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Segmentation, Targeting, Positioning: Modern business marketing strategy relies on three tasks—segmentation, targeting, and positioning.

ISBM Fellow Professor Robert Thomas of Georgetown University has been a leading strategist in this area.

Segmentation: Different customers with different needs respond to different value propositions. Yet customers with similar needs can be grouped together and be served by similar offerings. Marketers typically group consumers into statistically large groups. But in business markets, segmentation often becomes a much more complex process dealing with smaller customer populations that are harder to analyze as statistical averages. A segment could consist of just one business customer.

Targeting: Marketers next determine how to approach market segments and decide which segments deserve the most attention. Which seem to offer the most potential profit? Which will best respond to the marketer’s offerings? In business markets, managers must set priorities for assigning sales resources and developing distribution channels, for example. Profiling how customers in a business segment and their multifaceted buying committees will react is much harder to research than are individual consumers.

Positioning: Once the marketer decides how to approach a segment, the next decision determines which parts of the offering to emphasize. It’s uniqueness? Superiority to competition? A lower price for equivalent performance? A firm can emphasize different parts of its value proposition to different segments. The goal is placing the offering in the “considered set” of the customer’s decision makers—that group of suppliers they think of first for a specific purchase.

In business markets with their value-chain relationships, it is helpful to think of industries as value networks. Business marketing attempts to manage those networks with strong value delivery and inter-organizational alliances bolstered by trust and collaboration. The complexity of industrial and business offerings often requires “cocreating” solutions with customers to maximize the value-in-use of a transaction. Manufacturers, for example, will co-develop new products with customers and assign cross-functional specialist teams to assist key accounts. Customers often share production scheduling information with vendors; some even invite supplier salespeople to function as members of the customer’s purchasing staff. ISBM Fellow Robert Spekman of the University of Virginia is a leading researcher, consultant, and coach in the practice of business alliance-building.