Segmentation Variables for Industrial Market

The market of industrial products is called industrial market. In other word, the total demand made by industrial users is industrial market. The goods used in industrial purpose are industrial goods. Raw materials, equipment, installation (big machines), operating supplies etc. are industrial goods. In industrial market, goods are purchased with the purpose of business use, or resale
produce new goods. The industrial purchaser is fully knowledgeable about the goods. Although the number of industrial customers may be small, they demand big quantity. Industrial market should be segmented on the basis of four variables. They are related to geographic, demographic, operational and purchasing variables.
The components for Industrial Market Segmentation

1. Geographic variables

Area, climate, topography etc. are included in geographic variables.
  1. Area: On the basis of geographic area, industrial market can be divided into four segments as local, national, regional and international.
  2. Climate: On the basis of climate, industrial market can be divided into three segments as tropical, temperate and alpine.
  3. Topography: On the basis of topography, industrial market can be segmented as Himali market, hilly market, Terai market, rural market, sub-urban market, fully urban market etc.
Tips
Geographic segmentation for industrial market
Variables
Typical market segments
- Area                  
- Climate
- Topography
Local, National, Regional, International              
Tropical, Temperate, Alpine
Himali, Hilly, Terai, Rural, Sub-urban, Urban

2. Demographic variables

Industrial market can be segmented on the basis of demographic variables such as type, size etc. of the business firm.

  1. Types of business: Different types of industries and organizations (customers) operate in industrial market. They are agriculture, construction, mining, manufacturing, finance, insurance, services, govt. organization etc. Such industries and organizations need distinct marketing mix. So, industrial market can be segmented on the basis of different types of business to satisfy all the types of customers.
  2. Size of business: Different sizes of business organization (customers) operate in industrial market. It (size of business) can be used as the variable of industrial market segmentation. On this basis, industrial market can be segmented as follows:
    1. Very small customers (footpath vendors)
    2. Small customers (small and cottage industries)
    3. Medium customers (medium size industries)
    4. Large customers (big industries)
    5. Very large customers (government bodies)

Tips
Demographic segmentation for industrial market
Variables
Typical market segments
- Types of business                  




- Size of business
Agriculture, Construction, Mining,
Manufacturing, Finance, Insurance, Services,
Government Organization            
Tropical, Temperate, Alpine
Himali, Hilly, Terai, Rural, Sub-urban, Urban
Very small, small, Medium, Large, very large

3. Operating variables

Technology, requirements of service, usage, rate etc. are the main operating variables.

  1. Technology: Technology can also be used in segmenting industrial market. The variables like, labor incentive technology, capital incentive technology, automatic ultramodern technology and computer technology should be considered while segmenting industrial market on the basis of technology.
  2. Requirement of services: Industrial users require different types of services. Marketing mix becomes effective if the market is segmented by identifying such requirements of the services. The main variables of market segmentation on the basis of requirement of services are warranty of products, machinery installation, machinery repair service etc. after sale.
  3. Usage rate: Usage rate of industrial goods differs according to customers. Usage rate affects continuity and quantity of purchase of goods. So, marketing mix should be fixed considering this fact. The main variables of segmentation of industrial market are heavy users, medium users, light users, non-users etc.
Tips
Operating segmentation for industrial market
Variables
Typical market segments
- Technology


- Requirement of services    
- Usage rate
Labor incentive, Capital incentive
Automatic ultra modern technology,
Computer technology    
Warranties, Installation, Repair, After service sale       
Heavy users, Medium users, Light users, Non users

4. Purchase related variables

Purchase organizations, purchase procedures and methods negotiation period, contract duration etc. are purchase related variables.

  1. Purchase organizations: Purchase may be different according to the size and nature of business organization. Some organizations give all purchasing responsibility to a certain individual; some give this responsibility to purchase committee or department. It becomes easy to sell goods to single individual but it becomes difficult to sell goods to purchase committee or department. So, effective marketing mix should be made by segmenting industrial market.
  2. Purchase procedures and methods: Purchasing procedures differ according to business organization. Some purchase goods through contract, some others purchase through tender. Similarly, purchase methods also differ according to organization. Some organizations adopt centralized purchase methods and others decentralized methods. So, industrial market should be segmented on the basis of purchasing procedures and methods.
  3. Negotiation period: Industrial market can be segmented on the basis of negotiation period. Many persons involve in taking decisions on purchase negotiation to purchase some goods and few person take decisions for some other goods. If many individuals need to be involved in taking decision on purchase negotiation, such negotiation period becomes long. Otherwise the period of purchase negotiation becomes short. Negotiation period of some goods may be years long.

Tips
Purchase-related segmentation for industrial market
Variables
Typical market segments
- Purchase organization            
- Purchase procedures and methods

- Negotiation
Individual, Purchase Committee, Purchase department      
Negotiation, Tender, Quotation, Centralization Purchase,
Decentralization Purchase
Short, Long

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