Segmenting B2B technology markets via psychographics: an exploratory study

Segmenting B2B technology markets via psychographics: an exploratory study

1. Introduction

   • the formula segmentation, targeting and positioning (STP) is the starting point for value creation and the essence of strategic marketing.
   • ‘all markets consist of segments and niches.’
   • in the identical way, firms that offer the same products, in the same territory, under the same conditions, with the same clientele cannot coexist equally. Eventually, one will dominate
   • Psychographics has captured the imagination of consumer marketers as a segmentation dimension
   • to differentiate target markets and provide an overall basis for promotional strategy via personality traits or lifestyles

2. Background – defining psychographics

   • quantitative research intended to place consumers on psychological – as distinguished from demographic – dimensions’
   • the use of psychological, sociological, and anthropological factors, self-concept and lifestyle to determine how the market is segmented by the propensity of groups within their market – and their reasons – to make a particular decision about a product,
   • the segmentation of organizational buyers into homogenous clusters of mindsets and behaviors that are distinguished by motives, risk perceptions and social interaction styles in order to identify prospects as well as predict the predispositions of the firm’s decision makers for the sake of adapting products, marketing messages and relational selling behaviors.
   • business psychographics consists of three major dimensions (motivation, risk and relationships) and 8 variables

3. Business psychographics – recent research trends

   • a key marketing activity to create value-enhanced experiences that connect customers with brands.
   • effective selling by adaptation to customer personality types.
   • that employing organizational psychographic variables improved the explained variance by more than 25% versus demographics alone.
   • Most marketers now recognize that simplistic segmentation schemes based on demographics, geography or SIC codes are suboptimal at best – and disastrous at worse’
   • than 5% of the plans they have seen contained useful segmentation information.
   • 59%of large companies commissioned a major segmentation study within the past two years but only14%of the executives said they gained real value from them.

4. Findings

   • The use of B2B psychographics impacts target marketing success. While there was no significant difference between formal and informal psychographics, those not using any form of psychographics fared significantly worse with respect to target marketing success.
   • Market segmentation for B2B is just as important for companies marketing to consumers. In this day and age ‘one size fits all’ will cost you market share, if not your entire market.

5. Marketing implications – the value of B2B psychographics

   • Psychographics has the potential to be a powerful segmentation dimension in business and technology markets.
   • The relatively high costs of conducting such primary research have limited its widespread use in B2B markets. Firms using business psychographics were 24% more successful than average in target marketing success.
   • it is imperative that marketing research vendors and corporate market researchers demonstrate the value of this marketing investment through projects and processes.
   • Firms not using psychographic insights from either formal market segmentation studies or trained marketing executives were least effective in their target marketing efforts. Their lack of market orientation limits their success in understanding target markets and finding new niche opportunities.

6. Research agenda

   • can assist marketers design winning target marketing strategies.
   • improving response rates or designing behavioral segmentation products for clients), field and online customer service enhancements, differentiated web sites, cost/value tradeoffs or price sensitivity studies, and creating and managing online communities/business social networks.
   • Other suggestions include the types of market definitions employed – undifferentiated, differentiated, single segment concentration or segment-of-one; criteria for market selection; marketing activities used and success; technology factors and additional classification (firmographic) data.

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