Segmenting technology markets: applying the nested approach

Purpose - Sound target marketing leads to winning business strategies. While market segmentation is an intriguing academic concept, most B2B practitioners struggle with the design and implementation of such initiatives. This paper aims to illustrate an effective strategic segmentation process in a high-technology market context. Design/methodology/approach - Bonoma and Shapiro's nested model - consisting of geodemographics, operating variables, purchasing approaches, situational factors and characteristics of the buyer - is used as a conceptual framework for market segmentation analysis. The model is applied to Citrix Systems as a way of finding new business opportunities in the desktop application streaming market. Findings - In this study, 17 potential segmenting variables within the five major levels are examined with an initial emphasis on firmographics and technology. Census data identified market priorities based on establishment size, key sectors and geographic sales territories. Practical implications - A four-stage segmentation plan consisting of corporate commitment, research/refinement, implementation and evaluation/enhancement is proposed and discussed. Strategic planning lessons and research extensions are offered. Originality/value - While the work on business segmentation has proliferated over the past 25 years, there has been a paucity of practical applications on how to conduct segmentation analysis successfully in technology markets. This paper provides an important roadmap for marketers to enhance segmentation initiatives via a comprehensive application and analysis of a leading global company.