Journal of Business Research 126 (2021) 415–428

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Journal of Business Research

journal homepage: www.elsevier.com/locate/jbusres

B2B market segmentation: A systematic review and research agenda

Roberto Mora Cortez *, Ann Højbjerg Clarke, Per Vagn Freytag
Department of Entrepreneurship and Relationship Management, Southern Denmark University, Universitetsparken 1, Kolding 6000, Denmark

A R T I C L E I N F O A B S T R A C T

Keywords: Segmenting industrial markets is a key challenge for the marketing field. More than 30 years of research has not
Segmentation produced comprehensive guidelines for developing robust B2B market segments; only a few studies have
Targeting empirically tested the impact of segmentation and the literature today appears to be more fragmented than
B2B marketing
earlier. The present study integrates prior endeavors via a systematic literature review, scrutinizing 88 papers in
Systematic review
Marketing strategy
detail. It develops a three-layer framework comprised of: (1) conceptualization of B2B market segmentation, (2)
segmentation as a process, and (3) context. The authors use the framework to evaluate scholarly efforts during
the 1986–2019 period and propose a broader view on segmentation as a continuous process. Marketers can
benefit from the study by adopting four activities for segmenting markets: (1) pre-segmentation, (2) segmen­
tation, (3) implementation, and (4) evaluation. Finally, the authors identify several gaps and offer a rigorous,
practice-oriented research agenda, providing direction for academicians.

1. Introduction market segmentation beyond mere traditional industry segments

(Clarke & Freytag, 2008); and (3) information searching and purchasing
Market segmentation, while not yet flawless, has provided value for in B2B contexts are more formalized than in consumer (B2C) contexts,
industrial firms and been considered part of modern marketing for more resulting in decision-making units (buying centers) with multiple actors
than 40 years (Morgan, Whitler, Feng, & Chari, 2019). The key theo­ (Müller et al., 2018). Such an added complexity in B2B market seg­
retical underpinning for segmenting the market is the presence of mentation is challenging and may have helped to evoke a fragmentation
customer heterogeneity, which allows the identification of demand- and stagnation of the literature. Indeed, the value of B2B segmentation is
based segments and firms to shape different offerings for those pending demonstration, requiring further research inquiries (Thomas,
selected segments (Thomas, 2012). Segmentation provides direction for 2012). Thus, it is imperative to develop a conceptual framework to
a firm’s marketing strategy and resource allocation. The value of market harmonize and extend past research (Palmatier, Houston, & Hulland,
segmentation lies in helping firms to adopt a position somewhere be­ 2018).
tween the overgeneralized and over customized. Formally, market seg­ Uncovering the areas that have received little attention in research
mentation is “an ongoing and iterative process of examining and and integrating concepts that are commonly analyzed in isolation from
grouping potential and current customers whose needs are within-group one another are the triggers to constructing meaningful theory (Paul &
similar but between-group different” (Mitchell & Wilson, 1998). B2B Criado, 2020). One means by which to explore how research endeavors
market segmentation is the “core of good industrial marketing” have approached the segmentation domain and how it has changed over
(Bonoma & Shapiro, 1983). Despite the perceived usefulness to B2B time is conducting systematic reviews. This is particularly relevant for
practice (Mora Cortez & Johnston, 2018), more knowledge about why advancing extant fragmented B2B market segmentation literature,
B2B market segmentation is “particularly difficult to execute” (Boej­ which neglects the long-term nature of the concept, limiting the progress
gaard & Ellegaard, 2010) and “whom to address with which kind of in recent decades (Goller, Hogg, & Kalafatis, 2002; Thomas, 2016). The
content” is still needed (Müller, Pommeranz, Weisser, & Voigt, 2018). last major reviews of B2B market segmentation research were under­
Research provides three rationales for the hurdles in the domain of taken by Chéron and Kleinschmidt (1985) and Plank (1985), which shed
B2B market segmentation: (1) the vast majority of the market segmen­ some light on developing a normative model for B2B segmentation and
tation literature deals with consumer markets (Hutt & Speh, 2016; warned about the common limiting view of segmentation as a marketing
Wilson, 1986); (2) industrial marketers have been slower to adopt research issue as opposed to a strategic issue. Moreover, much has

* Corresponding author.
E-mail address: [email protected] (R. Mora Cortez).

https://doi.org/10.1016/j.jbusres.2020.12.070
Received 28 February 2020; Received in revised form 28 December 2020; Accepted 30 December 2020
Available online 20 January 2021
0148-2963/© 2021 Elsevier Inc. All rights reserved.
R. Mora Cortez et al. Journal of Business Research 126 (2021) 415–428

happened in business in the last 34 years, both in terms of practice and Palmatier et al. (2018) and Snyder (2019), we adopted a rigorous pro­
research, which positions the present study as necessary and timely. The cess to conduct the review. The selected approach involved four stages:
specific aim of this article is threefold: (1) to engineer a parsimonious (1) design, (2) conduct, (3) analysis, and (4) structuring and writing the
conceptual framework to assess the current state of research in B2B review (for further detail, see Snyder, 2019). The design stage focused
market segmentation; (2) to provide an integrated summary of the state on three key elements: (1) journal selection, (2) article selection, and (3)
of knowledge in the main aspects of segmenting B2B markets; and (3) to protocol, coding, and synthesis (see Web Appendix A).
develop a research agenda for aspects of B2B market segmentation that
builds on existing gaps and offers direction for future scholarly 2.1. Journal selection
endeavors.
We address these objectives and provide three significant contribu­ Our review targeted peer-reviewed journals, which represent the
tions to the marketing literature. First, we indicate that the B2B market principal source of knowledge regarding B2B market segmentation
segmentation research published in top-tier, reputable, and specialized literature. Hence, practitioner manuscripts, textbooks, business books,
journals over the past 34 years (1986–2019) has primarily focused on and conference papers were excluded from the search.1 To select an
either particular elements of market segmentation (e.g., methods, seg­ appropriate and representative sampling frame, we examined the most
mentation variables, implementation) or emphasized the context for influential marketing journals in Baumgartner and Pieters (2003) in the
market segmentation (e.g., geographical scope) and provided marginal field of strategic marketing, as identified by Morgan et al. (2019):
added depth to the conceptualization of B2B market segmentation, with Journal of the Academy of Marketing Science (JAMS), Journal of Marketing
only one article providing a more integrative view of B2B market seg­ (JM), Journal of Marketing Research (JMR), Marketing Science (MS),
mentation (cf. Goller et al., 2002). The lack of conceptual consolidation Journal of Retailing (JR), and International Journal of Research in Mar­
in this area should be viewed as a significant gap in marketing keting (IJRM). We also included the B2B specialized marketing journals:
knowledge. Industrial Marketing Management (IMM), Journal of Business and Industrial
Second, we develop a new, holistic framework for understanding Marketing (JBIM), Journal of Business-to-Business Marketing (JBBM), and
B2B market segmentation, determining three theory-based layers Journal of Business Market Management (JBMM). Moreover, we consid­
(conceptualization, process, context). This provides a framework with ered the ranked 3, 4, and 4* marketing journals (complementary to the
which to scrutinize the state of the field, to establish knowledge gaps for previously stated set) in the latest version of the Chartered Association of
both academics and practitioners, and to synchronize prior research Business Schools’ Academic Journal Guide (CABS, 2018), which are
efforts to identify elements that have received less attention and can typical outlets for marketing strategy research: European Journal of
direct future research. For instance, we show that B2B market segmen­ Marketing (EJM), International Marketing Review (IMR), Journal of Inter­
tation is a continuous process that should be disaggregated into four active Marketing (JINM), Journal of International Marketing (JIM), Mar­
concrete, intertwined stages: (1) pre-segmentation, (2) segmentation, keting Letters (ML), and Marketing Theory (MT). Finally, we included the
(3) implementation, and (4) evaluation. Conversely, the marketing Journal of Business Research (JBR; a ranked 3, multidisciplinary journal)
literature has commonly interpreted B2B market segmentation as a for its impressive impact factor, current consideration for joining the
discrete, abstract idea that first becomes tangible in the implementation FT50 list, and high relevance in marketing strategy research (e.g.,
stage. Kienzler & Kowalkowski, 2017).
Third, building on the most representative findings for theory and Thus, we formally included 17 journals in this review. We first
practice, we propose a new research agenda for further B2B market conducted a keyword-driven search directly from their official websites
segmentation endeavors. Summarizing extant knowledge within a for the 1986–2019 period, querying for articles containing the search
domain of inquiry and assessing the collective evidence in a specific area terms “segmentation,” “market segment,” “segmenting,” “targeting,” or
of business are important phases in knowledge production (Palmatier “segment” in the title, abstract, or keywords (similar to Kienzler &
et al., 2018). Gaining cumulative knowledge serves as a response to the Kowalkowski, 2017). Due to differences in the search engines, we also
tremendous speed at which marketing practice is changing, fostering the explored two leading electronic databases (EBSCO and ABI/INFORM;
relevance of academic research and its validity to business practitioners similar to Watson, Wilson, Smart, & Macdonald, 2018) to supplement
(Snyder, 2019). Hence, we consider practical elements as essential to the original search based on the same keywords and procedure. We
developing and prioritizing the directions for an updated research cross-checked the search using Google Scholar. This procedure delivered
agenda in the B2B market segmentation realm. a total of 836 articles that were retained in an Endnote file for further
analysis.
2. Method
2.2. Article selection
A systematic review is defined as “a research method and process for
identifying and critically appraising relevant research as well as for Only research articles (i.e., no editorials or case studies) were
collecting and analyzing data from said research” (Snyder, 2019, p. included. Two experienced researchers (one of the authors and a senior
334). Systematic reviews can be classified as (1) domain-based, (2) B2B marketing scholar) independently examined all 836 articles to
theory-based, or (3) method-based (Palmatier et al., 2018). This study determine whether they should be coded as B2B market segmentation
represents a domain-based review of the topic of B2B market segmen­ papers. Following Morgan et al. (2019), the article screening (i.e., title,
tation. Such reviews scrutinize, synthetize, and extend a body of liter­ abstract, conceptual framework, method, etc.) was executed based on
ature in the same substantive domain (Palmatier et al., 2018). Periodic four inclusion/exclusion criteria: (1) applicability to B2B or industrial
literature reviews in a domain are useful for consolidating academic settings, (2) focus on segmentation as a relevant element of the article,
efforts and enabling a more integrative view of knowledge. The (3) the unit of analysis being at the firm or SBU level, rather than at a
importance of segmentation for marketing strategy and the number of more granular level (e.g., salespeople), and (4) the article being
unanswered marketing strategy questions and opportunities to impact
practice have arguably never been greater (Morgan et al., 2019). The
effective segmentation of industrial markets is the first step toward 1
Relevant content published in such sources is added throughout the text to
designing a marketing strategy, as the characteristics and needs of each complement the discussion but not outlined in the summary tables.
segment will define the direction and focus of the B2B marketing plan
(Hutt & Speh, 2016). A thorough systematic review in the B2B market
segmentation domain is, therefore, more relevant than ever. Following

