Strategic Marketing: Planning and Control, Third Edition

Segmentation 83

A more systematic method to organisational market segmentation has
been developed called the nested approach. This method moves through
layers of segmentation variables starting with the demographics of the
organisation (the macro level) down through increasingly more sophisti-
cated levels reaching the complex areas of situational factors and personal
characteristics. This approach effectively establishes a hierarchical struc-
ture in which to undertake the segmentation process (see Figure 4.22).

General, observable

at macro level

Intermediate

level

Specific, subtle

at micro level

Organisational demographics

Industrial

sector

Geographical

location

Operating variables

Technology

User

non-user

status

Customer’s financial capabilities

Purchasing approaches

Organisation

of DMU

Purchasing

policies

Purchasing criteria

Situational factors

Urgency

Size of

order

Personal

Attributes

Motivation

Buyer-seller

relationship

Perceptions of risk

Figure 4.22

The major factors

for segmenting

organisational

markets (a nested

approach) (Source:

Adapted from

Bonoma and

Shapiro, 1983)

There is a balance to be struck with this approach between the macro
level which is generally inadequate when used in isolation, and the micro
level which may be too time consuming and expensive to establish and
operate in markets with limited potential.