Core Concepts of Marketing

APPROACHINGTHEMARKET 41

Introducedin1978,theoriginalVALS(Values,Attitudes,andLi~estyle)dividedthe
Americanpopulationintoninesegments,organizedalonga hierarchyofneeds.Afterseveral
yearsofuse,it wasdetenmnedthattheninesegmentsrefjecteda popuiationdominatedby
peopleintheirtwentiesandthirties,astheU.S. wastenyearsago. Moreover,businessesfound
it difficulttousethesegmentstopredictbuyingbehaviorortargetconsumers.Fortheserea-
sons,SRldevelopedanall-newsystem,VALS2.Itdroppedvaluesandlifestylesasitspri-
marybasisforitspsychographic segmentationscheme.Instead,theforty-threequestionsask
aboutunchangingpsychologicalstancesratherthanshiftingvaluesandlifestyles.
ThepsychographicgroupsinVALS 2 arealTangedi'1a rectangle(seeFigure2.3).
Theyarestackedverticallybyth eirresources(minimaltoabundant)anhorizontallybytheir
self-orientation(principle,status,oraction-oriented).
AnannualsubscriptiontoVALS2 providesbusinesseswitha rangeofproductsand
services.BusinessesdoingmarketresearchcanincludetheVALSquestionsintheirques-
tionnaire.SRlwillanalyzethedataandVALS-typetherespondents.

SegmentingOrganizationalMarkets
Itisalsoimportantforthemarketingmanagertounderstandhowbusinessororganization
customerscanbesegmented.Manyfirmssellnottoultimateconsumers buttootherbusi-
nesses.Althoughtherearemanysimilaritiesbetweenhowconsumersandbusinessesbehave,
therearealsoseveraldifferences, asmentionedearlier.Recallthatbusinessbuyersdiffer
asfollows:(i)mostbusinessbuyersviewtheirfunctionasa rational(problem-solving)
approach;(2)thedevelopmentofformalprocedures,orroutines,typifiesmostbusinessbuy-
ing;(3)theretendtobemultiplepurchaseinfluences;(4)inil1dustrialbuyingit isneces-
sarytomaintainthecorrectassortmentofgoodsininventory; and(5)itisoftenthe
responsibilityofthepurchasingexecutivetodisposeofwasteandscrap.
Anumberofbasicapproachestosegmentingorganizationalmarketsexist.Anindus-
trialmarketingfirmmustbeabletodistinguishbetweentheindustriesit sellstoandthedif-
ferentmarketsegmentsthat existin eachofthoseindustries.Thereareseveralbasicapproaches
tosegmentingorganizationalmarkets:(1)typesofcustomers;(2)theStandardIndustrialClas-
sification;(3)enduse;(4)commonbuyingfactors;and(5)buyersizeandgeography.2, 16

TypeofCustomer Industrialcustomers,bothpresentandpotential,canbeclassi-
fiedintooneofthreegroups,

1. OriginalEquipmentM anufacturers(OEMs),suchasCaterpillarintheroad equip-
   mentindustry,


2. Endusers,suchasfarmerswhousefarmmachineryproducedbyjohnDeere and
   OEMs.


3. Aftermarketcustomers, suchasthosewhopurchasesparepartsfora pieceof
   machinery.
   Similarly,industrialproductscanbeclassifiedintooneofthreecategories,eachof
   whichistypicallysoldtoonlycertaintypesofcustomers:


4. Machineryandequipment(e.g., computers,trucks,bulldozers):theseareendprod-
   uctssoldonlytoOEMandendusersegments.


5. Componentsorsubassemblies (e.g., switches, pistons, machinetoolparts):these
   aresoldtobuildandrepair machineryandequipmentandaresoldinallthreecus-
   tomersegments.
   J.Materials(e.g.,chemicals, metals,herbicides):theseareconsumedintheend-user
   productsandaresoldonlytoOEMsandendusers.