Industrial Marketing Segmentation
Essentially, industrial marketing segmentation is dividing your customers into groups that make selling to them more effective. Most manufacturers do this in a broad sense by identifying potential customers that could use their products or services. However, you can use narrower criteria to align messaging with the needs of the segment better.
Industrial marketing segmentation codes
Using industry codes is the first and most common step in industrial marketing segmentation. There are two types of codes, Standard Industrial Classification (SIC) and The North American Industry Classification System (NAICS). Starting in 1937, the U. S. government assigned four-digit numerical SIC codes to categorize companies by industry and organize industries by business activities. NAICS codes were developed by the Office of Management and Budget in 1997 to replace SIC codes. While both are still in use today, NAICS codes drill down in more detail on the industry of the business. If you are uncertain which codes you should use, a list company can do a code lookup. You will need to send them a list of companies in a market you want to target, and they can match the company’s code and provide a count for review.
Depending on what you manufacture, geography may or may not be a factor in industrial marketing segmentation. I have had clients that manufacture processing systems and drill rigs that ship these massive products worldwide. On the other hand, clients that fabricate or stamp parts often restrict sales territory to a handful of states. The deciding factors are accessibility and profitability. If a prospect has an accessible local supplier, it will be difficult to get them to switch to a parts supplier from across the country. You need to evaluate shipping costs and delivery schedules to determine your profitability based on geography. It simply may not be worth your while to work outside a specific sales area.
Products & Services
Another industrial marketing segmentation technique is to determine which products or services the markets you target are likely to buy. When you narrow down your service or product line based on the market, you avoid overwhelming a potential customer and demonstrate that you clearly understand their needs.
New industrial marketing segmentation
Industrial marketing segmentation does not always have to take place within your current customer base. The same principles that work for segmenting customers are valid when looking to expand into new markets. You will still need to review codes, evaluate sales territory, and product/service alignment.
About the Author
Paul Kowalski (or Pappy as he is called around the office) spent over two decades working at other agencies before opening Conach Marketing Group in 2008. The early part of his career was working with Fortune 500 clients at different agencies. However, working with smaller clients was his preference. This choice was because of the impact on a client’s business growth and forming closer, personal relationships.
When he was creating Conach, his goal was to bring those Fortune 500 strategies along with years of B2B marketing experience to small business marketing clients. As a result of focusing on business to business marketing, Conach specializes in financial marketing, financial marketing, and industrial marketing. Even though we are in Mid-Michigan, Conach provides marketing services to clients across the country.