Market Segmentation Strategies and Industrial Buyer Types

Effective Market Segmentation Strategies

Segmentation strategies:

• Undifferentiated: This option ignores the existence of market segments. The company tries to meet needs and demands, each with unique shopping opportunities. This strategy has the advantage of cost savings, but it is difficult to meet the needs of all consumers.
• Differentiated: This strategy involves offering products tailored to the needs of each individual target segment, using different trade instruments. This strategy can increase the total market demand, as it meets the needs of each segment, but the costs for the company are higher. The company must evaluate each segment served.
• Concentrated: The company detects the existence of several market segments that are relevant but may not be able to meet them all in an appropriate manner due to a lack of resources. It is more advantageous to concentrate on one or a few segments where the company may have some advantage (quality, price, etc.) and gain a greater market share. This may present certain risks, such as a weakening of demand, changing preferences of a segment served, or the entry of new competitors.

Classification of Industrial Buyers

• Business and agricultural cooperatives, livestock, or fisheries: Their purchases represent a much smaller volume than the industrial and service sectors. Only certain purchase volumes reach significant levels, and the most important purchases are machinery.
• Industries: This group includes extractive companies, manufacturers, energy production, and construction. The products purchased are usually raw materials, materials, components, computers, and more.
• Resellers: These are those who buy finished goods and sell them again without making any physical changes. However, they enhance the product value by adding services such as delivery, financing, and technical assistance. This group includes mainly wholesalers and retailers.
• Public Authorities: The state is the main buyer in almost all countries. State contracts may be awarded by auction, tender, or private contract. The most common is the auction, where the government sets a price for tenders, and the award of the contract falls on the most economically advantageous tender.
• Utilities and Services: The service sector is the heaviest and most dynamic, representing nearly 50% of GDP. It distinguishes between service companies that seek to make a profit and those that do not. The former include financial institutions, insurance companies, hotels, and transport. The latter include education, health, and religious institutions.