STRATEGY-BASED SEGMENTATION OF INDUSTRIAL-MARKETS

Segmentation of industrial markets is typically based on observable ch aracteristics of firms such as their location and size. However, such variables have been found to be poor predictors of industrial buying b ehavior. To improve the effectiveness and power of existing approaches to industrial market segmentation, we propose using unobservable char acteristics such as organizational strategy in addition to the observa ble characteristics currently used. An important justification for our approach is that a firms strategy influences its behavior especially its buying behavior as a result, adding the strategic type and orienta tion of firms to a segmentation scheme is bound to improve the effecti veness of the scheme. To test the effectiveness of our approach, we co nducted an empirical study of the pur-chase of car phones by 200 Dutch firms. The results support our predictions. In fact, they indicate th at a firm's strategy is art even more important determinant of industr ial buying behavior than the variables currently used. Thus, strategy- based segmentation may be a more powerful and effective approach to in dustrial segmentation than current approaches. (C) 1998 Elsevier Scien ce Inc.