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published during the 1986–2019 period.2 The coders evaluated the four Table 1
selection criteria using a screening metric (similar to Watson et al., Sample overview by journal and period.
2018). They assigned 0 (not at all), 1 (medium), or 2 (totally) points Journal Group 1986–96 1997–2007 2008–19 Total Total
representing the level of adequacy of every specified filter. If an article (n) (%)
reached a score ≥ 5 (of a possible 8) from at least one of the coders, it JBIM B2B 1 6 3 10 11%
was retained in the review. In case of discrepancy at the threshold level IMM B2B 14 16 11 41 47%
(4 vs. 5 points),3 which was identified for 10 cases, a detailed analysis of JBBM B2B 1 0 4 5 6%
the paper was conducted until consensus was reached. The average JBMM B2B 0 0 1 1 1%
JBR Reputable 2 1 0 3 3%
inter-rater reliability was checked with the proportional reduction in IJRM Reputable 1 2 1 4 4%
loss method, obtaining a satisfactory level of 0.85 (Rust & Cooil, 1994). EJM Reputable 2 2 1 5 6%
A total of 88 articles (see Web Appendix B) remained in the review and IMR Reputable 2 0 0 2 2%
established the final sample for further analysis. The final sample was ML Reputable 0 1 0 1 1%
JIM Reputable 0 0 1 1 1%
stored in a new Endnote file.
JAMS Top-tier 2 0 0 2 2%
MS Top-tier 1 1 0 2 2%
2.3. Protocol, coding, and synthesis JMR Top-tier 2 2 1 5 6%
JM Top-tier 2 2 2 6 7%
Total 30 34 25 88 100%
Following the procedures recommended for systematic literature
reviews (e.g., Snyder, 2019), we developed a protocol for coding and *JR, MT, and JINT did not publish a single article on B2B market segmentation.
structuring the key elements provided by the articles in the spirit of
advancing B2B market segmentation research. First, we created an Excel influenced the framework, which, in turn, influenced the understanding
document to code (1) the purpose of the study, (2) how the paper relates of the article. Moving toward convergence, a final conceptual frame­
to segmentation, (3) whether and how the paper relates to a specific work for B2B market segmentation was developed. This integrative
stage in segmenting markets, (4) the focus of the paper (i.e., B2B/B2C or model organizes the concepts in a new, coherent system. The mean­
purely B2B); (5) segmentation method (if any), and (6) the key findings. ingfulness of the framework was assessed by a panel of 21 B2B aca­
Second, one experienced marketing researcher coded a randomly demics (see Web Appendix C), obtaining an 8.1 average score on an 11-
selected sample of 20 articles using the initial protocol to assess this tool point scale from 0 (not at all) to 10 (completely).
with actual data. The reviewer made revisions and suggested the in­
clusion of a more specific characterization of papers based on: (1) the 3. Findings: Descriptive analysis
basic research approach (i.e., theoretical, qualitative, empirical, or
analytical), (2) data analysis approach for empirical papers (e.g., 3.1. Journals and publications over time
regression, analysis of variance (ANOVA), descriptive statistics, etc.),
and (3) argumentation approach (e.g., atheoretical/logic or data-driven, To highlight trends over time, we categorized the articles in the final
single theory, multiple theories). These recommendations are in line sample into three balanced time periods:4 1986–96, 1997–2007, and
with prior literature review coding procedures (e.g., Morgan et al., 2008–19. As summarized in Table 1, the main outlet for B2B market
2019). Third, to ensure the trustworthiness of our revised protocol, one segmentation research is IMM, with 42 articles, followed by JBIM and
additional marketing researcher evaluated the tool and reviewed 10 JM with 10 and six articles, respectively. In the reputable category, the
randomly selected articles. The expert agreed with the usefulness and journal with the most B2B market segmentation papers is EJM, with five.
thoroughness of the protocol. We also examined the representativeness The most productive time period is 1997–2007, with 33 papers (37.5%),
of the protocol in practice (Mora Cortez, Gilliland, and Johnston, 2019). followed by 1986–96, with 30 papers (34.1%), and last, 2008–19, with
Specifically, we presented our protocol in a discussion forum with more 25 papers (28.4%). The decrement in the most recent period is a sign of
than 120 sales, business development, and marketing practitioners. In waning interest in a topic among academics, while the literature stresses
general, they agreed with our final approach. the relevance of B2B market segmentation for both practice and research
Three knowledgeable researchers in B2B segmentation then coded (e.g., Müller et al., 2018). Fig. 1 also shows that, while publication in
each of the 88 selected articles. Inter-rater agreement ranged from 81 to B2B journals seems steady over time, the trend lines for the overall
94%. Identified discrepancies were discussed until agreement was sample, reputable journals, and top-tier journals in the period
reached. To enhance the reliability of the evaluation procedure, two 1986–2019 are clearly downward. On one hand, there is no evident
independent researchers with extensive knowledge in B2B marketing, linear trend for B2B journals, since 16 articles were published in the
both as editors and educators, also coded 15 randomly selected articles. 1986–96 period, 22 in 1997–2007, and 19 in the most recent time
The coding outcome was similar; only the writing and idea structuring period. On the other hand, reputable journals published seven, six, and
styles diverged from the baseline coding. Intercoder reliability was three B2B market segmentation articles, respectively, and top-tier
controlled by the proportional reduction in loss statistic and achieved a journals published seven, five, and three articles in the same periods
satisfactory 0.87 level (Rust & Cooil, 1994). The final protocol and (see Table 1). While Morgan et al. (2019) and Thomas (2012) recently
procedure, therefore, ensure the validity and reliability of our coding indicated that market segmentation is the heart of marketing strategy,
scheme. Fig. 1 shows that researchers are abandoning B2B segmentation
Building on the last major reviews (i.e., Chéron & Kleinschmidt, research. One reason for such a trend is the lack of direction for further
1985; Plank, 1985), an inductive content analysis approach was adopted research. This situation enhances the value of the current research
(Watson et al., 2018). This process involved a continuous iteration be­ endeavor, as the agenda developed identifies gaps in extant research.
tween the extracted data and the proposed framework. Thus, the The main advancements on segmentation in modern times are centered
selected articles provided evidence that supported or weakened the on the methodological elements in quantitative research and the chal­
evolving conceptual associations in the framework. Each article lenges for implementation. The following domain-based findings show a
more diverse scope for advancement.

2
We checked the year of publication as we found disparity (e.g., Hlavacek
and Reddy’s article in Google Scholar is listed in 1993, whereas the actual
4
publication year is 1986). The last period was extended to September 2019 (the initial point of
3
No other threshold differences were identified (e.g., 3 vs. 5 points). crafting this article).

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R. Mora Cortez et al. Journal of Business Research 126 (2021) 415–428

Fig. 1. Trends over time per journal type.

