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Select The Best Business Market Segment For Your B2B Business |
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Written by Linda P. Morton
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Tuesday, 22 April 2008 |
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Targeting a business market segment is as important for B2B businesses as for business-to-consumer businesses. But many B2B business owners have no idea about what to look for in a business market segment. They don't realize that the right business market segment can produce a group of businesses with shared interests and common behaviors that make them good potential customers.
by LindaP.Morton
Targeting a business market segment is as important for B2B businesses as for business-to-consumer businesses. But many B2B business owners have no idea about what to look for in a business market segment. They don't realize that the right business market segment can produce a group of businesses with shared interests and common behaviors that make them good potential customers.
Business characteristics are called firmographics, and they provide the same type of factual information about businesses that demographics do about consumers.
Both demographics and firmographics are facts. Firmographics provide facts about businesses that help to group them into target markets, just as demographics enable business-to-consumer businesses to select a consumer target market.
Three categories of firmographics help B2B businesses determine a business market segment to target. These include:
Using Organizational Firmographics To Select a Business Market Segment
Selecting a Business Market Segment With Financial Firmographics
Using Industrial Firmographics To Select a Business Market Segment
Using Organizational Firmographics To Select a Business Market Segment
One organizational firmographic is size. It enable you tochoose a business market segment according to number of employees, number of branches, plants, or stores, and number of locations.
Size distinguishes businesses in several ways. Number of employees can help you determine whether the business owner or an employee is in charge of purchasing. Number of plants, branches or stores can mean that each makes individual purchasing decisions. Thus, knowing size helps to determine how many people and the type of people B2B business owners have to contact and build relationships with.
Each business market segment also differs by company age. Young businesses need different types of products and services than more established businesses. They usually have limited resources and less cash flow so they need vendors who will guide them in making good purchase decisions rather than just selling to them. By providing this service to new businesses, you can turn them into loyal customers.
The geographic location of a business market segment reveals regional characteristics that influence businesses. In addition, each location has different tax laws, regulations, and economic environments that make businesses different by location.
You can use organizational firmographics to select a business market segment with good profit potential. Then you can target that business market.
Using Financial Firmographics To Select a Business Market Segment
Selecting a business market segment based on financial firmographics enables you to consider how much volume a potential business customer will purchase and how able it is to pay for those purchases.
For example, if you sell a machine that automates packaging products, it's more likely that businesses with large sales volume will purchase your machine than will smaller ones, whose small sales volume makes human packaging less expensive.
Ownership factors can also help you select the business market segment for your target market. You need to know whether the business leases or owns its office, plants, stores, warehouses, and equipment. By monitoring the relationship of ownership factors, you can determine relationships between these factors and the businesses needs and purchases.
By selecting a business market segment whose financial firmographics best match the benefits features and prices of what you sell, you can determine those businesses most likely to purchase your product or service.
Select a Business Market Segment by Industrial Firmographics
Industrial firmographics provide another way to distinguish the best business market segment to target. Businesses differ in many ways according to the industries they operate within. Each industry has different standards, regulations, expectations, inspections, etc. that require different products and services. Determining which industry has the most need and desire for what you sell goes a long way to selecting your target market.
Industrial firmographics influence not only a business' needs and desires, but also the kinds of customers they are.
A manufacturing business market segment that uses high-tech equipment in its production differs considerably from a manufacturer who uses only low-tech production. They purchase completely different equipment and supplies, use different processes, and have different facility needs.
Businesses that produce quality luxury products use more expensive quality components and produce fewer products than a business that mass produces lower quality products for discount stores. The latter must use a more automated process in order to produce the large volume of products to survive with their small profit margins.
A consultant is a business market segment in the information industry, but the consultant's business is very different from a major book publisher. Consultants' incomes are limited by how much they can charge for their time. Book publishers' incomes are limited only by the number of books they can publish and sell.
By understanding how industrial firmographics influence business needs, you can distinguish the business market segment most likely to provide your B2B business, new and repeat customers.
In Conslusion
Selecting the best business market segments from these industrial, financial and organizational firmographics will enable you to comprise a profile of your best and most lucrative target market.
Your ability to select the best target market for what you sell is enhanced by good record keeping and research. Good records help you to recognize which business market segment provides the best customers within each type of firmographic.
You will increase your changes of selecting a profitable target market for your B2B business if you use records and research to make business market segment selections.
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