5. Industrial Market Segmentation

Industrial market segmentation has been understood by most academics and practitioners as a customer purchasing behaviour partitioning. Little effort has been done to discuss that purchasing behaviour should be considered a ‘sales segmentation’, not a strategic one.This chapter introduces the idea that in-use product application is a more potent and impactful approach to do industrial market segmentation. Thus, application segmentation should be understood and implemented in an on-going basis at the end-user level. The chapter establishes a direct relation between application-based segmentation and product functionality and attributes. Product adaptation and specialization follows. Moreover, application niche detection and tagging is presented as pivotal tasks to design the business unit strategy. Tools such as a product-application matrix and a novel industrial segmentation protocol are described.