6 B2B Market Segmentation Mistakes to Avoid

In our work with market segmentation in the B2B space, we often see the same mistakes. Here, we would like to pass on the benefits of our experience to help you avoid them as well.

These are the classic six mistakes in B2B market segmentation:

  1. Diving in before you have tested the water. Before you do anything else you need to define the market you wish to segment. What are the products or services that interest you and what are their alternatives from the customers’ point of view? For example, a few key accounts may make a significant proportion of the total market.  Therefore, it may be better to segment deeper within these accounts than perform a shallow analysis across the whole industry.  Scope the market carefully before segmenting it.
  2. Not knowing where the ball is going.  So many segmentation studies go to great lengths to study recent customer behaviour but pay little or no attention to how this might change in the future. If the economy is about to change or if a new technology looks set to take-off, then behaviour could change as well.  If a new market, re-organization or procurement strategy is about to be implemented, this could change who the decision-makers are and what they are looking for.  Understand where the ball is going, not just where it has been.
  3. Researching who you know rather than who counts. This is a particular problem in B2B where existing contacts are routinely surveyed for their thoughts – but they are often too low in the organization to make the big decisions or see the big picture. Use your senior contacts to setup interviews with the customer’s senior contacts, or use a third party company to help gain access to opinion leaders.  Ensure your research has the right quality of sources, not just the right quantity.
  4. Gaining just a shallow understanding of needs.  In a simple interview, customers will nearly always score price as an important factor, yet price is rarely the only reason why a customer will swap supplier.  Good interviewers will follow up answers with further probing “why” questions to try to get to the bottom of their real needs, which the customer themselves will find a useful journey of discovery. Gain a deep understanding of customer needs and throw new light on the real drivers of the issues.
  5. Forming segments that follow the norm.  Too many suppliers use simple segments that make life easier for them.  These could be industry-based, product-based or geographic-based segments.  But are there customers across these borders that actually have similar needs? For example, are there health & safety driven customers in Industry A, B and C which have similar needs and are not being served well by anyone?  Great segmentation will find ‘blue oceans’ of segments with little competition.   Use segmentation to see the world differently to your competition.
  6. Not using the segments. The greatest sin of all is to come up with smart segments that sit in someone’s drawer.  We must remember that the purpose of segmentation is to help develop better market strategies. It is better to do a small pilot exercise and use the segmentation outcomes, than to do a grand segmentation study only to find the implications too big for the business to handle. Make sure you link market segmentation to market strategy and drive implementation (even if just a pilot).

These should help you get a bigger strategic bang for your segmentation buck!

Edmund Bradford

www.market2win.com

Sales Performance Association meeting, 4th June, Chartered Institute of Marketing, Moor Hall

Members and guests who attended the SPA seminar on 4th June 2013 took part in a competitive and fast paced simulation in the area of Strategic Account Management.  Our first Honorary Fellow, Professor Malcolm McDonald introduced the day and set the scene for managing key accounts and Dr Beth Rogers followed by sharing a little of how the “game” is used at Portsmouth Business School.

Ed Bradford, the architect of the SAM Simulation then led us into our first round of the game.  The game is based on the global supply of staffing services including Recruitment, Outsourcing, Training and Consulting. This market has been chosen as a generic scenario in which to learn about the key elements of managing strategic (key) accounts in particular the vital subject of account selection.  It borrows strategic concepts from marketing and applies them to account management.  This includes combining, segmentation, targeting, positioning, value propositions and other key concepts.

We were arranged into 5 mixed teams and thankfully, Ed led us into the game gently, suggesting in round one, we focussed on the North America Market by service area.  The game was set up so that the 5 competing teams were already “in the market” and had all achieved an equal, base line performance that we could see and build on.  Ed coached us to strive to position our offer for maximum result, be it profitability or sales etc.

The teams grappled with the mass of data and slowly, we developed an understanding of the concepts, looking for ways to improve our position.  At lunchtime, Ed revealed our results showing that we had all improved performance with some teams doing a little better than others.  Ed then took us into some of the theory of Managing Strategic Accounts – a full slide set is available on the SPA Website (members Area).

After lunch, Ed lifted the market restrictions allowing teams to compete in all the Global Markets.  The teams quickly identified the limitations of resources and the need for focus.  Cash resources were removed from some markets and added to others, value propositions were fined tuned to match chosen segments and teams battled hard and fast to complete their decisions in the time allowed.

The winning sales team

After the third round with a teasing count down to the final decision, Ed revealed the winners and led a review of the group’s performance.  It was clear that some teams had developed strategies for the long haul and “what a pity” the game could not have run longer.  Ed presented “medals” to the winning team shown below.

The subject of Key Account Management ranks high in the SPA member’s interests and we have had many speakers on this subect including McDonald and Ryals.  Without doubt, this brought home the key messages into what was a most educational and enjoyable day. Our thanks  to Malcolm McDonald, Beth Rogers and particularly Ed Bradford for bringing this topic to life.

 

As written by John Andrews, Secretary of the Sales Performance Association

10th June 2013

For further information about the Sales Performance Association visit: http://www.salesperformanceassociation.com/

Compass wins a prestigious award

We are delighted to announce that our client, Compass Group PLC has won an award for its work in growing its international clients business. The award was announced by the highly respected Strategic Account Management Association and recognizes the excellent work that Compass has done in co-creating value with its clients.

In responding, Ed Bradford, Managing Director of Market2win said, “We have been working with Compass for many years on different aspects of their International Clients Programme and this is terrific recognition for the success that they have achieved. As part of the entry process for this award we interviewed many of their senior executives and I was blown away by the innovative ideas they were developing and implementing with these clients around the world.”