3.2. Article focus Contrasting the original pool with the final sample, as screening out pure
B2C papers was a relevant step in the selection process, shows a sign of
The total initial pool was characterized by 89.5% (748) of the articles the relatively low penetration of B2B research in the mainstream mar­
coming from general top-tier and reputable marketing journals. The B2B keting science.
specialized journals represented only 10.5% (88), as shown in Table 2. In addition, a non-parametric analysis was conducted to assess the
Once the screening for the article selection was applied, the configura­ relationship between article focus and CABS journal ranking. Based on
tion changed significantly. In the final sample, the most representative Spearman’s correlation, research on pure B2B market segmentation is
group was the specialized B2B journals, which made up 64.8% (57) of significantly less likely (r: − 0.270, n = 88, p < 0.05) to appear in top-tier
the articles. Reputable and top-tier marketing journals only represented publication outlets (i.e., JM, JMR, MS, and JAMS) than was research
18.2% (16) and 17.0% (15), respectively. The articles solely referring to focusing on both B2B and B2C settings. This is in line with prior research
firms as primary buyers were classified as B2B, and those concentrating (e.g., Kleinaltenkamp, 2018), which has shown how, in recent years,
on both consumer and business markets were classified as B2C/B2B. only 5–10% of the papers in the leading general marketing journals dealt
with B2B markets. Fig. 1 also supports this trend in market segmenta­
tion, as it is observed that the linear scaling for publications over time is
Table 2
almost convergent for the total and B2B articles in the year 2019.
Sample classification according to grouping, focus, approach, and theory.
Sample classification Total
3.3. Type of research
Initial journal pool characterization (n = 836) n %

Top-tier journals 211 25.3% Most of the studies are quantitative (46), representing more than half
Reputable marketing journals 537 64.2% of the final sample (52.3%). This type of investigation uses empirical
Specialized B2B marketing journals 88 10.5% data in the form of surveys, experiments, and secondary data. The sec­
Journal characterization (n = 88)
ond predominant research design is theoretical, with 19 (21.6%) articles
Top-tier marketing journals (JM, JMR, JAMS, MS) 15 17.0%
Reputable marketing journals (JBR, IJRM, EJM, IMR, JIM, ML) 16 18.2% involving ad hoc conceptual analysis and incremental extensions from
Specialized B2B marketing journals (IMM, JBIM, JBBM, JBMM) 57 64.8% the prior literature. The third representative research design is qualita­
Paper focus (n = 88) tive, with 16 (18.2%) articles, entailing interviews and case studies. The
B2C/B2B 19 21.6% least representative research design is analytical, with seven (7.9%)
B2B 69 78.4%
Paper categorization (n = 88)
articles that are comprised of mathematical models often tested with
Theoretical/conceptual 19 21.6% simulated data or instrumental cases. Thus, empirical studies are the
Analytical 7 8.0% dominant force in B2B market segmentation research, with a total of 62
Quantitative-empirical 46 52.3% (69.7%) articles.
Qualitative 16 18.2%
Furthermore, a cross-analysis of the research design type and the
Theoretical foundation (n = 88)
Atheoretical (logic/data-driven) 59 67.0% three structured time periods finds a significant association between the
Single theory 23 26.1% elements (Likelihood ratio = 29.21, df = 6, p < 0.01). Particularly, the
Multiple theories 6 6.8% different trends are (1) qualitative research moving from zero articles in
*Studies with a mixed-method approach are codified as quantitative- 1986–96, through six in 1997–2007, to 10 in 2008–19; (2) quantitative
empirical
research accounting for 23 articles in 1986–96, 11 in 1997–2007, and 12

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in 2008–19; (3) theoretical research, represented by five articles in by analyzing changes on (1) customer satisfaction, (2) sales force per­
1986–96, 12 in 1997–2007, and two in 2008–19; and (4) analytical formance, and (3) financial firm-level performance. The evaluation
research accounting for two, four, and one articles, respectively. Overall, result affects the next segmentation cycle (see the dotted arrow in
the dominance of quantitative and theoretical/conceptual papers sug­ Fig. 2). This whole market segmentation system is influenced by (1) the
gests that researchers have prioritized dealing with generalization issues scope of the segmentation (local vs. international), (2) market coverage
rather than the contextual complexity involved in B2B market seg­ (horizontal vs. vertical), (3) the type of offering (good, services, and
mentation. The high embeddedness and rare occurrence of segmenta­ solutions), and (4) offering status (new vs. existing).
tion in practice calls for more case analyses and action research (Möller
& Parvinen, 2015), and a benchmarking of the variables used to segment 4.1. Conceptualization of B2B market segmentation
markets (Thomas, 2012).
4.1.1. The view of the market
3.4. Theoretical foundation Many of the existing and well-known macro- and micro-segmentation
models (e.g., Wind & Cardozo, 1974) and the nested approach (Bonoma
Based on Kienzler and Kowalkowski (2017) and Morgan et al. & Shapiro, 1983) start out with a “market,” which is assumed to be given
(2019), the classification of the theoretical foundation of articles is (static). Some reviewed articles challenge this assumption by discussing
threefold: (1) atheoretical, (2) single theory, and (3) multiple theories. the active influence of the multiple actors present in a market. Industrial
To be classified as theoretical (i.e., using one or more theories), articles markets are characterized by cooperation and adaptation among
had to purposively inform their theoretical foundation or anchor their network actors (e.g., Clarke, 2009). In this vein, market segmentation is
conceptual framework or hypothesis development in a specific theory. more than just a technique for analyzing the environment and allocating
Simply offering a brief review of market segmentation literature or marketing resources; it is part of shaping the environment (Freytag &
mentioning a theory was insufficient. On this basis, 67.0% of the final Clarke, 2001, p. 473). Hlavacek and Reddy (1986) stress that business
sample was atheoretical, a high number indicating a rationale for the history is replete with cases of existing competitors seeing market
disconnection of segmentation from strategy (Chéron & Kleinschmidt, boundaries as static and losing the opportunity to identify new or
1985; Hutt & Speh, 2016). For the theoretical articles (33.0%), we also emerging segments. Thus, the market (i.e., buyers, sellers, competitors,
examined the specific theories applied. The majority of these (79.3%) environment) itself is an active force influencing B2B market segmen­
were used in a single B2B market segmentation study published in the tation. Change is reflected in the constant transformation of what value
1986–2019 period. Thus, only six theories were used in two or more is (Clarke & Freytag, 2008). How customers perceive value is changing
articles: Relationship Marketing Theory (4), Organizational Buying over time due to the dynamics in the supply base, self-perception of their
Behavior (4), Business Solutions Theory (2), Customer Portfolio Theory needs/wants, competitor activities, and general changes in the envi­
(2), Customer Value Theory (2), and Equity Theory (2). ronment (Flint, Woodruff, & Gardial, 1997; Homburg, Steiner, & Totzek,
A cross-analysis of the research design (conceptual, analytical, 2009).
quantitative, qualitative) and the use of theory shows that there is no Ongoing segment monitoring is proposed as being important to
association between the elements (χ2 = 0.414, df = 2, p greater than capture market evolution (e.g., Dibb & Wensley, 2002). Segment
0.05). However, the groups also display internal heterogeneity. None of monitoring takes the form of keeping a close watch on the changing
the MS articles in the top-tier group uses theory, for instance, and 66.7% conditions within customer industries and the subsequent implications
of the JM articles use theory in the manuscript development. In addition, for customer demands, competitor actions, and shifting customer pref­
a non-parametric analysis indicates a marginally significant correlation erences (Freytag & Clarke, 2001). However, monitoring for changes in
(r = 0.202, n = 88, p = 0.059) between the time periods (1986–96, segments is “inherently reactive” and deals with the past and present
1997–2007, 2008–19) and the use of theory. Thus, there is a subtle only, making no attempt to create a clear picture of how transformations
increment in the use of theory for B2B market segmentation articles over are taking place or to predict “shifts in needs, segment sizes, or segment
time. membership,” nor does it provide recommendations about how to react.
Furthermore, such monitoring can be time-consuming and challenging
4. Findings: Domain-based analysis as well as costly, and can be seen as too expensive (Blocker & Flint,
2007). This is in line with Söllner and Rese (2001), who claim that the
Fig. 2 offers the template for our analysis, following a practice- “uniqueness of each individual makes it impossible to form absolutely
oriented three-layer configuration. The framework is derived from the homogeneous segments” (p. 23). Thus, they argue for “accepted het­
literature review and based on issues commonly discussed in B2B market erogeneity in segments.” The origin for such differences relates to the
segmentation. The framework also shows considerations for which firms principle of value. While value-in-exchange is objective and relatively
should account when segmenting industrial markets. This section fol­ static, value-in-use is subjective and relatively dynamic (Eggert, Ulaga,
lows the structure of the integrative framework. Overall, the framework Frow, & Payne, 2018). Several studies (e.g., Freytag & Clarke, 2001;
depicts three layers (conceptualization, segmentation as a process, and Homburg et al., 2009) have pinpointed changes in customer needs as the
context). Key is the four-stage process (middle-layer), which represents Achilles heel within segmentation, since a static market view seems to
the main tenets of cumulative knowledge on conducting B2B market dominate. Blocker and Flint (2007) emphasize the dynamic nature of
segmentation in the literature during the 1986–2019 period. B2B markets. Even though B2B segments are dynamic, it does not par­
First, firms are required to conceptualize B2B market segmentation, allel the high evolving pace of consumer segments.5
which needs the establishment of (1) what is the view of the market
(static vs. changing) and (2) what is the dynamism of segmenting a 4.1.2. Market segmentation dynamism
market (discrete vs. continuous). Once firms reach such an under­ The transformational essence of the market calls for a more contin­
standing, they can proceed with a pre-segmentation stage, discerning both uous, process-based view on the temporality of B2B market segmenta­
(1) what is a market and (2) the purpose of segmentation. Then, firms tion. Some recent studies propose a different view on markets as they
are able to face the segmentation stage. Herein, they should (1) identify study a market in the making (e.g., Storbacka & Nenonen, 2012).
variables for segmenting, (2) choose a segmentation approach (model), Moving away from a discrete, event-based segmentation view (e.g.,
and (3) select target markets. In the third stage, firms can conduct the Ferrell, Lucas, & Bush, 1989; Kalafatis & Cheston, 1997; Nakip, 1999;
implementation by (1) exercising leadership and assigning resources, (2)
executing marketing mix adjustments, and (3) conducting a reorgani­
zation (if pertinent). Finally, firms conduct the evaluation of segmenting 5
We thank an anonymous reviewer for this comment.

