When a software company sells the same product to a farmer’s cooperative, a steel plant, and a private bank, it cannot use one sales pitch for all three. Each buyer has different needs, different budgets, and different ways of making decisions. This is where segmentation of organisational markets becomes essential. Unlike consumer markets, where companies group people by age, income, or lifestyle, business-to-business (B2B) markets are divided using organisational traits. Three of the most practical and widely used bases are the type of customer, the size of the customer, and the type of buying situation. Understanding these helps a seller build the right marketing mix for each group instead of wasting effort on a one-size-fits-all approach.

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Why organisational markets need different segmentation

An organisational market is a market where businesses and institutions buy goods and services to support their operations rather than for personal consumption. A factory buying machinery, a hospital buying medical equipment, or a bank buying IT systems are all part of this market. Because these buyers purchase to run a business, their requirements are technical, their order values are large, and their decisions often involve many people.

The bases used to segment these markets are conceptually similar to consumer segmentation but tailored to organisational behaviour. Instead of personality and lifestyle, a seller looks at the industry a customer belongs to, how big the buyer is, and the circumstances under which a purchase is being made. Each of these reveals a different set of needs and calls for a different selling strategy.

Segmenting by type of customer

One of the most common ways to divide an industrial market is by the kind of business the customer operates. A manufacturer of industrial pumps, for example, may sell to agricultural users, construction firms, and chemical plants. Each of these industries seeks a different benefit from the same basic product, so each needs a tailored marketing mix in terms of features, pricing, and after-sales support.

Classifying customers by industry code

To make this grouping systematic, businesses rely on a standard industrial coding system. Globally, this idea is captured by the Standard Industrial Classification (SIC) code. In India, the equivalent framework is the National Industrial Classification (NIC) code, which is India’s official tool for classifying every economic activity, from agriculture and manufacturing to banking and digital services.

The NIC is maintained by the Ministry of Statistics and Programme Implementation and is used for company registration, GST filings, MSME (Udyam) registration, and economic surveys. The system is hierarchical, moving from broad sections down to detailed sub-classes, which lets a seller zoom in on exactly the kind of industry it wants to target. The most recent revision, NIC 2025, introduced a six-digit code structure to replace the older five-digit format, giving finer detail and reflecting newer sectors like renewable energy, fintech, and e-commerce.

For a marketer, these codes are valuable because they allow a market to be mapped precisely. A company selling laboratory chemicals can use the classification to identify all pharmaceutical manufacturers in a region, estimate how many there are, and direct its sales team only at that group. This turns a vague idea like “we sell to industry” into a focused, measurable target list.

End users seek different benefits

The core logic of customer-type segmentation is that different end users want different things. A bank buying air conditioners cares about quiet, reliable cooling for its branches. A cold-storage warehouse buying cooling equipment cares about heavy-duty performance and energy efficiency at very low temperatures. The seller must adjust not just the product, but also the message, the warranty terms, and the service plan for each segment. Grouping customers by industry makes these differences visible so the right offer can be built for each one.

Segmenting by customer size

The second major base is the size of the buyer. Many companies split their organisational market into large accounts and smaller accounts, because the cost and effort of serving them differ enormously. A single multi-crore order from a large manufacturer justifies a dedicated team, frequent visits, and customised terms. A small dealer placing modest, occasional orders cannot be served the same way without losing money.

Major accounts versus smaller accounts

This is why firms often create separate systems for handling different sizes of customers. Large, strategically important buyers are typically managed through a practice known as key account management, where a dedicated manager builds a long-term relationship and a customised plan for each account. Smaller dealer accounts are usually served through standardised processes, distributors, or inside sales teams that handle many customers efficiently.

The reason this split makes financial sense is the Pareto principle, or the 80:20 rule. In most B2B businesses, the top fifth of customers generate roughly 60% to 90% of total revenue. Treating these high-value buyers with the same light-touch approach used for the long tail would leave significant revenue at risk. At the same time, lavishing premium attention on every tiny account would be wasteful. Segmentation by size lets a company match its resources to the value each group brings.

