Segmentation Analysis for Viking

The provided content focuses on the evaluation and selection of market segments for a business-to-business (B2B) firm, specifically Vikings. The company must assess structural attractiveness, strategic direction, marketing expertise, and opportunity costs to make an informed decision about which target market to pursue. Key factors to consider include competitive rivalry, distribution channels, strategy and goals, marketing resources and capabilities, brand role, financial investment, staff time, and growth options. Ultimately, the selection of a target market will be based on Viking's ability to leverage its existing skills and develop appropriate products for the chosen segment.

INTRODUCTION
Business to Business Marketing refers to the marketing of products and services to
organizations which who develop products which are delivered to customers. B2B marketing
has several variations in the comparison of consumer marketing (Freeman, 2010). The present
report includes the case study of Viking Office Products, Inc. which sells office supplies to the
small and medium sized businesses. This report describes about the types of customers in B2B
market and their significance for Viking. In addition to this, it also features the comparison of
industrial and consumer products. Further it also covers the importance of different
segmentation. Lastly, it also covers the different classification system used in Europe and Asia.
1. Critically review the types of customers in B2B market as well as the importance of them in
the context to Viking
Types of consumers in B2B Markets and their importance to Viking
Manufacturers: Viking sells office supplies to small and medium sized manufacturers. Producers
are the businesses that develop goods in bulk to sell them in consumer market. These producers
need office supplies in carrying out their day to day business operations (Hitt, Ireland and
Hoskisson, 2012). Thus, they are one of the potential buyers of Viking Company. However,
manufacturers need to produce their products on time and for this purpose, Viking has to supply
their products to these manufacturers according to their demand (Hill, Jones and Schilling,
2014).
Re-sellers: Re-sellers are the organizations that sell goods and services produced by other
businesses without making any changes to the products and services. These include retailers,
wholesalers and brokers. These play an important role in increasing the sales of Viking. But in
case, these Re sellers do not perform their work effectively then this will affect the growth of
Viking. The firm should select e Re-sellers who would be capable enough to help organization
in increasing their revenue and growth (Barney and Hesterly, 2008). They are the intermediaries
who come in between manufacturers and customers. They buy the products in bulk and sell
directly to ultimate customers.
 Government: Government is the major purchaser of office supplies. Government
organizations need office supplies in their offices to carry out their day to day tasks.
Local and national government order products in bulk quantities. This provides great
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opportunity of profit maximization to Viking. In all the government organizations they
also need office supplies so that they can provide their services properly to their
customers.
 Institutions: These are the non-profitable organizations such as hospitals, care
organizations, charitable organizations, colleges, NGOs, etc. These organizations also
purchase large quantity of goods from Viking. They are the important buyers of the
company as these organizations supply purchased goods to needy people in order to fulfil
their social responsibilities towards society. Thus, company needs to keep the prices low
for these non-profit organizations (Stacey, 2007). If Viking do not supply products to
these firms according to demand, then these charitable organizations will not be able to
perform their operations effectively. People who are in need support, these charitable
organization help them in providing products and these products are directly given by
Viking.
2. Characteristics of industrial products and services, comparing and contrasting these with
consumer products and services
Comparison of industrial goods and services and consumer products and services are as follows:
Consumer Good Industrial Good
Consumer goods are those goods which are
bought personal, family or household use from
retailer.
Industrial goods are those goods which are
bought by organizations in order to produce
other products which later on are sold to
others.
Number of buyers in vase of consumer good is
very high
On this side, number of buyers for industrial
good are very less.
Quantity bought in consumer good is very low In industrial goods, quantity bought by buyers
is very high.
There is an autonomous demand for consumer
goods. For the ultimate consumption, these
goods are demanded.
There is a derived demand for industrial goods.
These goods are used for the development of
consumer goods (Wheelen and Hunger, 2011).
Market of consumer good is high due to In industrial good, market size is small due to
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availability of more customers. availability of less customers.
Examples of consumer good are furniture,
bread, soup, etc.
Examples of industrial good are timber,
copper, lubricants, etc.
3. UK SIC classification system
Standard Industrial classification (SIC) was introduced in 1948. This system is helpful in
classification of statistical units and business establishments. Further, this classification is helpful
in developing framework for the presentation, analysis, collection and tabulation of data (Kaplan
and Norton, 2007). It is also used by non-government bodies for classifying industrial activities
and for the administrative purposes. Similarly, NAICS (North American Industry Classification
System) is followed in U.S which performs similar functions like SIC.