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R. Mora Cortez et al. Journal of Business Research 126 (2021) 415–428

Fig. 2. Overview of B2B market segmentation in marketing strategy.

Sudharshan & Winter, 1998), a fundamentally more integral view on of B2B market segmentation, some authors suggest taking future
segmentation is needed (Clarke, 2009). The main idea is that segmen­ customer value into consideration (e.g., Balboni & Terho, 2016; Sood &
tation is an “emergent and interactive process of shaping” (Harrison & Kumar, 2017). From practice, it is not uncommon to find B2B firms that
Kjellberg, 2010, p. 784). Interactivity in market segmentation is based have not segmented a market in more than 10–20 years. So, adopting a
on a dyadic view that proposes that customer responses are being shaped more active view of the market and a more continuous view of seg­
through problem-solving negotiations between buyers and sellers menting B2B markets is crucial for marketers.
(Freytag & Clarke, 2001). From this perspective, segmentation is
constantly occurring as part of the interaction process and the unstable
nature of industrial markets (Boejgaard & Ellegaard, 2010). In this vein, 4.2. Segmentation as a continuous process
Harrison and Kjellberg (2010) raise an interesting question about situ­
ations where no markets exist. Here, segmentation foremost becomes a 4.2.1. Pre-segmentation
process of construction. Construction rests on interactions with cus­ What is a market? (focal firm view). While many articles focus on
tomers and environmental influences, where these early customers segmenting markets, few explain what a market is or which market they
develop needs in combination with the innovation of product are segmenting. Markets can be viewed differently, whether supply-side,
characteristics. demand-side, or technology-based (Goller et al., 2002; Nenonen &
The consequences of failing to adapt include staying in an unprof­ Storbacka, 2013; Storbacka & Nenonen, 2012). The most common view
itable market, losing a unique position within a market, targeting seg­ is demand-side, where the customer is in the center. This view can entail
ments that lack the growth and profitability of other segments, or customers from diverse industries (De Kluyver & Whitlark, 1986) and
targeting within-segment customers with an undesirable market offering differences between direct and indirect customers (Thomas, 2016). In
(Müller et al., 2018; Harrison & Kjellberg, 2010). The literature has, this sense, Hlavacek and Reddy (1986) differentiate between industry
therefore, called for the need to keep market segments under constant and market. An industry refers to a wide group of manufacturers pro­
review and to gain information about potential changes; and evaluating ducing a wide, related range of products. A market segment is a more
and estimating how to react to change is a crucial, ongoing process distinct group of customers with similar requirements that might be
(Clarke & Freytag, 2012; Mitchell & Wilson, 1998). This research stream served by different offerings and technologies (Hlavacek & Reddy,
offers different understandings of how firms interact and change with 1986). B2B markets are often characterized by multiple subsequent or
the market. For example, Blocker and Flint (2007) claim that most multistage markets. Thomas (2016) has proposed a multistage market
segmentation research has depicted static snapshots of a moving segmentation alignment concept. Building on “a multistage market
marketplace with segmentation as an isolated event. These authors also champion” (a firm that exerts the most influence on multiple levels),
indicate that to remain competitive in changing markets, it is essential to Thomas shows that alignment across multiple levels can create strategic
learn about the ongoing transformations to lead a more dynamic pre- advantages, but not all markets may need to apply such an approach.
segmentation strategy. Complementing a more recurrent temporality An alternative approach is a supply-side view focusing on supply
characteristics, including capabilities and the nature of the organization,

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leading to an upstream market definition based on industry and with micro-segmentation due to the data requirements. Based on macro-
competition in a given industry (Storbacka & Nenonen, 2012; Söllner & segmentation variables, early 1980s and 1990s studies explored how
Rese, 2001). Mitchell and Wilson (1998) state that the supply and segmentation can be used for communication, product offering, and
customer perspective should be balanced. Finally, there is a more formulating marketing strategy (e.g., Wilson, 1986). For example,
technology-based definition, which helps firms that develop new tech­ Weerahandi and Dalal (1992) segment based on industry sector and firm
nologies form a sense of identity and technology-based set of competi­ size for diffusion and forecasting.
tion (Storbacka & Nenonen, 2012). In this vein, Millier (200) indicates Over the years, there has been a shift from a focus on macro-variables
that rationalizing segmentation involves the comparison of competing to increased attention on micro-variables (i.e., information unique to the
technologies. In summary, it is in defining markets that consideration customer that can be challenging to acquire, demanding surveys or other
should be taken in relation to all downstream, upstream, competitor, forms of data collection). The transition to a micro-segmentation
and other environmental factors. However, the market concept is better approach gained momentum since the late 1990s, and was dominated
characterized when focused on downstream actors (i.e., customers). by a focus on purchasing or buying behavior (Simkin, 2008). Proposed
Purpose of segmentation. Authors have highlighted how segmentation segmentation variables are purchase responsibilities (Thomas, 1989),
is both purposive and context-dependent (Clarke, 2009; Clarke & purchasing process and firm characteristics (Segal, 1989), customers’
Freytag, 2008; Goller et al., 2002; Hlavacek & Reddy, 1986) and that the actual purchasing behavior (Dowling, Lilien, & Soni, 1994), and pur­
selection of variables and the method for segmenting should reflect the chasing patterns of sourcing strategy (Frear, Alguire, & Metcalf, 1995).
purpose and problem to be solved. Nevertheless, few have systemati­ Other researchers consider buying behavior to determine price sensi­
cally considered different purposes behind segmentation from a non- tivity (Ferrell et al., 1989) and to describe purchase frequency and brand
tactical perspective. choice (Uncles & Ehrenberg, 1990). Moreover, File and Prince (1996)
Some authors state that the purpose behind their proposed variables consider the psychographic segmentation of family-owned firms. The
and segmentation methods is: (1) marketing strategy (Palmer & Millier, macro-approach was still visible in the 1990s. For example, Griffith and
2004), (2) identifying target segments and planning future product of­ Pol (1994) propose a demographic-based segmentation scheme to
fers (Clarke, 2009), (3) management of customer future value potential measure a manufacturer’s penetration across market segments. Re­
(Balboni & Terho, 2016), or (4) improved salesperson performance searchers have also sequenced macro- and micro-variables (e.g., Kala­
(Terho, Eggert, Hass, & Ulaga, 2015). In this avenue, Clarke and Freytag fatis & Cheston, 1997) and integrated “hard” macro-segmentation (e.g.,
(2008) are among the few that have explicitly considered different industry) with “soft” behavioral micro-segmentation (e.g., Rao & Wang,
purposes for segmentation. They argue that different purposes have 1995).
different ramifications and vary in how difficult it is to implement, Moving toward the 2000s, micro-variables continued to prevail.
depending on the degree to which changes in the firm’s activities, actors, Mitchell and Wilson (1998) determined a lack of consideration of
and resources are needed. Clarke and Freytag (2008) discuss different customer needs as a prime segmentation variable. Since then, research
purposes that distinguish between strategic and operational levels and has proposed more customer-centric variables, including strategy
the degree to which new value is created. Overall, knowledge remains (Sudharshan & Winter, 1998; Verhallen, Frambach, & Prabhu, 1998),
limited regarding the link between segmentation purpose and its influ­ understanding of customer needs (Albert, 2003), customer use (Millier,
ence on the various elements in the segmentation process (e.g., whether 2000), customer requirements (Dibb & Wensley, 2002), and branding
there are variables and methods that are more appropriate for different importance (Mudambi, 2002). Others combine macro- and micro-
purposes) and further implementation. variables. For instance, Powers and Sterling (2008) combine de­
mographic and needs-based variables. Several researchers recommend
4.2.2. Segmentation variables relationship as a prominent segmentation variable (Mark, Niraj, &
The literature on industrial segmentation has proposed several var­ Dawar, 2012; Ringberg & Gupta, 2003; Windler, Jüttner, Michel,
iables for creating market segments. In the 1980 s, a conventional Maklan, & Macdonald, 2017). Particularly, Freytag and Clarke (2001)
categorization of variables was a division into macro- and micro- propose segmenting based on customer intentions toward collaboration,
variables. Macro-variables include size, industry type, SIC codes, bene­ and Ringberg and Gupta (2003) suggest using variables that influence
fits, application, and geographic location; variables that are often easily long-term exchange relationships. Windler et al. (2017) propose a
observable and accessible at low cost or published by governmental methodology consisting of 21 criteria for dimensions of the quality of the
statistical series (Chéron & Kleinschmidt, 1985; Powers & Sterling, relationship and potential for future partnerships. More recently, au­
2008). Abratt (1993) identified that the most commonly used variables thors have considered increased digitalization. This stream considers
in practice segmentation are at the macro-level. The leading approach is web design, e-commerce, and social media (e.g., Lord & Ford Collins,
industry or vertical segmentation (see more details in sub. section 4.3.2). 2002). In this sense, Müller et al. (2018) research digital, social media,
Industry-based segmentation is often used in practice as a heuristic for and mobile marketing in industrial buying based on variables such as
needs-based segmentation, since customer needs might vary based on buying frequency, function of the buyer, and industry sector.
their industry. Another nuance in the macro-segmentation stream is While research has recently focused on micro-segmentation, there is
based on customer size and strategic importance, classifying customers no evidence supporting that B2B firms did the same. Insight is needed
into strategic accounts, key accounts, or national accounts (Rangan, into how firms practice and actually use segment variables. One point of
Moriarty, & Swartz, 1992). Key account management (KAM) is simul­ criticism raised from the segmentation literature is the scarce guidance
taneously a customer-facing activity and a segmentation strategy on how and when it is appropriate to select different variables as busi­
(Millman, 1996, p. 635). Recent B2B marketing literature has consid­ ness markets are complex and highly situational (Clarke & Freytag,
ered KAM a customer-facing activity (e.g., Gupta, Kumar, Grewal, & 2012; Thomas, 2012).
Lilien, 2019), whereas older literature considered it a segmentation Models. The reviewed literature suggests many models to identify
approach using current and potential sales (e.g., Wind & Cardozo, market segments, and such models can be categorized differently.
1974). Not all KAs are large-volume customers, but should fit supplier’s Remarkably prevalent are the differences based on build-up (aggrega­
strategic intent. tive) versus breakdown (disaggregative) approaches. Rao and Wang
More sophisticated macro-segmentation approaches noted in the (1995, p. 58) indicate that aggregating individual customers is an a
literature are benefit segmentation (i.e., grouping firms by measures of posteriori approach (segmentation variables are extracted from a pool,
benefits sought; Moriarty & Reibstein, 1986) and application segmenta­ generally via statistical analysis) and disaggregating a large market is an
tion (i.e., grouping firms that have common problems to be solved; a priori approach (segmentation variables and their categories are
Hlavacek & Reddy, 1986). Both macro approaches represent the frontier decided before data are collected).

