exclusively to auto manufacturers. But when
General Motors, Ford, Chrysler, and other auto companies experienced a slump in sales
following the recession that began in 2008, the auto parts makers found themselves in
trouble. Many of them began trying to make and sell parts for wind turbines, aerospace tools,
solar panels, and construction equipment (Simon, 2009).

Niche marketing involves targeting an even more select group of consumers. When engaging
in niche marketing, a company’s goal is to be a big fish in a small pond instead of a small fish
in a big pond1. Some examples of companies operating in niche markets include those shown
in Table 5.5 “Companies That Operate in Niche Markets”.

Table 5.5 Companies That Operate in Niche Markets

Company Niche Market Share (%)

Hohner Harmonicas 85

Tetra Tropical fish food 80

Swarovski Crystal jewels 65

Uwatec Snorkeling equipment 60

St. Jude Medical

Artificial heart valves 60
Center

Micro targeting, or narrowcasting, is a new effort to isolate markets and target them. It was
originally used to segment voters during elections, including the 2008 U.S. presidential
election. Micro targeting involves gathering all kinds of data available on people—everything
from their tax and phone records to the catalogs they receive. One company that compiles
information such as this is Acxiom. For a fee, Acxiom can provide you with a list of Hispanic

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consumers who own two pets, have caller ID, drive a sedan, buy certain personal care
products, subscribe to certain television cable channels, read specified magazines, and have
income and education levels within a given range (Schiffman & Kanuk, 2010). Clearly, micro
targeting has ethical implications and privacy issues.
What is differentiated marketing?
Differentiated marketing, or segmented marketing, is an approach to marketing that appeals
to a niche market or different types of customers. A strategy of differentiated marketing
would create different marketing campaigns to optimize brand awareness for the various
customer bases of your target audience.
What is undifferentiated marketing?
Undifferentiated marketing, or mass marketing, is a type of marketing that creates a unified
marketing campaign that targets multiple segments of the market. It is a common strategy by
brands that have more universal appeal and want to embark on a more cost-effective
campaign with unified messaging.
Why is differentiated marketing important?
Differentiated marketing is important because it allows brands to reach out to disparate
audiences with tailored messages. With a deliberate brand strategy, companies can connect
with customers by focusing on their specific needs via carefully selected channels, as well as
improve metrics such as objectives and key results.
Why is undifferentiated marketing important?
Undifferentiated marketing is important because it appeals to a wide range of shoppers. Since
it has one main message, it can benefit budget-conscious brands by reaching many consumers
at once.
What are the key differences between differentiated and undifferentiated marketing?
Key differences between differentiated and undifferentiated marketing include how brands
are reaching out to their audiences. While differentiated marketing strategies tailor to more
specific subsets of their audience, undifferentiated marketing strategies take a more universal
approach when connecting with shoppers through their marketing efforts. In either strategy,
an effective marketing plan will be a guide for the marketing efforts, but the actual strategy
can help achieve a campaign’s goals.
When should you use differentiated marketing vs. undifferentiated marketing?
Brands should use differentiated marketing when they want to tap into the varying
characteristics among their audience, such as age, gender, interests, or geographic
distinctions. More specific marketing approaches that tailor to certain groups could help
generate more interest, including on different channels such as social media and digital
marketing, billboards, TV ads, and so on.

On the other hand, undifferentiated marketing can be more useful for brands that may be
strapped for resources or haven’t seen results with a segmented strategy. It could also be
more appropriate for brands that are household names with more widespread appeal.

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Advantages and disadvantages of differentiated marketing

Advantages
Advantages of differentiated marketing include the opportunity to address different needs of
various customer bases more closely, by using differentiated market segmentation to provide
specified options for each niche market.
Disadvantages
Disadvantages of differentiated marketing may include increased costs to advertise to
different audience segments, more time and resources to prepare separate strategies and
analyze market research, and a potential loss of customers in untargeted segments.
Types of differentiated marketing
There are many types of differentiated marketing that can reach different target audiences.
See how your brand could connect with all types of shoppers based on market research.
Product differentiation
Brands that want to distinguish their offerings from other brands could engage in product
differentiation. For example, if there is a popular sneaker on the market, a different brand
could manufacture a similar item but highlight something unique, like a more sustainable
material or an exclusive partnership with a spokesperson to optimize product promotion.
Service differentiation
Companies could offer different types of services with personalization for different guests in
their marketing approach. For instance, February could be an ideal time to promote holiday
marketing deals for couples at different price points, such as suite upgrades or complimentary
champagne for Valentine’s Day. In the springtime, to align with spring break for college
students, a hotel could advertise packages for groups of friends that include unlimited drinks
or buffet meals.
Distribution or channel differentiation
Based on the wants and needs of different market segments, companies should think carefully
about distribution methods for each group. To deliver an actual product or service to
customers, companies can work with different types of distributors for specific subsets of
consumers. For instance, shoppers who live in busy urban areas might prefer to pick up an
item at a physical store that is located in a bustling commercial neighborhood near their
office, whereas customers in more rural areas might rely on home delivery to receive the
same product.

Brands may also want to think about which suppliers could be good channel partners. For
example, a luxury clothing retailer that prides itself on exclusivity may prefer to limit their
availability to high-end stores, but a more affordable brand might want to sell in as
many stores as possible to reach the masses with a separate retail marketing campaign. The
way that companies connect with their customers across income demographics is an example
of differentiating among these disparate groups.

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Image differentiation
When considering how a brand might want to market itself, they could capitalize on
differentiating themselves by their image and brand positioning. Whether it’s advertising
themselves as a sustainable enterprise, highlighting their global (or community) presence, or
positioning themselves as a higher-end or affordable option, companies should think of how
they best want to present themselves to their market.

When grouping these different types of audiences into a strategy, a company should think
about how to best customize the steps to position a brand’s products or services.
Price differentiation
Retailers that are typically known as higher-end brands can still reach different customers.
For example, if a luxury retailer usually sells their products in exclusive department stores,
they can still find new-to-brand shoppers by partnering with a mass-market retailer to create a
special line of products for their shoppers at a different price point.
Differentiated marketing strategy
A differentiated marketing strategy helps companies connect with distinct customer bases of
their audience with an ultimate goal of increasing revenue. It will more often than not require
more resources than an undifferentiated marketing strategy since differentiation requires
more analysis to separating customer segments based on different characteristics, defining the
unique set of needs, and determining how to best disseminate this information.

Depending on the details on this type of market segmentation, the marketing strategy will
vary since different demographics have distinct needs and preferences. It might be more
logical to concentrate advertising efforts with younger customers on social media, while
perhaps it makes more sense to use print advertising with older shoppers.
Undifferentiated marketing strategy
An undifferentiated marketing strategy should focus on commonalities rather than
differences. Even if the targeted customers encompass a large age group, live in different
regions, earn varying salaries, or have a wide array of interests, an undifferentiated campaign
speaks to them as a group with a mass-marketing message that speaks to everybody similarly.

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