The award will be handed out at the SAMA European Conference in Berlin on the 11th March 2013

The full SAMA announcement is provided below

SAMA Announcement

February, 2013

Compass Group Recognized for Strategic Account Management Excellence and receives SAMA Excellence Award(TM) for Co-Creating Customer Value

The Strategic Account Management Association (SAMA) has selected Compass Group, a world-class provider of contract foodservice and support services, to receive a SAMA Excellence AwardTM for Co-Creating Customer Value. The award will be publicly given to Compass Group executives at the SAMA Pan European Conference, 11 March, 2013 in Berlin.

Through its International Client Programme begun in 1998 to develop strategic relationships with its top clients, Compass Group has demonstrated world-class practices in the critical area of customer-supplier value co-creation. Collaborative value creation is the key process in strategic customer management to bring about mutual growth, profit, trust, loyalty, innovation and risk management in B2B relationships.

“We are very impressed with Compass Group’s accomplishments and the documented evidence that their International Client Programme has integrated the key processes for co-creating customer value and through it has attained superior growth,” says Bernard Quancard, President & CEO of SAMA.

These elements are being documented in a SAMA case study examination, and presented in a conference session this March

Useful links:

SAMA Pan-European Conference (Berlin – 10-12 March) website

SAMA Pan-European Conference brochure

SAMA Academy in Berlin, 12-14 March website

Protected: Survey on marketing implementation

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Implementing a marketing plan is no easy task and research suggests it is not done very successfully. Moreover, when thinking about why a particular implementation program has failed, there is a tendency to focus on just a few known factors. In this paper we list the many possible causes of implementation failure coupled with some real examples. It will help readers appreciate the significance of the implementation challenge, the diversity of the issues involved and help dig down to the underlying causes.

The paper is here: Implementation issues and examples

A unique KAM workshop: London 12th Jan 2012

Earlier this year, we ran a KAM Simulation workshop for members of the world-renowned Strategic Account Management Association ( May 2011 ).  This was rated one of the best workshops at their conference and so we have teamed up with the University of Portsmouth, to offer a similar session in the UK.  My co-presenter is Beth Rogers,  one of the most distinguished KAM experts in the UK (and a long-time colleague of mine).  She has been researching and teaching in this area for over 20 years and already runs KAM courses at Portsmouth Business School.

This is the first time we are offering this course in the UK so please do not hesitate in claiming your early bird discount.

For more information, click on the link below:

Key Account Simulation Day 12 Jan 2012

KAM2win Simulator gets top satisfaction scores

The KAM2win Simulator recently scored some of the highest satisfaction scores amongst delegates at the SAMA Global Conference in Orlando.

Click here to see the conference highlights: SAMA Feedback Orlando 2011

Lecturer wins Dean’s Award

A Bradford student team on the Market2win Simulator

We are delighted to announce that Martin Haley has won the 2010 Dean’s Award for Teaching Excellence at the University of Bradford’s School of Management.

There are around 80 lecturers at the School and only three such awards handed out each year.  The award is based on student feedback on the courses they have undertaken.  Martin says, “It is a great honour to receive such an award and the use of the Market2win simulation has been a significant factor in generating the excellent feedback I have received from students.  We are now using it on both postgraduate and undergraduate courses. We hope to expand its use further within this university and across to our international partner institutions in the future.”

Edmund Bradford, MD of Market2win says, “This underlines the positive connection between using simulations and the student experience.  The best universities like Bradford are developing the right skills of students, not just improving their understanding of a subject.  This will give these students an employability edge when they finish their course.”

November Strategic Marketer of the Month

We are delighted to announce that the Strategic Marketer of the Month for November is Anant Pagare, an MBA student at Cardiff Business School.

Anant achieved this by playing the online Market2win Game and guiding his virtual company to a superb market success.   In doing so, he demonstrated the right stuff for senior leadership including superior customer insight, situation awareness, strategic leadership and masterful execution.

Anant was glad to be involved in one of our games: “In my opinion, knowledge is of little use without understanding the practical aspect and consequences of application of the theories. Market2win provided a platform where we needed to analyse the market conditions, compete with other companies in a simulated market environment, anticipate the competitor’s strategy and to act accordingly to stay ahead. It was a great learning experience and I’d be glad to get an opportunity again to become a part of it.”

“There were over 300 MBA students playing in several different games” says Edmund, MD of Market2win, “and Anant’s company made one of the highest profits across all the games.  He did this by beating his fellow students, not the computer.  He did exceptionally well.”

Do you want to develop your strategic leadership skills by playing against other real people from around the world – and collect valuable CPD time along the way? For more information about upcoming games go to http://www.market2win.com/play.php

September Strategic Marketer of the Month

We are delighted to announce that the Strategic Marketer of the Month for September is Robin Mar, owner of Eleven Solutions Ltd.

Robin achieved this by playing the online Market2win Game and guiding his virtual company to a superb market success.   In doing so, he demonstrated the right stuff for senior leadership including superior customer insight, situation awareness, strategic leadership and masterful execution.

Robin was very glad he signed up to one of our games: “It was a great experience for me playing the Market2win games.  Although I was already aware of the main principles of market strategy, we can all do with more practice.  It helped me to apply the theory in a realistic way and beat some other online players along the way!  It was enjoyable and a great way of building practical commercial leadership skills.”

“This was a short game played over just one afternoon” says Edmund, MD of Market2win. “Therefore, for Robin to do so well is a testament to how quickly he got to grips with the case and his very real competitors. Well done!”

Do you want to develop your strategic leadership skills by playing against other real people from around the world – and collect valuable CPD time along the way? For more information about upcoming games go to http://www.market2win.com/play.php

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