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Quantitative method papers focus on testing and proposing different assigned partially to multiple clusters). The most common approach is
statistical approaches, often inspired by consumer marketing (Thomas, non-overlapping, which can be performed in hierarchical and non-
2012). Consequently, there is a narrow focus on how firms can apply the hierarchical procedures. The former involves the construction of a hi­
statistical procedures in a B2B context (e.g., introducing new variables erarchy of a treelike structure, commonly in the form of a dendogram,
and more “sophisticated” methods for selecting among the segments). and requires the researcher to choose a similarity measure (e.g.,
Much less consideration is given to broader issues in the segmentation Euclidean distance) and linkage method (e.g., Ward’s method). The
process in B2B markets. Conversely, qualitative research is more occu­ latter involves directly assigning customers to clusters once the number
pied with the full B2B segmentation process and frequently incorporates of clusters to be created is specified. The non-hierarchical procedure is
the practitioner’s perspective. Further, most quantitative methods are also referred to as “K-means clustering.”
based on a build-up approach (e.g., conjoint, cluster analysis, and Fourth, by applying finite mixture models, latent class analysis (LCA)
benefit segmentation). These methods are criticized for not considering uses regression-based procedures to identify a set of unobservable
the practitioner, having overly complex data requirements, and failing clusters from observed variables (Thomas, 2012). LCA assumes a non-
to deal with the presence of buying centers and networks in the indus­ overlapping view of the segments. Vriens et al. (1996) conclude that
trial marketplace (Kalafatis & Cheston, 1997; Palmer & Millier, 2004). LCA outperforms the majority of cluster analysis procedures. Surpris­
In contrast to the quantitative methods, qualitative methods generally ingly, LCA has not been a dominant approach to B2B market segmen­
propose a breakdown approach (Nenonen & Storbacka, 2013; Simkin, tation and was first recently adopted (e.g., Mark et al., 2012). The
2008), with Clarke (2009) being the only exception. challenge for B2B marketers is the econometric skills required in LCA.
Based on the reviewed literature for segment identification, we Fifth, the optimization approach generates a more constrained set of
categorize the models into five groups (similar to Thomas, 2012): (1) segments by simultaneously including variables, such as profitability, in
network analysis, (2) categorical variables for matrix analysis, (3) addition to common descriptors of needs or buying behavior (Thomas,
cluster analysis, (4) latent class analysis, and (5) optimization procedure 2012). DeSarbo and Grisaffe (1998) that show the managerial advantage
by predefined criteria. First, this qualitative stream acknowledges the of using optimization procedures based on combinatorial algorithms.
presence of both direct and indirect customers. Hlavacek and Reddy This approach is now gaining advocates, as marketing must show
(1986) three-step model (identification, qualification, and attractive­ financial results. For example, Tsao, Raj, and Yu (2019) formulate a
ness) focused on the end-user offering application. The key idea for mixed-integer programming problem to maximize the entire seller-
segmentation is the value-in-use derived from the offering application. expected profit. Similarly, Tarasi, Bolton, Hutt, and Walker (2011)
Thus, segmentation starts by identifying where the actual value is co- “optimize” an initial cluster analysis to build an efficient portfolio by
created by the network actors. Albert (2003) expands this view by minimizing the cash flow variability in the segments. Overall, while the
pointing toward the question of who the customer is and includes both inclusion of financial performance is appealing to practice, the essence
intermediaries and end-users. This author proposes a needs-based of segmenting the market is transgressed, since it hides the underlying
model, concluding that intermediaries and end-users have different reasons for the change in financial performance, deriving in tautological
perceptions of what value is. More recently, Nenonen and Storbacka systems.
(2013) and Storbacka and Nenonen (2012) work on generating a Selection of target segments. Deciding which segments to target is a
competitive arena mapping, creatively combining supply- and demand- critical management decision (Hlavacek & Reddy, 1986). Several au­
side characteristics. Thomas (2016) suggests that more value can be co- thors have proposed that the selection process consists of an evaluation
created whether direct and indirect customer needs are aligned. Thus, of the segments and the selection and prioritization of target segments
network segmentation involves the finding of pieces of whole value (Clarke, 2009; Freytag & Clarke, 2001; Montoya-Weiss & Calantone,
chains that can represent an advantageous space for competition (for the 1999). To ensure that the identified segments can be trusted as the basis
focal supplier). for company strategy, they should be challenged, tested, and evaluated
Second, firms can identify a few base variables with defined cate­ (Clarke, 2009). Myriad criteria are often used to characterize identified
gories in order to create a classification matrix of organizational cus­ segments that can lead to an effective and profitable marketing strategy.
tomers (Thomas, 2012). This approach utilizes an objective or subjective Identifiability, substantiality, accessibility, stability, responsiveness,
assessment to indicate the two extremes of a predefined variable. For and actionability are examples of such criteria (Mühlbacher, Dreher, &
example, Laughlin and Taylor (1991) present a model that considers a Gabriel-Ritter, 1994; Plank, 1985; Steenkamp & Ter Hofstede, 2002). If
segmentation approach based on customer concentration and product these criteria are not characterizing the segments, then work on a new
customization, generating a 2 × 2 matrix. The quadrants are then appropriate segmentation structure should be considered. According to
managed by a suggested combination of the importance (high vs. low) of Abratt (1993), the most common criteria that firms use to select target
marketing mix variables (e.g., price, advertising). Similarly, Rangan market segments are the (a) ability to reach buyers in the market, (b)
et al. (1992) propose a segmentation method based on relative paid- competitive positioning, (c) market size, (d) compatibility of the market
price vs. cost-to-serve, distinguishing the equity axis (equilibrium) and with the objectives and resources of the company, (e) profitability, and
the power axis (disequilibrium) to manage customers. In a relationship (f) expected market growth.
setting, Freytag and Clarke (2001) and Windler et al. (2017) use The targeting literature indicates that B2B firms should develop a
matrices to analyze buyer–seller collaboration. Overall, the use of cat­ measure for segment attractiveness. Hlavacek and Reddy (1986) suggest
egorical variables allows a simple descriptive analysis, which can pro­ accounting for attractiveness by (a) market growth potential, (b) level of
vide initial direction for practitioners. market domination by large and powerful competitors, (c) entry barriers
Third, B2B segments are identifiable by evaluating a series of vari­ and the prospect of being able to attain and maintain a certain “critical
ables via cluster analysis (Thomas, 2012). This is the most common mass” to be an efficient producer, and (d) the value added by the
method used in the segmentation literature (e.g., Sheikh, Ghanbarpour, manufacturer. Söllner and Rese (2001) propose that factors supporting
& Gholamiangonabadi, 2019). The chosen variables can be reduced by segment attractiveness are determined by the behavior of customers and
factor analysis to better capture the responsive factor structure of the competitors, creating barriers for both newcomers and established firms.
market. The selected factors are then submitted to a cluster analysis Alternatively, attractiveness can be considered a dual – internal and
(Thomas, 2012). The identification of segments is based on the evaluator external – challenge for B2B firms (e.g., Clarke & Freytag, 2012). For
criterion in a post hoc analysis of the data. Vriens, Wedel, and Wilms Montoya-Weiss and Calantone (1999), attractiveness entails the prob­
(1996) compared different cluster approaches: (1) overlapping (cus­ lem of how a manager can select the appropriate segment for long-run
tomers can be assigned to multiple clusters), (2) non-overlapping (cus­ profitability, considering firm constraints. They develop a procedure
tomers are assigned to only one cluster), and (3) fuzzy (customers can be for structuring and modeling the segment selection problem based on

