Maximize the Power of B-to-G Segmentation

By Mark Amtower

All markets have unique needs, and nowhere is this more obvious than in the business-to-government (B-to-G) market. Regardless of the validity of the premise, B-to-B catalogers must address this issue to meet the expectation of treating the market differently. This perceived difference, plus the perceived value of treating the market niche differently, can lead to premium prices and increased market share.

I focused on this premise during a session I presented at last week’s MeritDirect Business Mailer’s Co-op in White Plains, N.Y. The first demonstration of this was in 1990 when National Audio-Visual put out the first “government edition” catalog. It also included the old government credit card logo — the IMPAC logo. And the perceived difference led to increased market share, even though the interior of the catalog remained the same.

In the late 1990s, computer multichannel marketer CDW launched its first B-to-G catalog, CDW E&G (Education and Government). While this was met with modest success, CDW went further, creating CDW-G, a wholly owned subsidiary. CDW-G then segmented further, separating education from government. Even more, it then segmented education into K-12 and higher education.

Further Segmentation
At the same time, the company segmented CDW-G into federal, state and local. Each segmentation of the catalog was accompanied by a specially trained sales force for each segment. Each sales force had its own dedicated marketing team.

The PC catalog market in the mid- to late 90s was fairly crowded, but it lacked a true dominant player. By 2003, there were only three big PC catalogs left: CDW, PC Connection and PC Mall. CDW emerged as the biggest. Its growth was fueled by CDW-G.

Since then, CDW has started producing catalogs for PC niches including security, storage, mobile and more. Furthermore, CDW started publishing a series of magazines, all produced internally, which address each market segment.

In the federal market from 1998 until 2007, CDW migrated from a second tier player to become the dominant reseller of computer products in the federal space.

The lessons that other marketers can learn from CDW are to look at your data and identify each major segment. Look carefully at the money you make in each segment and the overall niche potential for you. Then find out who the major players are in each niche and see if they address each market niche separately. Predicated on the findings, you may have some serious growth potential.

Mark Amtower is the author of “Government Marketing Best Practices.” You can reach him at mark@federaldirect.com.