Select The Best Business Market Segment For Your B2B Business

By Linda P. Morton in Business on April 22nd, 2008

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by Linda P. 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.

This article provides three types of firmographics to help B2B business owners select a profitable business market segment to target. These include:

Select a Business Market Segment by Organizational Firmographics

Selecting a Business Market Segment With Financial Firmographics

Selecting a Business Market Segment With Industrial Firmographics

Select a Business Market Segment by Organizational Firmographics

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.

Age distinguishes businesses in other ways. For example, young businesses need more help in choosing the right products and services for their businesses. They will respond best to marketing directed at helping them to make good decisions, rather than just selling to them. Older businesses are more likely to know what they need, but those needs may require customized products and services.

Buinesses differ by location because people and business cultures vary by regions. Furthermore, regulations, tax laws and economic factors distinguish business by location.

Knowing these organizational firmographics can help you to select the business market segment with the best long-term profit potential for your B2B business.

Selecting a Business Market Segment With Financial Firmographics

Financial firmographics include sales volume, profits and market share. They can help the B2B business owner to distinguish businesses by whether or not they have the financial means to buy a product or service. Financial firmographics also identify a business market segment that’s sales volume demands more automated products.

For instance, if you sell an accounting system capable of handling thousands of transactions a day, a business with small sales volume is not in your target market because a simple, readily available, accounting program will handle its needs.

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.

Selecting the business market segment with financial firmographics that match you B2B business products and services can help you to target businesses most likely to become customers.

Selecting a Business Market Segment With Industrial Firmographics

Industry provides another business market segment to help you determine your best target market. For example, businesses in information industries differ considerably from those in manufacturing and those in service industries. These differences make some businesses better potential customers than others and influence how, when, and why they will buy certain products.

The following example illustrates how industrial firmographics influence what businesses need and want and what kinds of customers they will be.

Manufacturers differ in the equipment, components and supplies that are used in high-tech production compared to low-tech production. Their processes and facilities also differ.

Luxury market businesses need different production processes and buy different types of supplies than businesses who manufacture higher-volume, mass marketed products. Thus, one type will be a better potential customer for your B2B products than another.

Similarly, consultants and books publishers are both in the information business, but they have different needs and their income base is different. Book publishers earn based on the number of books they sell and how the price those books. Publishers basically sell an information product. On the other hand, consultants sell an information service and their incomes are limited to how much they earn per hour.

Thus, if you know how industrial firmographics affect businesses’ needs for what you sell, you can select a business market segment that provides new, and potentially long-term repeat, customers.

Conclusion

B2B business owners can improve their marketing with organizational, financial and industrial firmographics.

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.

About the Author:

To discover more about marketing your B2B business, get Linda Morton’s free report Marketing Your Small Business. You can also get her free report on Market Segments.