Human Resource Knowledge

Matrix form of market segmentation

Recent researchers in industrial marketing shows that firms tend to combine size and buying criteria used by the customer to segment the market and also to evolve marketing strategy. Often a firm may even add a third dimension to it, the geographic location of the customer. The most important dimension of this basis of segmentation is the use of buying motives along with buyer characteristics. Let us consider the case of an electrical power pump company that wishes to segment its market. The market survey showed that the company has the following customer segments.

Segment 1

These are large customers with an average order size of Rs.2, 00, 000. The firm has only a 20% share in these customer purchases. The customers want a standardized motor and are not particularly concerned about the vendor’s service as most have their engineering and maintenance departments. The customers, however, want the best available quality but at competitive prices and want the suppliers to maintain their delivery commitments. These buyers generally buy on the basis of facts and not just emotions. Most of these buyers are located in the western part of India.

Segment 2

This segment also consists of large buyers with almost the same characteristics and buying motives as above. But the difference is that they are highly price sensitive and are generally not as quality conscious as the customers above. Most of these buyers are located in the North India.

Segment 3

These are medium sized firms with an average order size of Rs.50, 000. They want tailor made products and are not highly price sensitive. They would like to pay only what they consider as the value for the product. They want good services from the vendors and are also particular about vendor credibility. Relationships are important. They want extended credit periods and want the vendor to take back the product if it fails .Most of these firms are in South India.

Segment 4

These are small firms scattered allover India. They want tailor-made products, excellent and reliable after-sales service and delivery as per the approved schedule. They generally have cash flow problems. While they are willing to buy at the vendor’s price, they expect him to empathize with them and generally not insist on penalty clauses for a slight or once a while delay in payment. These firms are owner-managed. Their average order size never exceeds Rs.5, 000. The vendor firm has a 15% share in this segment. These firms are spread all over the country.

Labels: Marketing

posted by Paresh @ 9:49 PM