How size changes the marketing mix

Customer size affects almost every element of the offer. Large buyers often negotiate volume discounts, longer credit periods, and special delivery schedules. They may also expect technical training and on-site support. Smaller buyers, by contrast, are more sensitive to list price and rely on the seller’s distributors for service. By segmenting on size, a company can design pricing tiers, service levels, and sales structures that keep both groups profitable.

Segmenting by type of buying situation

The third base looks at the circumstances of the purchase rather than the buyer itself. The same organisation behaves very differently depending on whether it is buying something familiar or something completely new. Marketers classify these circumstances into three buying situations, and each one calls for a distinct selling approach.

New buy

A new buy, also called a new task, happens when an organisation purchases a product or service for the first time. This is the most complex situation. Because the buyer has no prior experience, it requires extensive research, evaluation, and decision-making. The perceived risk is high, the sales cycle is long, and many people across departments are usually involved in the decision.

For the seller, a new buy is both a challenge and a big opportunity. The marketing approach should focus on education and trust-building: explaining how the product works, reducing the buyer’s perceived risk, and positioning the seller as a knowledgeable guide. Detailed information, demonstrations, and patient follow-up matter far more than a quick price quote.

Modified rebuy

A modified rebuy occurs when a buyer wants to reorder a product but with some changes, such as new specifications, a different price, or other altered aspects of the order. A useful illustration is a restaurant that has changed its logo and now needs new menus and cups with the updated design. The same items are being purchased, but the change opens the door for the buyer to reconsider suppliers.

This situation involves more effort than a routine reorder but less than a new buy. For the existing supplier, the marketing approach is to highlight flexibility and the ability to meet the new requirements quickly. For a competing supplier, a modified rebuy is the moment to step in, because the buyer is already open to evaluating alternatives. Comparison information and proof of better value become powerful tools here.

Straight rebuy

A straight rebuy is the simplest situation. The organisation reorders the same product, in the same quantity, from the same supplier, with no modifications. These transactions are routine and are often handled entirely by the purchasing department, because the choice of product and supplier was already made earlier. Ordering office stationery or raw materials on a fixed monthly schedule is a typical example.

The marketing approach depends on which side the seller is on. For the current supplier, the goal is to protect the relationship by ensuring consistent quality, reliable availability, and competitive pricing, sometimes supported by loyalty schemes or volume discounts. For an outside supplier hoping to break in, a straight rebuy is the hardest situation to crack, because the buyer sees no reason to change. The strategy is to find a weakness in the current arrangement and convert the situation into a modified rebuy.

As one analysis of B2B selling notes, each scenario demands a tailored approach to maximise the chances of success. Real purchases do not always fit neatly into one box, but recognising which situation is in play tells the seller how much effort, education, and negotiation a deal will need.

Bringing the three bases together

These three bases are not used in isolation. A single seller might segment its market by industry to decide which customers to pursue, by size to decide how much attention each deserves, and by buying situation to decide what message to deliver at a given moment. A supplier of factory equipment, for instance, may target chemical manufacturers (type of customer), assign its largest plants to a key account team (customer size), and approach a plant making its first purchase with detailed education while simply maintaining service for one placing a routine reorder (buying situation).

Used together, these bases turn a broad, undefined market into clear groups that can be served efficiently. The result is a marketing effort that is relevant, timely, and far more likely to win and keep business than a generic approach aimed at everyone at once.

What do you think? If you were selling industrial equipment to both a large manufacturer and a small local workshop, how would you change your approach for each? And can you think of a product that a business buys as a straight rebuy today but once bought as a risky new buy?

