Understanding Business Market Segmentation with Postmaster Joe in Ninja Town (Full Transcript)

Speaker 1: You may have heard the term B to B. B to B stands for business-to-business marketing. The business market is where companies sell their products or services to other businesses. Business markets can also be segmented into easily identifiable areas. The town expert is Postmaster Joe because he knows the area better than anyone and he's going to give us a tour of Ninja Town to explain how businesses are segmented. Postmaster Joe's territory is huge. He covers the entire southern part of Ninja Town and sells companies, metering machines, and other mailing products. He also delivers mail to all four different types of business markets, which are producers, resellers, government, and institutions. A Ninja Town producer would be the steel factory that produces the material for the local automakers. Postmaster Joe visits a few resellers every day on his route. Postmasters buy products and then resell them to other businesses. Some examples include distributors such as food warehouses and brokers. Postmaster Joe's route covers a ton of government markets such as the Navy Yard, Motor Vehicle Department, and defense contractors. The last segment that the mailman visits every day consists of institutions such as hospitals, prisons, churches, and libraries. Postmaster Joe loves his route and all of the businesses in town. He agrees with the business marketing strategy of segmenting according to company characteristics. He divides his route up as well in the same manner. Company characteristics include segmentation variables of company size, product use, geographic location, and even type of company. He uses geographic segmentation for his route as it makes his route efficient and good production to deliver mail in order of the location. A marketer might choose product use and send a sales force out to call based on how many companies use their product. For example, a big client requires much more attention. Some companies divide their business market segmentation by type of company. It might be cost effective to group all churches and all schools into one section while keeping all government institutions in another segment. It also allows companies to create custom marketing plans for each segment. For example, banks segment businesses by company characteristics in order to offer specific promotional financial deals based on their size. Companies can also segment business markets based on buying processes. This type of segmentation is based on how the company buys goods and services. For example, a company could segment their business customers by price, quality, and service. Postmaster Joe's post office segments customers by price. Some of his business customers visit weekly just to buy stamps while other businesses spend thousands of dollars a month of expensive overseas shipping. He has created a different promotional plan for each segment. Satisficers are business customers who place an order with the first satisfactory supplier. This type of business customer needs to be contacted quickly in order to get the sale. Optimizers are business customers who research all supplies through bid proposals and then make a careful decision. Companies must spend more time and expense convincing these types of customers that they offer the best product or service. Postmaster Joe has explained the basics of business market segmentation. He evaluates his business customers monthly in order to make sure they are appropriately segmented via buying process or by a company characteristic. Business customers do change and our mailman has to make sure he's providing the best product and keeping his large users very happy.