7 Types of B2B Market You Need to Know
If you are a business owner or marketer, you probably know that there are different types of B2B market segments that you can target with your products or services. But do you know what they are and how to identify them? In this article, we will explain the concept of B2B market segmentation and introduce you to the seven main types of B2B market that you should be aware of.
KEY TAKEAWAYS
B2B market segmentation is the process of dividing a large and heterogeneous market of business buyers into smaller and more homogeneous groups based on certain criteria
B2B market segmentation can provide many benefits for businesses, such as better understanding of customer needs, more effective targeting and positioning, more efficient allocation of marketing resources, higher customer satisfaction and loyalty, and increased market share and revenue
The seven main types of B2B market segmentation are industry, size, location, needs, behavior, preferences, and persona
The best type of B2B market segmentation depends on several factors, such as business goals, product features, customer expectations, competitive landscape, and available data
B2B market segmentation can be combined with other types of segmentation to create more refined and specific segments
What is B2B Market Segmentation?
B2B market segmentation is the process of dividing a large and heterogeneous market of business buyers into smaller and more homogeneous groups based on certain criteria, such as industry, size, location, needs, behavior, or preferences. The purpose of B2B market segmentation is to help businesses tailor their marketing strategies and offerings to the specific needs and characteristics of each segment, thereby increasing their chances of attracting and retaining customers, as well as enhancing their competitive advantage and profitability.
The Benefits of B2B Market Segmentation
B2B market segmentation can provide many benefits for businesses, such as:
- Better understanding of customer needs and expectations
- More effective targeting and positioning of products or services
- More efficient allocation of marketing resources and budget
- More personalized and relevant communication and interaction with customers
- Higher customer satisfaction and loyalty
- Increased market share and revenue
The 7 Types of B2B Market
There are many ways to segment a B2B market, depending on the criteria and variables that are relevant for a particular business or industry. However, some of the most common and widely used types of B2B market segmentation are:
1. Industry
This type of segmentation divides the market based on the industry or sector that the business buyers belong to, such as manufacturing, healthcare, education, or retail. This allows businesses to focus on the specific needs, challenges, opportunities, and trends that affect each industry and offer solutions that are tailored to them.
2. Size
This type of segmentation divides the market based on the size of the business buyers, such as small, medium, or large enterprises. This allows businesses to adjust their pricing, features, service levels, and delivery methods according to the different capabilities, resources, and demands of each size segment.
3. Location
This type of segmentation divides the market based on the geographic location of the business buyers, such as country, region, state, city, or zip code. This allows businesses to adapt their products or services to the different cultural, legal, economic, environmental, and climatic factors that influence each location segment.
4. Needs
This type of segmentation divides the market based on the specific needs or problems that the business buyers have or face in relation to their products or services. This allows businesses to offer solutions that address those needs or problems and demonstrate their value proposition and benefits for each need segment.
5. Behavior
This type of segmentation divides the market based on the behavior or actions that the business buyers take in relation to their products or services, such as usage frequency, purchase frequency, loyalty level, satisfaction level, or referral rate. This allows businesses to reward or incentivize certain behaviors or actions and influence them for each behavior segment.
6. Preferences
This type of segmentation divides the market based on the preferences or opinions that the business buyers have in relation to their products or services, such as quality, price, design, functionality, brand image, or customer service. This allows businesses to appeal to those preferences or opinions and differentiate themselves from competitors for each preference segment.
7. Persona
This type of segmentation divides the market based on the persona or profile that represents the typical characteristics, attributes, motivations, goals, pain points, and decision-making process of the business buyers. This allows businesses to create more personalized and engaging marketing messages and content for each persona segment.
TIP
B2B market segmentation can help you improve your marketing performance and results by targeting the right customers with the right products or services at the right time.
Types of B2B Market and Global Demand
B2B market refers to the transactions between businesses, such as manufacturers, wholesalers, retailers, or service providers. There are four main types of B2B markets: producers, resellers, government, and institutions.
Producers
Producers are businesses that purchase raw materials, components, or finished products from other businesses to use in their own production process or to resell to other businesses or consumers. Examples of producers are car manufacturers, construction companies, or food processors.
Resellers
Resellers are businesses that buy finished products from other businesses and resell them to other businesses or consumers. Examples of resellers are distributors, wholesalers, retailers, or e-commerce platforms.
Government
Government is a type of B2B market that consists of federal, state, and local agencies that purchase goods and services from other businesses to fulfill their public duties and responsibilities. Examples of government buyers are the Department of Defense, the Department of Education, or the Department of Transportation.
Institutions
Institutions are non-governmental organizations that purchase goods and services from other businesses to support their social, educational, or charitable missions. Examples of institutions are universities, hospitals, museums, or non-profit organizations.
The global demand for B2B products and services varies depending on the type of market and the industry sector. According to a report by Forrester Research, the global B2B e-commerce market reached $12.2 trillion in 2019, accounting for 17% of all B2B sales. The report also projected that the B2B e-commerce market will grow at a compound annual growth rate (CAGR) of 10% from 2020 to 2024.
Some of the factors that influence the global demand for B2B products and services are the level of economic development, the degree of digitalization, the availability of infrastructure, the regulatory environment, the competitive landscape, and the customer preferences and expectations.
FREQUENTLY QUESTIONS
Q1: What is B2B marketing?
A: B2B marketing is the process of marketing products or services to other businesses or organizations that use them for their own purposes or resell them to end consumers.
Q2: What is the difference between B2B and B2C marketing?
A: B2B marketing differs from B2C marketing in several aspects, such as:
- The number of customers is usually smaller but more valuable in B2B marketing
- The decision-making process is usually longer and more complex in B2B marketing
- The relationship between buyer and seller is usually more long-term and collaborative in B2B marketing
- The communication style is usually more formal and professional in B2B marketing
Q3: How do I segment my B2B market?
A: To segment your B2B market effectively, you should follow these steps:
- Identify your target market and analyze its characteristics
- Choose the criteria and variables that are relevant for your business or industry
- Collect and analyze data on your potential and existing customers
- Divide your market into distinct and meaningful segments based on the data
- Evaluate and select the most attractive and profitable segments for your business
- Develop and implement marketing strategies and tactics for each segment
Q4: How do I choose the best type of B2B market segmentation for my business?
A: There is no one-size-fits-all type of B2B market segmentation for every business. The best type of segmentation depends on several factors, such as:
- Your business goals and objectives
- Your product or service features and benefits
- Your customer needs and expectations
- Your competitive landscape and positioning
- Your available data and resources
You may also use a combination of different types of segmentation to create more refined and specific segments.
Q5: What are some examples of B2B market segmentation?
A: Some examples of B2B market segmentation are:
- A software company that segments its market based on industry, size, and needs, and offers different versions of its product for each segment
- A consulting firm that segments its market based on location, behavior, and preferences, and provides different services and prices for each segment
- A manufacturing company that segments its market based on persona, needs, and behavior, and creates different marketing campaigns and content for each segment
References:
https://www.infosys.com/about/knowledge-institute/insights/Documents/future-customer-engagement.pdf
https://archive.org/details/ecommerceformula00plan/page/26
https://whatis.techtarget.com/definition/B2B2C-business-to-business-to-consumer
https://www.investopedia.com/terms/b/btob.asp
https://sweetfishmedia.com/b2b-marketing-types-examples/
https://open.lib.umn.edu/principlesmarketing/chapter/4-2-types-of-b2b-buyers/
https://www.marketing91.com/types-of-b2b-market-segmentation/
https://www.hubspot.com/marketing/b2b-market-segmentation
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