Balancing theory and practice: a reappraisal of business-to-business segmentation

The article reviews some current guidance on when and how to segment business-to-business markets. It evaluates traditional segmentation processes and the variables usually recommended. Several important issues are highlighted including: the limitations of current definitions; the continuing tension between theoretically meaningful and managerially possible segmentation methods, and the difficulties in using product benefits as opposed to customer needs as a basis for segmentation. The paper proposes a new comprehensive definition of segmentation and a more balanced marketing-orientated approach to the process. We conclude that the appropriate approach to segmentation in business-to-business markets is governed by the objectives of the organizations involved and by prevailing investment priorities and competitive tensions, rather than by the idealistic recommendations of marketing theory always to focus exclusively on customer needs. The implications for managers and for future research are discussed. (Reprinted by permission of the publisher.)