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Multiple Market Segments

A site designed for business customers looks different from a site designed for consumers. Consumer sites are designed to be easy to use and often encourage catalog browsing to find products. On the other hand, business buyers are not interested in spending any extended time browsing through a catalog to look for items of interest. Rather, business buyers typically either already know what they need or are interested in finding the products that satisfy their company's needs as quickly as possible. Therefore, it is better for the company to create separate sites for consumers and business customers so that the layout and the flow of each site best suit the needs of the customers.

Other kinds of market segments also can require a targeted site to serve their needs. For example, a company might want to create separate sites for educational institutions or governments, or a site for auto dealers. Even within the consumer segment, it might make sense to create targeted sites for women or for teenagers. We therefore explore some of the common segmentation scenarios to better understand the reasons that cause the need for targeted sites.

B2B and B2C Sites

When people go shopping to a retail outlet, they usually get the impression that the company that owns the store is mostly in the business of selling to consumers like themselves. This impression is created by the environment of the store, which is designed to please the mass consumer market. Frequently, however, retail outlets are only a portion of the parent company's business. The seller can have other operations invisible to consumers, such as sales to small business customers or to governments. Companies know that it is unwise to approach each of these segments in exactly the same way, but rather have long ago learned to treat each market segment differently.

An example of such a seller is Staples Inc., which to a consumer is a large retailer of office products, with thousands of outlets around the world. Staples Inc. has a popular commerce site, Staples.com (www.staples.com), which sells the company's products to shoppers. In addition, Staples Inc. has a large business clientele; in other words, it has many customers who are companies rather than individual shoppers. The Staples Inc. site for its business customers is StaplesLink.com (www.stapleslink.com), which is completely different from the consumer site.

On consumer sites, all shoppers usually see the same products, same prices, and same checkout rules. On the other hand, organizational buyers often negotiate a contract with the seller that covers such terms as discounted pricing, special shipping arrangements, or payment rules. Such contracts can be arranged directly with buyers; alternatively, the buyers might be simply qualified to make use of a standard contract.

Sophisticated B2C sites provide the shoppers with marketing content—for example, informing the shoppers of additional offers, of upcoming promotions, or other events—or simply give product suggestions. Such marketing information can take the form of advertisements, product suggestions, and recommendations, or show related offers and promotions. These marketing and merchandising activities can be valuable to help the shoppers find products and to help the selling company increase sales on its site.

On the other hand, business buyers would have no patience for beautiful advertising that takes half the screen because it detracts from their ability to do business quickly. Therefore, business-to-business sites tend to have little product advertising, but instead focus on advertising additional services. For example, a B2B site might advertise certain shipping arrangements or the ability to download spec sheets for a product line. A B2B site can also inform customers of relevant industry news or regulation changes, such as safety information. Another typical example of marketing content on B2B sites is product recommendations, such as up-sells, cross-sells, and accessories. These recommendations do not take much space on the screen, but they benefit both the buyers and sellers. The buyers get greater awareness of the range of products available that could serve their needs, while the sellers can benefit from increased size of orders.

For a consumer shopping site, a customer is usually a single person referred to as a shopper; in rare cases a consumer site might keep track of families or buying groups. Shoppers typically view the products catalog as soon as they access the site, without having to register their profile; in other words, a consumer-oriented site allows "anonymous" shoppers. Registration is usually an option that is presented as a convenience to shoppers, to save their profile for simpler subsequent purchases, to receive notification for special offers promotions, or to be notified of other services made available to registered shoppers. Sometimes shoppers are asked to register before placing an order. But even in this case, fundamentally the site is open to all shoppers, and registration is a simple process that shoppers can perform directly on the site.

On the other hand, for a B2B site, a customer is not a person, but is a company or a buying organization. The buying organization might have many employees or persons who are authorized to purchase on behalf of that customer. Customer registration is often a lengthy process, requiring setting up the account with fulfillment and supply chain systems, and setting up the necessary roles and responsibilities, carrying a credit check, and setting up contractual arrangements.

Consumer shoppers usually have their own profiles that they manage, including their addresses and preferences. On the other hand, all buyers from the same business customer share the same customer profile. They all automatically qualify for the same terms and conditions, have access to their company's corporate payment instruments, and use the company's purchase order numbers. Frequently, employees of buying organizations might not even be allowed to create personal profiles, but the company creates an account on their behalf.

In B2C sites, it would be a serious security violation if shoppers could see each other's orders. However, with B2B sites, multiple persons in the same buying company might have access to each other's shopping cart and order history. For example, one buyer might create the shopping cart, another might submit it, and a third person in the company might need to approve it.

With B2C sites, payment is usually done by credit card or an Internet payment provider such as PayPal. With B2B sites, business buyers frequently have arrangements through which they place an order by simply specifying a purchase order (PO) number. In this case, payment settlement is taken care of later, when the selling company bills the buyer. Even when payment is specified as part of checkout, business purchasing might use such payment options as corporate cards, procurement cards, and electronic funds transfer, which are not typical of consumer retail.

We thus see that B2B and B2C sites differ in just about every aspect of their presentation, flow, and business rules. In most cases, therefore, it would be unwise to try to serve both of these market segments with a single site.

Sites Targeted to Industry Segments

Often, companies create separate marketing organizations to sell to different industry segments. For example, SAP is a large vendor of Enterprise Resource Planning (ERP) systems. SAP creates solutions targeted at specific segments, such as Aerospace, Automotive, Banking, and so on. The same is true for many companies that sell software, electronics, telecommunications, or other products. In such situations, it makes sense for companies to create unique sites for different industry segments that they deal with. For example, they can create a site for educational institutions, for governments, or a site for auto dealers.

Within such industries, the buyers tend to have similar terminology, and even similar business processes. Even the product catalog can be structured in a way that is better-suited to customers in a particular industry. For example, a site for medical professionals would feature prominently the products related to their needs, rather than simply showing the global catalog, which contains perhaps hundreds of thousands of products, most of which are not needed within the medical segment.

Having such a targeted site can increase the sales by making products of interest to customers easier to buy. The company's reputation for being easy to do business with can also improve customer loyalty and can attract more customers to the site.

Targeted Sites in Consumer Retail

The improved effectiveness of segment-specific sites can also be powerful in consumer retail. The appearance of a site targeted to a particular market segment can be customized to best appeal to this group of customers. For example, marketing researchers have long known that adolescents and adults respond differently to such aspects as colors, style, and even the layout and flow of a site. Therefore, a site focused on adolescent buyers can be designed to be attractive to this audience. Such an adolescent-oriented site can have a "cool" look-and-feel, with a choice of brighter colors and content of interest to teenagers.

A site directed at women not only focuses on products deemed of interest to women, but also allows the use of advertising that is most effective with the female audience. If a new unidentified shopper visits a generic site, advertisers have no idea who the customer is and cannot create focused advertisements and promotions. However, advertising can be effective if most visitors to the site are known to be women. Such a targeted site can create advertisements or recommendations that are tested to work best with the typical visitors, even if the shoppers are not identified by their profile.

Therefore, a site where the presentation is designed for the tastes of a particular market segment would be far more appealing to this group of customers and hence likely to have higher sales than a generic site. Such a targeted site would, therefore, have a better chance to increase the company's revenues and improve customer loyalty.

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