Following are the differences between SIC and NAICS:
SIC which is a four digit code used by government and organizations for the purpose of non-
statistical analysis. On the other hand, NAICS is a six-digit code which is used in business
classification when analysis is made by federal agencies for the statistical information.
History: SIC was established in the year 1930 in order to classify business based in U.S. This
also compares and measures activities of economics. On the other hand, NAICS is more flexible
than SIC codes (Klein, 200). NAICS was first released in 1997, this code provides comparison
capabilities and compatibility among companies in U.S.
Features: SIC has ten primary division and NAICS has twenty main sectors. In SIC Service,
division is done into eight sectors which also include health care, administrative, information,
education and professional services. On the other hand, NAICS code uses sub sector for third
digit, main industry sector is denoted by first and second digit, fifth is for particular industry and
fourth is denoted for industrial groups.
Consideration: SIC numbers only in few cases (Hoetker, G., 2007). For example, Revised tax
law for franchises was passed in May 2006 which was developed by Texas legislature. SIC code
was required by Texas Controller of Public Accounts in order to verify tax rates (Klein, 2009).
On the other hand, NAICS is frequently used for regulatory, administrative, non-statistical
purposes, taxations and contracting. For example, in specified NAICS industry, there are few
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state governments who offer tax incentives for the classification of businesses. In order to bid on
certain contracts, they require NAICS numbers.
Conversion Chats: Census Bureau provides concordance and conversion tools in order to convert
all the SIC numbers to NAICS numbers. These tools are helpful to make sure that all the SIC
codes are converted to NAICS codes. In order to get access to 1997 NAICS and 1987 SIC, term
NAICS concordance is used in census.gov website (Hoetker, 2007).
Trends: Beyond statistical purposes NAICS has expanded well. Tax incentives are received
through specified NAICS industries. When these classifications were made from that time till
now many changes took place according to change in time and trends. In modern era change is
very frequently and accordingly the changes are made in these classification systems (Shook,
2004).
4. Importance of segmentation to Viking
Segmentation can be defined as dividing of splitting customers into segments or groups. It
divides of the basis of customers with similar demand and accordingly organizations develop
product or services which would help them in order to satisfy their customers. When target
audience are grouped, then it becomes very easy to adopt strategies or process in order to
identify the needs and wants of the customers. There are many benefits in segmentation for
Viking (Shook, 2004). Benefits are as follows:
Better services: With a limited product range it is possible to understand and satisfy customers
needs. As it was said early, Viking supplies it products to both small and large scale businesses.
In this context segmentation will be helpful in understanding the needs and requirements of all
the organizations who need similar products. Expensive plans can be conveyed to large firms and
other plans which are less expensive can be conveyed to smaller firms. In case Viking fail in
understanding the needs and preference of the customers, then they will not be able to provide
better services to their customers.
Purchase power by price differentiation: According to this point, it is very difficult to raise the
price for whole market. Premium segmentation can be done which would help in increasing the
price by providing the customers with features like product verification, additional services, etc.
(Eden, and Ackermann, 2013). Mostly businesses compete with each other on the basis of price.
As the price of the products have high level of price elastic and are comparable. Viking should
understand their customers preferences as it would help them to develop distinguishable offers
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for particular segment market. Products which have high demand has low price elasticity. Such
products can develop higher margins and can also sustain higher price level.
Helpful in attracting additional groups: For particular targeted marketing plans is helpful for
approaching other firms who look for specialized players. With segmentation Viking can attract
new firms who may be in need of their products (Piercy and Lane, 2006.). Segmentation strategy
developed on the basis of loyalty of customers is helpful in attracting new customers.
Communication: Communication with target audience becomes very easy and it is very essential
for Viking to communicate with their customers in specific way. It helps in highlighting criteria
which would be under consideration at particular segment.
Increasing market share: Segmentation is helpful in order to maintain the market share of the
organization and also in expanding it. It will be helpful for the organization if it tries to get
competitive advantage and this is possible if Viking understand the needs and wants of the
customers (Perrott, 2011).
Right customers: the resource of the organization will be used effectively when the firm will
have clear understanding regarding their target audience. In this context, Viking will be able to
use their resources effectively and efficiently. In addition to this, firm will be able to use resource
according to the requirement and wastage will also be less with respect to resources (Cinquini
and Tenucci, 2010).
