WMBA 6060 Week 3 Segmentation and Target Choice Example

Choose the 200 Multi-Dentist Independents, Leave the 760 Solo Offices and the Chain-Affiliated Clinics: Segmenting a Twin Cities Dental Service Market by How Practices Buy, With Defended Size Estimates

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Walden University

WMBA 6060: Marketing for Competitiveness

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Month Day, Year

Choose the 200 Multi-Dentist Independents, Leave the 760 Solo Offices and the Chain-Affiliated Clinics: Segmenting a Twin Cities Dental Service Market by How Practices Buy, With Defended Size Estimates

Bases That Matter to Buying

Kettle River Dental Technologies, the composite equipment service firm studied this term, sells into a market of about 1,128 private dental offices in the seven-county Twin Cities area, plus about 45 community and institutional clinics. Week 2 described that market. This paper divides it into segments, sizes each with stated assumptions and selects one.

Smith (1956) framed segmentation as accepting that buyers fall into groups wanting different things and shaping an offer for one group or a few. Bonoma and Shapiro (1984) proposed a nested approach for business markets, working inward from broad organizational characteristics toward how purchases are actually decided. Following them, this analysis uses three bases that change how a practice buys equipment service.

The first is practice structure: how many dentists share the office and whether it belongs to a dental support organization that buys centrally. The second is who decides: an owner-dentist, an office manager or a regional procurement team. The third is downtime cost: how much a stopped chair or compressor costs the practice in a day.

The Segments

Table 1

Four Segments With Size Estimates

Office counts start from the 2024 QCEW total of 1,128 private offices; shares by segment and spend per office are estimates explained below; composite figures.

How the Estimates Were Built

The public data give the number of offices and employees but not the number of dentists per office. The shares were estimated from Kettle River's customer list of about 340 offices, which records practice size and affiliation, adjusted for the firm's known underrepresentation among solo offices. In that list, about 18 percent of private offices have three or more dentists and about 15 percent are affiliated with a dental support organization. Applying those shares to 1,128 offices gives the counts above, with the remainder treated as solo and two-dentist practices.

Annual spend per office comes from the firm's billing records for each type, including both emergency repairs and maintenance contracts. Solo practices spend least because they have fewer operatories and tend to defer maintenance. Clinics spend most because they run equipment for long hours and must document sterilizer testing.

These are estimates, and their weakest point is the segment share. A spot check of fifty randomly chosen offices from the state dental board's public license lookup, counting dentists at each address, would test the 18 percent figure before the plan commits resources.

Selecting the Target

Kettle River should target independent practices with three or more dentists. Four reasons support the choice.

First, downtime hurts these practices most. When a compressor fails in a four-dentist office, four providers and their hygienists stop at once, so the value Week 1 described, a schedule that holds, is worth the most here.

Second, decisions are made locally. An owner-dentist and office manager can choose Kettle River on the strength of a relationship and a response record, without a regional contract standing in the way.

Third, the segment is large enough. At about $2.8 million in annual spend, a gain from Kettle River's current share of about 12 percent to 25 percent would add roughly $360,000 a year in revenue, a large increase for a firm of 22 technicians.

Fourth, the segment is growing where Kettle River can reach it. Many of the multi-dentist practices opened in the last five years are in Dakota, Anoka and Washington counties, along the routes the firm's technicians already drive.

Buyers Deliberately Left Unserved

Two segments will not be pursued, and the firm is better off without them.

Solo and two-dentist practices are the largest segment by count and by total spend, but each spends little, buys mostly on price and calls only when something breaks. Serving them well requires short visits across a wide area, which consumes technician time that could serve larger offices. Kettle River will continue to answer calls from existing solo customers but will not market to new ones.

Offices affiliated with dental support organizations are attractive in spend but buy through regional or national contracts that favor the distributors' service arms, which can cover many states. Winning them would require bids Kettle River cannot win on coverage, and losing those bids would consume sales time.

Community clinics are a special case. They value Kettle River's response and documentation, and the firm will keep serving the clinics it has, but they are too few to build the plan around.

How the Choice Could Be Wrong

The choice rests on two beliefs that could prove mistaken. The first is that multi-dentist practices will pay for faster response through a contract rather than simply calling when something breaks. If they prefer to pay as they go, the segment's spend is real but the Uptime Plan will sell slowly. The second is that chain-affiliated offices will stay locked into national contracts. If dental support organizations in the metro begin letting local managers choose vendors, part of that segment would behave like the target and could be added. Both beliefs can be tested within a season, the first by tracking how many emergency customers accept a contract offer and the second by asking chain-affiliated customers who currently call Kettle River how their vendor decisions are made.

What the Choice Commits the Firm To

Choosing a target means accepting that some revenue will be left to rivals. Wind and Cardozo (1974) noted that a segment is useful only if the firm can design a distinct approach for it. For Kettle River, the distinct approach will be built in the coming weeks around guaranteed response times and preventive contracts priced for offices with several operatories.

References

Bonoma, T. V., & Shapiro, B. P. (1984). Evaluating market segmentation approaches. Industrial Marketing Management, 13(4), 257-268. https://doi.org/10.1016/0019-8501(84)90021-X

Smith, W. R. (1956). Product differentiation and market segmentation as alternative marketing strategies. Journal of Marketing, 21(1), 3-8. https://doi.org/10.1177/002224295602100102

Wind, Y., & Cardozo, R. N. (1974). Industrial market segmentation. Industrial Marketing Management, 3(3), 153-165. https://doi.org/10.1016/0019-8501(74)90025-X