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multiple decision criteria to manage diversity among decision-makers in Simkin, 1997). The literature suggests that implementation involves
organizations. The procedure for segment evaluation and selection converting analytical results (from theoretical segments) into actionable
consists of four stages: (a) problem structuring, (b) segment formation, plans and strategies (Boejgaard & Ellegaard, 2010). De Kluyver and
(c) segment evaluation and selection, and (d) segmentation strategy Whitlark (1986) state that implementation involves differential advan­
description. Likewise, Freytag and Clarke (2001) state that a segment tage by matching a firm’s unique capabilities to the requirements of
that may seem attractive may not suit the company if it cannot be segments, which should be documented to drive the adaptation of a new
handled internally to gain the desired market position. As firms are marketing strategy. Palmer and Millier (2004) show that implementa­
unique, their process of evaluating and selecting the segments that best tion provokes resistance, as it requires effort in time and knowledge to
match a company’s capabilities should reflect the company’s individual adapt the marketing strategy appropriately. The adaptation challenge
situation. The rationale is to find a perfect match between segment de­ covers carrying out the plans containing the activities for reaching the
mands and optimal use of the company’s capabilities (see Freytag & target customers. In this avenue, the literature also stresses the relevance
Clarke, 2001, p. 482). In summary, having an attractiveness metric in of designing specific plans for the new segmentation and conducting
place helps B2B marketers select the “right” segments and avoid the marketing-mix adjustments (Mitchell & Wilson, 1998). Importantly,
temptation of total market coverage. Dibb and Simkin (1997) found that the reasons why managers advo­
cated in favor of resisting segmentation were potential disruptions in
4.2.3. Implementation sales, marketing, and distribution. Thus, the marketing-mix adjustments
The successful implementation of segments in marketing strategy is must minimize the potential negative effects of a new segmentation.
commonly reported as a significant challenge in the industrial seg­ Reorganization. A failure to adapt organizational structures to sup­
mentation process (Boejgaard & Ellegaard, 2010; Clarke, 2009; Palmer port segmentation strategies is reported to cause implementation
& Millier, 2004; Storbacka & Nenonen, 2012). Academic attention to problems (Palmer & Millier, 2004). New segmentation structures can
segmentation implementation has tended to revolve around the trou­ mean that a firm must view the market differently and handle market
blesome nature of market segment identification (Dibb & Simkin, 2000; segments that overlap former segments. There can also be shortfalls in
Kalafatis & Cheston, 1997), the sectorized view of a market (product- communication, coordination, and dealership structures, which should
centric; Dibb & Simkin, 1994; Simkin, 2008), and/or segmentation costs be considered when deciding how to handle the segments (Dibb &
(Blocker & Flint, 2007; Mitchell & Wilson, 1998). There has been much Simkin, 2001). A synthesis of the implementation literature highlights a
less focus on the implications of implementing segments in organiza­ view on implementation as the execution of plans, which involves work
tions and use of market segmentation to formulate marketing strategy on the organizational structure. Particularly, it is claimed that a major
(Goller et al., 2002). challenge is connected to executives failing to change and adapt orga­
In a conceptual review, Dibb and Simkin (2000) identified three key nizational functions to effectively deploy segmentation strategies. Firms
areas requiring consideration when implementing a segmentation tend to hold on to “old” structures such as product, territory, or industry
approach: (1) the “infrastructure” in place at the beginning of the seg­ specific units, despite the adoption of new customer segments (see
mentation process, (2) the segmentation process itself, and (3) a series of Boejgaard & Ellegaard, 2010). The literature acknowledges trans­
implementation elements, including culture and sales force reor­ formation in organizational groupings such as creating key account
ientation within the business. In a more recent literature review on management teams, deploying cross-functional teams, adapting sales
segmentation implementation, Boejgaard and Ellegaard (2010) identi­ force, rearranging distribution channels, combining departments, and
fied two main takeaways: (1) knowledge about segmentation imple­ relocating technical support groups (e.g., Balboni & Terho, 2016;
mentation remains underdeveloped, and (2) the focus on analysis-plan Clarke, 2009; Palmer & Millier, 2004; Rangan et al., 1992). Managers
conversion is expanded to also include plan-action conversion. They perceive organizational changes as threats to their positions and power
found that execution has only recently appeared as a critical imple­ due to the risk of failing to execute a new market approach. Managers
mentation topic; hence, it is a rich avenue for further research. Overall, also hold on to existing structures, arguing the cost and coordination of
the literature identifies several themes that represent barriers for B2B conducting such structural changes (Bonoma & Shapiro, 1983; Dibb &
market segmentation implementation. We focus on (1) leadership and Simkin, 1994). Another issue is that “existing structures are well
resources, (2) marketing mix adjustment, and (3) internal entrenched and institutionalized, eroding the perceived need for
reorganization. change” (Boejgaard & Ellegaard, 2010, p. 1296). The latter speaks to a
Leadership and resources. Leaders providing guidance and resource cultural influence of segmentation, which has been almost completely
allocation among products and markets are key during implementation absent in the B2B marketing literature (cf. Dibb & Simkin, 2001).
(Goller et al., 2002). Fish, Barnes, and Aiken (1995) describe challenges Overall, studies have predominantly focused on snapshots of the
related to the capacity of managers to cope with the complexity of implementation issues (e.g., Dibb & Simkin, 1997; Mentzer, Myers, &
multivariable segmentation and the application of sophisticated seg­ Cheung, 2004). The lack of longitudinal studies for observing the effect
mentation methods. They also indicate that implementing segmentation of implementing segmentation on the firm over a longer period has
is difficult, and managers often have limited experience and expertise in precluded researchers from perceiving the value of implementing a new
segmentation. The guidance from experienced managers can smooth the market segmentation and the firm/organizational changes required. It
adaptation challenge during implementation. Inadequate senior man­ would also appear as though a firm’s context, industry, size, and the
agement involvement in segment roll-out is discussed in the literature as purpose of segmentation play a role in the segmentation implementation
having negative consequences (e.g., Dibb & Simkin, 2001). The use of task. More research is needed to understand some of the differences
resources is important to make change tangible, but can become a across firms and industries. Finally, we acknowledge that the analyzed
constraint during implementation (Dibb & Wensley, 2002). Resource implementation steps have a strong overlap with B2C segmentation.
availability is a sign that the segmentation project is a serious endeavor
and not merely a marketing exercise to bring new ideas into the firm 4.2.4. Evaluation
(Thomas, 2012). Leadership should make available and manage the Following a successful segmentation implementation, several articles
resources to explain the benefits of implementing a new segmentation evaluate its impact on different types of outcome variables in order to
approach and to facilitate discussion about the endeavor, both internally achieve competitive advantage (Goller et al., 2002). This block is
and externally (Dibb & Simkin, 2001). crucial, as the literature suggests that segmenting B2B markets should
Marketing mix adjustment. Implementing marketing plans and stra­ involve a systematic cost-benefit analysis, allowing segmentation to be
tegies frequently involves stages such as the formulation of marketing financially justified (e.g., Dibb & Wensley, 2002; Sood & Kumar, 2017).
strategies, segment targeting, and marketing mix programs (Dibb & B2B segmentation studies have focused on (i) customer satisfaction, (ii)