5. Appropriate and relevant variables/bases for segmentation in Viking
Market can be divided in to four segmentations, which are as follows:
Geographic segmentation: According to this segmentation, division is done on the basis of
states, nations, countries, districts, cities, provinces, etc. National organization can segment on
the basis of regions, countries, etc. International firm can segment the market on the basis of
nation (Sherman and et.al., 2007). As there are many factors which contribute to the customers
needs across different areas of the world. In accordance with the case, Viking is an international
firm, so it should segment on the basis of different nations. This will be helpful for Viking to
understand their customers need and requirements effectively (Eden and Ackermann, 2013). If
U.S. considers something important, that may not be considered important in UK. The need and
wants of the customers may differ from country to country. Accordingly, Viking should
understand the needs and wants of different countries where it has its business and accordingly it
should satisfy their customer by satisfying them.
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Demographic segmentation: In this segmentation market is divided on the basis of income,
occupation, religion, profession, etc. there are many big and small organization who require
products for their organization and Viking will be able to provide their products and services
accordingly (Retha Snyman and Kruger, 2004). According to the profession or services which
other firms provides to their customers accordingly Viking will be able to provide these products
to these organizations.
Psychological segmentation: According to this segmentation division can be done according to
the social classes, personality, life style, etc. All the firms to whom Viking provides its products
have their own way of operating and their structure and culture according to which these firms
require products given by Viking. For example, social class segment are air travel, holidays and
hotels who travel according to particular classes ( Cadez and Guilding, 2012).
Behavioural segmentation: This segmentation is based on the customers actual behaviour. For
example, some users may be classed as light users and other users may be classed as heavy users.
Some may occasional users and other may be first time users. Customer's of Viking may be of
same as it was given above (Wei‐wei, 2010). It will be helpful for the Viking if they will be able
to know the behaviour of the customers then they will be able to provide products according to
their needs and wants. Behaviour differs according to the need of the organization. If the Viking
will be able understand the period in which they require the products, then Viking will be able to
provide their products accordingly.
6. Procedure for selection and evaluation of market segment
While selecting a target market, there are a number of factors which are to be evaluated. The
procedure for evaluating and selecting market segments can be assessed with the help of the
following categories:
 Assessing Financial issues - The market segments are selected by Viking on the basis of
various criteria such as segment size, its growth rate, profit margins. All these criteria fall
in the category of financial issues. It is important for Viking to consider the minimum
size requirements for market segment so that it is financially viable for the firm (Grattan,
2005). At the same time, it will prefer segments with strong growth rates. Profit margin is
another criteria which Viking will use to evaluate the segment and select it.
 Analyzing Structural attractiveness- Apart from that, Vikings also has to assess
structural attractiveness while evaluating and selecting market segments. This includes
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competitors and distribution channels. While selecting a market segment, Vikings will
consider how dominant are the established competitors. The degree of competitive rivalry
will be evaluated (Henrique and et.al., 2014). Target markets with fragmented
competition position will be preferred by Vikings as it will limit the direct competition.
Another concern for Vikings will be development of strong relationships between the
current firms in the distribution channel.
 Strategic direction - Strategic direction is another important category with the help of
which evaluation is done. This provides criteria such as strategy and goals. It is important
that the market should contribute to the strategic future of Vikings. Only then it will be
selected (Piercy and Lane, 2006). Similarly, as Viking has higher growth goals, it will
likely adopt a multiple target market strategy. Hence, market selection will be governed
by these factors.
 Marketing expertise - The category of marketing expertise comprises of resources,
capability and role of brand. The procedure for evaluating and selecting market segment
will consider whether Viking has the financial position and staff resources to enter the
segment in a successful manner (Klein, 2009). The firm will select a target market only if
provides a comfortable level of investment in terms of finances, staff time etc. another
criteria for evaluating the segment is capability. It is important that Viking has the
required capability to develop appropriate products for the segment. In this regard, it can
be considered that Viking will seek those target markets where its existing skills can be
leveraged. It will avoid those segments which require development of new skills and
expertise.
 Opportunity cost - While evaluating and selecting segments on the basis of opportunity
costs, growth options are considered (Freeman, 2010). This includes market development
as well as market penetration, diversification, product development, acquisition. All these
options will be considered by Viking while evaluating and selecting market segments.
CONCLUSION
From this report, it can be articulated that business to business there are many customers
involves who are very important and essential for the in order to provide satisfaction to the
customer's. All the customers involved in this context are very important and firm should
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maintaining good relation with all so that their growth and revenue can be increased. Further,
SIC and NAICS both are very essential as they are helpful in classification of statistical units and
business establishments. Moreover, segmentation is very helpful in understanding the needs and
requirements more clearly and accordingly firm can provide services or products which would be
helpful in satisfying customers.
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