In contrast to consumer markets, in industrial markets number of customers are relatively less and they tend to purchase in large volumes. Hence, industrial customers go into the nitty-gritty of product details and take ultimate purchase decisions in a group.
Industrial customers are mostly organizations like; manufacturers and service providers, resellers, governments and institutions. Some of the market segmentation characteristics, applicable for consumer markets, are also applicable for industrial markets.
ADVERTISEMENTS:
However, specific market segmentation characteristics, applicable for industrial markets can be listed as under:
1. Location:
For industrial markets location of customer is important as, based on this, companies work out the cost of transportation, selection of vendors and also takes decisions on complete supply chain. Some companies like paints manufacturer, may even decide to locate their manufacturing base proximate to markets, i.e., customers, for the obvious problem in transporting the finished paints to a long distance, not only for high cost of transportation but also for natural deterioration of quality while the items are in transit. Similar considerations are also applicable for cement industry. Some companies, however, try to locate their warehouses strategically to meet the demands of different markets.
Image Source: 185.26.182.219
2. Company Type:
Type of company is also another important consideration for industrial markets segmentation. Such factors are:
i. Company size
ADVERTISEMENTS:
ii. Industry
iii. Decision making unit
iv. Purchase criteria
3. Behavioural Characteristics:
In industrial markets, patterns of purchase behaviour could also be the basis for segmentation. Such behavioural characteristics are:
ADVERTISEMENTS:
i. Rate of usage
ii. Status of buyers like potential, first-time, regular, etc.
iii. Procedures of purchase like bids, negotiation, etc.