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sales force performance, and (iii) firm-level financial performance. The on firm financial performance remains empirically unclear.
evaluation of the segmentation consequences influences the view of
segmenting B2B markets as a dynamic business-decision process 4.3. Context
(Thomas, 2012). Thus, the resulting consequences affect how firms
understand the market concept and purpose of segmentation (see Fig. 2). Several studies discuss B2B market segmentation in particular set­
Customer satisfaction. Several authors (e.g., Bolton & Myers, 2003; tings. Such contexts refer to the characteristics or tenets influencing the
Mentzer, Myers, & Cheung, 2004; Zeng, Yang, Li, & Fam, 2011) state segmentation process. The four most representative factors are: (1)
that segmenting a market according to customer needs/preferences in geographical scope (local vs. international), (2) market coverage (hor­
terms of technical requirements, product features, customer service, or izontal vs. vertical), (3) type of offering (goods, services, and solutions),
order handling determines customer satisfaction. The rationale is that a and (4) offering status (new vs. existing).
certain level of customization is a better approach than marketing the
same offering to meet total market needs (Thomas, 2012). This idea 4.3.1. Geographical scope
builds over the offering concept being a variable resulting from the Many studies within segmentation pay little attention to potential
identification and comprehension of customer requirements. The differences between local and international markets (Clarke, 2009;
segmentation-satisfaction link grows stronger when the focus of seg­ Mitchell & Wilson, 1998; Sudharshan & Winter, 1998). Nevertheless,
menting industrial markets is on end-users (see Hlavacek & Reddy, geographical scope is a key contextual element when conducting B2B
1986). Moreover, a few B2B market segmentation studies argue that market segmentation (Bonoma & Shapiro, 1983). Few studies have
satisfaction mediates the relationship between segmentation and addressed the differences in customer segments across international
customer price-sensitivity (elasticity; e.g., Mentzer, Flint, & Hult, 2001; markets more explicitly (e.g., Day, Fox, & Huszagh, 1988). In this sense,
Mentzer et al., 2004; Zeng et al., 2011). Surprisingly, the reviewed ar­ key attempts have been made to identify the smallest set of variables,
ticles lack quantitative empirical testing to demonstrate the influence of providing maximum variance of the dependent variable on international
market segmentation on customer satisfaction. markets. Macro-based cultural differences, economic growth, and tech­
Sales force performance. Some studies also evaluate the impact of B2B nological development are used for the segmentation of the interna­
market segmentation on sales force performance. Here, segmentation tional markets (Day et al., 1988; Steenkamp & Ter Hofstede, 2002).
capabilities are conceptualized as a key dimension of the sales strategy. Micro-based behavioral variables, such as international purchasing
Whereas marketing identifies and selects target segments, the sales patterns (Frear et al., 1995), preferences for global logistics (Mentzer
function is responsible for selling to all firms that constitute a market et al., 2001; 2004), and trading partner and product categories (Shan­
segment by allocating efforts at the sales force level (Balboni & Terho, karmahesh, Olsen, & Honeycutt, 2005), are used for segmenting global
2016). This explains the importance of capturing the influence of markets. By studying import data for broad product categories, Nachum
implementing market segmentation on sales force performance. Pan­ (1994) found that while income and currency stability were good pre­
agopoulos and Avlonitis (2010) provide initial evidence, showing that dictors of variance, such overall bases for segmentation have demon­
sales strategy as a whole (including segmentation) is significantly strated limited value for practical use and require further refinement.
related to three dimensions of sales force performance: (i) sales force Instead of using macro-factors, purchasing patterns across nations are
behavior performance, (ii) sales force CRM performance, and (iii) sales used by Frear et al. (1995). Their study revealed that differences in
force outcome performance. In a more granular analysis, Terho, Eggert, sourcing patterns can depend on country development and be used as a
Hass, and Ulaga (2015) indicate a direct, positive effect of segmentation proxy for global segmentation. Similarly, Nakip (1999) studied usage
on salesperson outcome performance. Interestingly, the studies associ­ rates of industrial products based on per capita consumption
ating segmentation and sales force performance all operationalize B2B (import–export quantities) in a country. It was found that development/
market segmentation as a general construct, confounding the segmen­ income level and market size are not unique predictors of usage rates.
tation type used by the firms. With a focus on price elasticities in a global context, Bolton and
Firm-level financial performance. Most of the studies discussing seg­ Myers (2003) reveal differences across customers in response to quality.
mentation evaluation (consequences) deal with firm-level financial The differences identified provide a basis for developing high or low
performance. Profitability is commonly used to measure financial per­ support services across international markets. More recently, Oberecker,
formance (e.g., Sood & Kumar, 2017). Other supplier outcome measures Riefler, and Diamantopoulos (2008) studied attitudes toward foreign
(e.g., revenue, market share) have not been studied in the reviewed countries and products, which are labeled consumer affinity. As demand
manuscripts. Due to the less atomized customer base, most B2B firms on business markets is derived, affinity will eventually impact business
focus on driving profitability from their customers in comparison with markets. Shankarmahesh et al. (2005) state that segments should be
B2C firms, which tend to focus more on growing market share. It is selected based on existing global markets and related export products of
important to highlight that many studies select buying behavior vari­ the marketer’s home country. Dominant markets and dominant products
ables or transactional data to conduct B2B market segmentation (e.g., are selected to achieve the highest possible pay-off of export endeavors
Homburg et al., 2009; Montoya-Weiss & Calantone, 1999; Tarasi et al., (Shankarmahesh et al., 2005). In conclusion, what stands out from these
2011). For example, while Tsao et al. (2019) investigate panic-buying studies in international settings is the strong focus on “sales” segmen­
behavior and brand substitution as a segmentation base to quantify tation – using global markets as an extended transactional arm of local
the subsequent profit levels, Rangan et al. (1992) contrast relative price markets, usually neglecting customer needs.
with relative cost-to-serve, showing the effect of increasing/decreasing
them on market profitability. Identifying purchasing patterns unequiv­ 4.3.2. Market coverage
ocally should help explain the profitability of target markets. This A key strategic task is to define market coverage based on a firm’s
instrumental bias toward segmenting B2B markets from a transactional goals, resources and capabilities (Hutt & Speh, 2016). This decision has
perspective becomes even more evident when segments are created an impact on segmenting industrial markets. A broader view on market
directly by profitability levels (see Mark et al., 2012). coverage may lead to crafting a horizontal approach to sell a firm’s of­
The literature reviewed substantially relies on case studies (quanti­ ferings across multiple industries. Conversely, a narrower view on
tative and qualitative) when accounting for segmentation aftereffects, market coverage may lead to crafting a vertical approach to sell a firm’s
which is not enough to justify its value to B2B firms (Thomas, 2012). offerings to a niche customer group (commonly an industry). Mentzer
Hence, we acknowledge the need for a comprehensive study of current et al. (2004) assert that business customers can be segmented both
B2B segmentation practices and their impact on profits, sales revenue, horizontally (across national markets) and vertically (within specific
and shareholder value. Overall, the impact of B2B market segmentation national markets), based on their preferences for logistics services.

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While a horizontal approach aims to amortize operational risk in a versus adjusting offer; Clarke & Freytag, 2008). This distinction between
diverse set of customers, a vertical approach aims to focus on specialized existing and new offerings underpins the need to learn more about the
needs enabling innovation (De Massis, Audretsch, Uhlaner, & Kam­ dynamic nature of segmentation, which is lacking in the literature, with
merlander, 2018). Blocker and Flint (2007) the noticeable exception.