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References
  1. https://www.segmentationstudyguide.com/business-market-segmentation-bases/
  2. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2191142
  3. https://pwonlyias.com/current-affairs/national-industrial-classification/
  4. https://ddnews.gov.in/en/india-updates-industrial-classification-after-17-years-with-nic-2025-rollout/
  5. https://arpedio.com/resources/blog/what-is-key-account-management
  6. https://openstax.org/books/principles-marketing/pages/4-2-buyers-and-buying-situations-in-a-b2b-market
  7. https://courses.lumenlearning.com/waymakerintromarketingxmasterfall2016/chapter/reading-b2b-purchasing/
  8. https://growleady.io/blog/what-are-the-three-main-types-of-b2b-buying-situations/

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Marketing

1 Nature and Scope of Marketing

  1. The Meaning of Marketing
  2. Marketing Concepts
  3. Evolution of Marketing
  4. Difference between Selling and Marketing
  5. Importance of Marketing
  6. Marketing in a Developing Economy
  7. Concept of Marketing Mix

2 Marketing Environment

  1. What is Marketing Environment?
  2. Relevance of Environment in Marketing
  3. Marketing Environment in India
  4. Government Regulations Affecting Marketing
  5. Marketing Implications of Some Regulations

3 Markets and Market Segmentation

  1. What is a Market?
  2. Types of Markets and Their Characteristics
  3. What is Market Segmentation?
  4. Importance of Market Segmentation
  5. Requirements for Segmenting a Market
  6. Bases for Segmentation
  7. Bases for Segmenting Consumer Markets
  8. Bases for Segmenting Organisational Markets

4 Consumer Behaviour

  1. Meaning of Consumer Behaviour
  2. Importance of Understanding Consumer Behaviour
  3. Types of Consumers
  4. Buyer Versus User
  5. Factors Influencing Consumer Behaviour
  6. Psychological Factors
  7. Personal Factors
  8. Social Factors
  9. Cultural Factors
  10. Consumer Buying Process

5 Product Concepts and Classification

  1. Meaning of Product
  2. Product Mix and Product Line
  3. Product Mix and Product Line Strategies
  4. Classification of Products
  5. Product Diversification

6 New Product Development and Product Life Cycle

  1. Importance of Product Innovation
  2. New Product Development
  3. Why New Products Fail?
  4. Product Life Cycle (PLC)
  5. Marketing Strategies at Different Stages of PLC

7 Branding and Packaging

  1. Branding: Meaning and Importance
  2. Advantages and Disadvantages of Branding
  3. Branding Decisions
  4. Selecting a Good Brand Name
  5. Registration of Trade Mark in India
  6. Packaging: What is Packaging?
  7. Functions of Packaging
  8. Criticism of Packaging
  9. Packaging Strategies
  10. Legal Dimensions of Packaging

8 Objectives and Methods

  1. Role and Importance of Price
  2. Objectives of Pricing
  3. Factors Affecting Price Determination
  4. Basic Methods of Price Determination

9 Discounts and Allowances

  1. Discounts and Allowances
  2. Geographical Pricing
  3. Pricing a New Product
  4. Fixed Price Versus Flexible Pricing
  5. Unit Pricing

10 Regulation of Prices

  1. Regulation of Pricing Under the MRTP Act
  2. Regulation of Pricing Under the Consumer Protection Act
  3. Regulation of Pricing Under other Acts

11 Channels of Distribution I

  1. What is a Channel of Distribution?
  2. Functions of Channels of Distribution
  3. Channels of Distribution Used
  4. Factors Influencing the Choice of Channel
  5. Intensity of Distribution

12 Channels of Distribution II

  1. Meaning and Role of Middlemen
  2. Types of Middlemen
  3. Wholesalers
  4. Retailers
  5. Trends in Wholesaling and Retailing

13 Physical Distribution

  1. Meaning and Importance
  2. Total System Approach
  3. Total Cost Approach
  4. Objectives of Physical Distribution
  5. Physical Distribution Tasks
  6. Order Processing
  7. Warehousing
  8. Inventory Control
  9. Transportation
  10. Information Monitoring

14 Promotion Mix

  1. Meaning and Importance of Promotion
  2. The Communication Process
  3. Concept of Promotion Mix
  4. Factors Affecting the Promotion Mix

15 Personal Selling and Sales Promotion

  1. What is Personal Selling?
  2. Importance of Personal Selling
  3. Selling Theories
  4. The Personal Selling Process
  5. Qualities of a Good Salesperson
  6. Sales Promotion

16 Advertising and Publicity

  1. What is Advertising?
  2. Objectives of Advertising
  3. Role of Advertising
  4. Parties Involved in Advertising
  5. Advertising Media Decisions
  6. Publicity