44 CHAPTER 2 UNDERSTANDINGANDAPPROACHINGTHE MARKET
CommonBuyingFactors Someindustrialrrarketerssegmentmarketsbyidenti-
fyinggroups ofcustomerswhoconsiderthe samebuy;ngfactorsimpOltant.Fivebuying
factorsareimportantinmostindustrialbuyingsituations:(1)productperformance,(2)prod-
uctquality,(3)service,(4)delivery,and(5)p rice.^2 Identifyinga groupofcustomerswho
valuethesamebuyingfactorsas importantisdifficult,asindustrialorganizations'and
resellers'priorities oftenchange.
Buyer SizeandGeography Iforganizations'marketscannotbeeasilysegmented
byoneofthe previous approaches, marketadvantagesmaystillberealizedbysegmenting
basedonaccountsize orgeographicboundaries Salesmanagershavedonethisforyears,
butonlyrecentlyhaveorganizationslearnedtodevelopseveralpricingstrategiesforcus-
tomersthatarebothcloseandfarawaygeographically.Similarly,differentstrategiescan
bedevelopedforlarge,medium, andsmallcustomers.
Single-BaseandMulti-BaseSegmentation
Sofar,wehave talkedabouttheuseofindividualbasesformarketsegmentation.Theuse
ofasingle-basesegmentationstrategyis asimplewaytosegmentmarkets,andisoften
veryeffective. Clearly,theuseofbasessuch as sex(cosmetics),orage(healthcareprod-
ucts,music),orincome(automobiles),providesvaluableinsights intowhouseswhatprod-
ucts.Buttheuseofa singlebase maynotbepreciseenoughinidentifyinga segmentfo r
whicha marketingprogramcanbe designed.T herefore,many organizationsemploymulti-
basesegmentationstrategies,using severalbasestosegmenta totalmarket.Forexample,
thehousingmarketmightbe segmentedbyfamilysize. income,andage.
American LogHome, forexample,offersa widevarietyofpackagesandoptionsto
itscustomersbasedontheirneeds, incomes,skills,familysize, andusage. Packagesrange
fromone-roomshelters designedprimari lyforhunterstoa 4,000square-footunitcomplete
withhottub,chandeliers, andthreedecks.Customerscanselecttofinishpartoftheinte-
rior,partoftheexterior, ortohavetheentirestructurefinishedbyAmericanLogHome.
Theresultinghugearrayofproducts is adisadvantageofmulti-basesegmentationas
a strategy. Usingseveralbasesthatvaryinimportance,consideringalltobeequal,could
producemisdirectedefforts.
QualifyingCustomersinMarketSegments
Clearly, it is importanttoemployappropriatefactorstoidentifymarketsegments.Equally
important is qualifyingthecustomerswhomakeupthosesegments.Qualificationsinvolves
judgment.Marketersmustbeabletodifferentiatebetweenrealprospectsandindividuals
or firmswhohavesomesimilarcharacteristicsbutcannotbeconvertedtopurchasers.
Itshould be clearthat notallmarket segmentspresentdesirablemarketingopportu-
nities. Traditionally, fivecriteria havebeenemployedtogaugetherelativeworthofa mar-
ketsegment: 16
- Clarityo/identification:Thedegreetowhichwecanidentifywhoisinandwho
isoutsidethesegment.Partofthisprocessalsoinvolves thedelineationofdemo-
graphicandsocialcharacteristicsthatmakeit easiertomeasureandtracktheiden-
tifiedsegment.Unfortunately,obtainingsegmentdatais notalwayseasy,especially
whenthesegmentisdefinedintermsof behavioralorbenefitcharacteristics.Sex
isa clearbasisforsegmentinga productsuchasbrassieres.
~'" Actualorpotentialneed:Needsthatreflectovertdemandsforexistinggoodsand
services, orneedsthat canbe transformedintoperceivedwantsthrougheduca-