4.3.3. Type of offering 5. Research agenda and closing remarks

The B2B market segmentation literature includes contributions to
both goods- and services-based offerings. The intangible nature of ser­ Throughout the text, several specific opportunities for further
vices increases the complexity for segmenting a market (Bolton & Myers, research have been identified. We acknowledge that the B2B marketing
2003). Most of the published articles focus on the tangible goods/ field requires a holistic perspective on the segmentation process, to
products (Fell, Hansen, & Becker, 2003; Tsao et al., 2019), the general measure and test the influence of each stage on the following one, via an
idea being to identify the attributes behind customer choice (e.g., via ethnography/observation approach. The depth and breadth of seg­
cluster analysis) and then combine them with more traditional variables, menting a market seems to be better captured by qualitative methods
such as demographics and SIC codes (Rao & Wang, 1995). Goods can than by quantitative modeling due to its contextual nature and
then be used as a “means” for segmenting markets. However, product embeddedness. Segmentation is highly influenced by the business
attributes assessment is not a perfect proxy for understanding customer context and current organizational strategy, which favor qualitative
needs. Similarly, articles focused on services tend to use service attri­ approaches (Möller & Parvinen, 2015). This also implies moving toward
butes to segment markets (e.g., Zeng et al., 2011). For example, Bolton a longitudinal understanding of the segmentation endeavor for B2B
and Myers (2003) implemented a segmentation based on three service firms with the active participation of the researcher. Action and case-
elements: (a) reliability, (b) responsiveness, and (c) assurance. In this based research emerge as appropriate approaches to account for the
vein, Lynn (1986) and Azimont and Araujo (2010) identify service conceptual, applied, and technological challenges in the segmentation
characteristics to develop new market segments for professional services task and to validate in detail the consequences of a successful imple­
and petrol stations, respectively. mentation (Storbacka & Nenonen, 2012), particularly at the financial
Windler et al. (2017) develop a segmentation methodology for level. In the present section, we summarize and discuss the most relevant
business solutions sellers. Solution selling is a mix of goods and services, domains requiring further research for each stage of the suggested B2B
where a B2B seller customizes its offering to a particular customer’s segmentation process: (1) pre-segmentation, (2) segmentation, (3)
needs (through requirements definition, customization and integration, implementation, and (4) evaluation.
deployment, and post-deployment support; see Tuli, Kohli, & Bhar­
adwaj, 2007). This approach is aligned with the customer needs macro- 5.1. Opportunities for pre-segmentation
segmentation view. It is argued that suppliers should apply a solution
approach for selecting customers based on prior experiences in a rela­ Prior research in this particular stage is scarce in the literature and
tionship and the customer’s potential for future solutions. The mana­ articles generally start with no clear stipulations about what market is
gerial implication is simply to identify “better” customers to sell being segmented nor what is the purpose of segmenting such markets. Both
solutions. In this vein, Santos and Spring (2015) argue that managers elements should be formally stated in B2B market segmentation studies.
should use the level of customers’ willingness and ability to participate To facilitate this action, researchers should explore the presence and
in the solution delivery as segmentation criteria. The emphasis on influence of indirect customers (e.g., what different actors are present in
business solutions relates to addressing different customers’ needs the downstream value-chain and how they influence the behavior of the
simultaneously, which requires the integration of organizational activ­ whole downstream market?), the validity of traditional criteria of
ities, influencing the segmentation decision. Overall, goods-, services-, segment formation (i.e., measurability, accessibility, substantiality, and
and solution-centric articles do not provide information about their responsiveness) in the presence of multiple actors (e.g., what are the
potential differences in market segmentation, as products, services, and different criteria to define a market with diverse direct customers, in­
solutions are merely used as a descriptive context. direct customers, and end-users?), and foreseeable changes in the
marketplace (e.g., how does the nature of business cycles affect the
4.3.4. Offering status mindset of decision-makers?). Hence, further research is required to
A fourth issue discussed in the literature is segmenting markets in the investigate foundational questions regarding the: (1) structure of the
context of new or existing offerings. There are two divergent streams in downstream value-chain, (2) criteria for defining a market (as dependent on
regard to managing offerings status. On one hand, some articles use new the purpose of segmentation), and (3) expected conditions of the market (e.
offerings as a given and explore mechanisms to increase profitability, g., business cycle). In Table 3, we develop representative research
reduce marketing expenditures, or increment the chances of a successful questions to advance these areas.
product launch (e.g., Fell et al., 2003; Sood & Kumar, 2017). These ar­
ticles build on traditional diffusion/adoption models, such as the Roger 5.2. Opportunities for segmentation
method or cross-sectional method (see Fell et al., 2003, p. 348). The
theoretical underpinning is to provide a sales approach based on The focus of published research in this stage has been on suggesting
improving the market response time. On the other hand, some articles diverse sets of variables and more refined methods of segmentation, with
diverge from mechanistic methods, as they acknowledge that a single some effort on the selection of target markets. Significantly less research
actor can be disruptive in industrial markets (Millier, 2000). The has examined questions related to how and when segmenting B2B
interaction between a supplier and early users both shapes and offers the markets would be undesirable, how qualitative approaches can be in­
foundation for subsequent attempts to combine new users into segments tegrated with quantitative approaches, who should take part in the
(Harrison & Kjellberg, 2010). Thus, traditional normative recommen­ segmentation execution, who coordinates them, what type of knowledge
dations viewing segmentation as an exclusively descriptive practice are is required to segment a market, how segmentation can be more
likely to leave out many activities related to the shaping of that market experimental and dynamic, and how to segment a new market (if
(Harrison & Kjellberg, 2010, p. 791). In this vein, Clarke and Freytag possible). In combination, we identify three areas for additional research
(2008) argue that segmentation can be developed by undertaking a that are interesting for practicing managers: (1) segmentation team, (2)
strategic or an operational approach and perceiving market offerings as methodological, (3) knowledge and competence bases, and (4) nascent
more or less predefined. Hence, a firm entering into a relationship can markets. In Table 3, we also develop key research questions in these
experience a different degree of customization of its offerings (new offer areas.

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Table 3
Further research agenda.
Research arena Illustrative research questions

Pre-segmentation
Structure of downstream value- • What different actors (i.e., integrators, specifiers, distributors, etc.) are present in the downstream value-chain and how do they influence the
chain behavior of the whole downstream market? How does the number of end-users affect the structure and behavior of intermediaries (between the
focal supplier and end-users)? What type of intermediaries have the highest influence on end-user behavior and how can such intermediaries be
aligned with the focal supplier goals?
Criteria for defining a market • What are the different criteria to define a market with diverse direct customers, indirect customers, and end-users? How do different purposes of
Segmentation team segmentation broaden/narrow the definition of a market? How would different criteria for defining a market influence the selection of variables
(e.g., measurability, accessibility, substantiality, and responsiveness) to control segment formation? How does the firm’s digitalization affect the
firm’s market conceptualization?
• Who should be part of the process of segmenting a market and who should coordinate it? How large should the segmentation team be? What type
of leadership better supports the segmentation decision? What is the impact of cross-functional vs. marketing-only participants in segmenting a
market?
Expected conditions of the market • How does the nature of business cycles affect the mindset of decision-makers? What market conditions provoke marketing strategy instability and
how can top management ameliorate the effects of such conditions? How does the context of a booming economy versus a declining economy
influence marketing strategy performance? What factors about the future are more relevant for designing more effective marketing strategies at
the present?
Segmentation
Segmentation process • What is the link between segmentation purpose and its influence on the various elements in the segmentation process and the implementation?
When should managers select which segmentation variables and methods? How and when would segmenting B2B markets be undesirable or
ineffective?
Methodological • What type of model offers more within-group homogeneity? What is preferable: more within-group homogeneity or more between-group het­
erogeneity? What are the advantages of LCA versus cluster analysis? What are the advantages of action research versus case analysis? How can a
longitudinal qualitative approach offer more insights to practitioners? How can qualitative approaches be combined with quantitative ap­
proaches? How do companies really segment the market?
Segmentation team • Who should be part of the process of segmenting a market and who should coordinate it? What type of leadership better supports the
segmentation decision? What is the impact of cross-functional vs. marketing-only participants in segmenting a market?
Knowledge & competences • What are the links between segments and organization (supplier) knowledge? how do segments affect and/or create a need for new knowledge
and competences? What types of knowledge are required to conduct B2B market segmentation?
Nascent markets • How can early indicators for spotting emerging markets and transforming indicators into variables for segmentation be developed? How can new
methods for identifying and selecting segments be developed? What is the difference between segmenting a market in the making vs. an
established market?
Implementation
Function & individual roles • What are the important roles in implementing the segmentation approach? What is the role of the marketing department in implementing the
segmentation approach? What is the role of the sales department? What is the role of the CEO in implementing the segmentation approach? What
is the role of the CMO? What is the role of front-line employees? What is the role of external consultants?
Implementation agenda • How can an effective implementation process with clear milestones be developed? How and when should the implementation process be
evaluated? How much time is involved in adequate implementation and why? What is the long-term effect of segmentation on a firm’s per­
formance and the target segments? What are the ideal communication channels for inter-departmental collaboration? How does firms’ context,
industry, and size play a role in the segmentation implementation task? How can segments be implemented efficiently in order to develop clear
indicators for the organization and individual employees’ performance? What are the differences between implementing segmentation in B2B
settings vs. B2C settings?
Evaluation
Comparative analysis of • What are suitable measures of successful segmentation within and across companies? What industries offer better results after being properly
segmentation segmented? What method is more effective for indirect customers vs. direct customers? What type of segmentation contributes to developing a
stronger customer orientation? How is the culture of a firm changed by a new segmentation approach (i.e., comparing culture pre-segmentation
vs. post-segmentation?)
Financial vs. non-financial • What is the right balance between financial and non-financial measures assessing the consequences of segmenting in the short and long run?
What are pertinent financial and non-financial variables measuring the effects of segmentation? What internal benefits emerge from improved
segmentation? How are financial and non-financial consequences experienced in time? What are the financial and non-financial consequences for
the sales force? How does segmentation influence both employees’ engagement and shareholder value?

5.3. Opportunities for implementation Exemplar research questions in each of these areas are also identified.

This stage has gained attention from researchers in the last 10–20
years, focusing on the top management role, resource availability, 5.4. Opportunities for evaluation
marketing mix adjustments, and organizational restructuring, with
significantly less research addressing questions related to the role of the The existing research focusing on this stage has been inherently
marketing department and other departments (e.g., what is the role of conceptual rather than empirically validated, with the focus on
the sales department?), timing (e.g., how much time is involved in customer satisfaction, sales force performance, and firm-level financial
implementation and why?), communication mechanisms (e.g., what are performance. Interestingly, many studies use performance measures as
the ideal communication channels for inter-departmental collabora­ segmentation variables, creating a tautological situation, or not identi­
tion?), prioritization of contingencies (e.g., what role does a firm’s fying the segmentation approach when quantifying the financial impact
context, industry and size play in the segmentation implementation of segmentation. Shedding light on these issues is key for the renaissance
task?), external support such as consultants (e.g., what is the role of of B2B market segmentation research. On one hand, segmentation
external consultants?), and specific implementation champions (e.g., consequences should be comparable at different units of analysis (e.g.,
what is the role of the CEO in implementing the segmentation what are suitable measures of successful segmentation within/across
approach?, what is the role of the CMO?). Working on these themes will companies?) and scenarios (e.g., what industries offer better results after
contribute to validating the impact of academic research in practice. being properly segmented?). On the other hand, consequences can be
Table 3, therefore, focuses on two areas for further research: (1) function contrasted regarding their nature/classification (e.g., what is the right
(department-level) and individual roles and (2) implementation agenda. balance between financial and non-financial measures assessing the
consequences of segmenting in the short and long run?). Hence, Table 3

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The authors declare that they have no known competing financial Fell, D. R., Hansen, E. N., & Becker, B. W. (2003). Measuring innovativeness for the
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