IGNOU : M.COM : MCO 6 : UNIT 5 : Q - 5. Discuss various bases on which an organizational market may be segmented.

 Ans. Bases for Segmenting Organizational Markets 

Organizational markets can be segmented with many of the same variables used in segmenting the consumer markets. For example, we can segment organizational markets on a geographic basis. Some industries are geographically concentrated. For example, in India most of the companies belonging to textile industry are located in Maharashtra and Gujrat. Any company that sells to this industry could use geographic segmentation. 

 Also, like consumers, businesses have demographics that can be used to segment market. For example, the size of a company (measured by sales volume or number of employees), the company's type of business (advertising agencies typically focus on cither clients that market to consumers or companies that sell to other businesses), or the company's method of buying (some rely on price and select the lowest bidder, while others use criteria such as quality or delivery time). Companies can also segment their organizational markets on the benefit desired by buyer and on product usage rates. We will discuss briefly the specific segmentation approaches for organizational markets below. In particular, there are three commonly used bases: 1) type of customer 2) size of customer; and 3) type of buying situation. Let us learn them. 

 a) Type of Customer Segmentation : A common way lo segment industrial markets is by end users. Different users often seek different benefits and can be approached with different marketing mixes. For example, a company that sells small electric motors would have broad potential market among many different industries such as automobiles, electrical appliances, government departments etc. , However, this company will do better by segmenting its potential market by type of customer and then specializing to meet the needs of businesses in limited number of these segments. 

 b) Customer Size Segmentation : Customer size is another variable used for segmenting organizational markets. Many companies set up separate systems for dealing with major and minor customers. For example, a company which manufactures office furniture, may divide its customers into two groups as major accounts and minor accounts. Accounts of large and reputed companies come under major accounts. Such accounts are handled by national account managers working with district field managers. Smaller accounts are categorized as dealer accounts. These accounts are handled by the field personnel working with franchised dealers who sell company's products. 

 c) Type of Buying Situations Segmentation : While discussing organizational markets we have identified three types of buying situations: new buy, modified rebuy, and straight rebuy. These buying situations, as you know, are different from each other in a significant way. An industrial seller can segment his market on this basis of buying situations and adopt marketing strategies accordingly.