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Shipping Marketing
Shipping Marketing
EVI PLOMARITOU
Institute of Chartered Shipbrokers Greek Branch
E-mail: eviplom@hol.gr
ABSTRACT
Concerning the implementation of marketing in merchant shipping companies, no
extensive research has been made up to now. The articles and books published are few
and they stress only in passing the necessity of applying marketing to shipping
companies, without analyzing the subject in depth. This article presents the stages of
marketing implementation that should be ideally followed by companies, which are
activated in merchant shipping. Additionally, the article attempts a comparative
analysis of marketing implementation in bulk and liner shipping companies. From bulk
shipping, the tanker shipping companies were chosen and from liner shipping, the
container shipping companies were chosen for investigation. An empirical research was
carried out in 2005 concerning the implementation of marketing in the largest tanker
and liner shipping companies organization models in the world. Consequently, this
article presents the marketing strategies, as well as the marketing philosophies of the
leading shipping companies in the world.
into the Voyage Charter Market, the Time Charter Market, the Bareboat Charter Market
and the Contract of Affreightment Market.
Figure 2 presents the shipping markets segmentation and the orientation of charterers
behaviour in every segment.
The type of ship and the type of cargo could be named as fundamental criteria because ship
and cargo are the protagonists in every commercial sea transport. Geographical criterion and
type of charter have a determinative meaning and constitute the basis for sub-apportionment
for every main segment ensued from the fundamental criteria. It must be noted that the
fundamental criteria do not operate cumulatively in forming the segments. What happens in
practice is that a group of cargoes is transported by one category of ships.
The charterers needs, as well as their buying behaviour are differentiated from segment
to segment8. In each segment, the buying behaviour of the charterers displays common
characteristics. A precondition of effective shipping marketing is the understanding of the
different needs the charterers shippers have in the above market segments. For each
segment of the shipping market appropriate marketing strategies must be designed and
appropriate marketing mix must be offered.
Phase Four: Evaluation of Shipping Market Segments
The shipping enterprise must evaluate the market segments, by studying the:
1. Size of a Segment: The appropriate size of a segment is relative, because large shipping
enterprises usually prefer segments with large volume of charters and avoid small segments,
whereas small companies avoid large segments because they demand many resources.
2. Development of a Segment: The development of a segment is desirable in the degree the
companies wish to increase charters. However, there is a risk that competitors enter quickly
into the developing segments and limit the companys profitability.
3. Structured Attractiveness of a Segment: A segment may have the desired size and
development, but not be attractive in view of profitability. The company should evaluate
possible consequences of those forces to the long-term profitability of the segment. Such
forces are the possible new shipping enterprises entering the market, the substitutes of sea
transport services such as air transport etc.
4. Company Objectives and Resources: Even if a segment has the appropriate size and
development and from structural point of view is good, the shipping enterprise must take
into account the objectives and resources it possesses in relation to this segment.
Phase Five: Choice Of The Target-Market
The shipping enterprise should target on the best possible segment or segments of the
market and select the target - market. The target - market is the sum of shippers
charterers that have the same transportation needs, they express eagerness in buying the
transport services and they show a high degree of buying force. A substantial
precondition for the recognition of a segment as target - market is its financial viability,
in order to justify the drawing up of marketing programmes for attracting it. The
shipping enterprise should apply one of the following selection models of the target
market which were defined by Abell D. (1980)9:
1. Segmental Concentration, where the enterprise offers transport services to one and only
one market segment. An example of concentrated marketing is the company Lavinia
Corp (Greece), which manages Reefer Vessels and offers transport services exclusively
to the Reefer market. Through concentrating marketing, an enterprise achieves a strong
position in the market segment due to the better knowledge of the segments needs and
the specific gravity it lends itself. If the enterprise achieves a good position in the
segment, it may ensure high performance for its investments.
2. Selective Specialization, where the enterprise selects to offer its transport services to a
number of market segments, which are promising and match the enterprises resources.
There might be minimum or no cooperation between the segments. An example of
company, which implements selective specialization, is the Bergesen (Norway). The
company possesses Gas Carriers, Bulk Carriers, and Tankers, and offers its transport
services to the liquid bulk as well as to the dry bulk cargo market. The strategy of this
multi-segmental coverage has an advantage over the segmental concentration concerning
the differentiation of the business risk. Even if some segments cease to be beneficial, the
enterprise can be profitable in the remaining segments.
3. Service Specialization, where the enterprise focuses its attention to the production of a
specific type of transport service, which it offers to many segments. An example of
company, which implements service specialization, is the Costamare Shipping
Company S.A. (Greece), which time charters its container ships to liner operators.
Through this strategy, the enterprise achieves a good reputation in the specialized sector.
4. Market Specialization, where the enterprise focuses its attention in servicing many
needs of a specific group of charterers. An example of company, which implements
market specialization is the Teekay Shipping (Canada), which manages a large fleet
comprising all types and sizes of tankers for servicing all transportation needs of
charterers in the oil market. The enterprise achieves reputation due to the fact that it is
specialized in servicing a specific group of charterers.
5. Full Market Coverage, where the enterprise tries to service all charterers groups
through all type of ships possibly needed. Only the large shipping enterprises
colossuses, as is Mitsui OSK (Japan) can undertake a strategy for fully covering the
entire shipping market through differentiated marketing, by designing various marketing
programmes and by offering various transport services in each market segment. In this
case, the enterprise cannot offer a non-differentiated marketing.
The action plans must be applied correctly, so that the proper transport service be
provided to the appropriate charterer, at the right time and port with the appropriate vessel
and at freight levels that satisfy not only the shipping enterprise but also its client.
The planning of marketing programmes consists of the basic decisions concerning the
distribution of marketing resources, marketing expenses and marketing budget among the
various tools of marketing mix. Shipping enterprises have unique capabilities with regard
to the means, resources and abilities of managing their ships, which means it is
impossible to exploit all the opportunities of the shipping market as efficiently as other
companies do. The combination of the shipping enterprises capabilities together with the
needs of the clients is a basic factor for the provision of desired transport services, the
satisfaction and retention of the charterers and therefore for the commercial success of the
enterprise. The shipping company must organize its resources in such a manner, as to be
able to apply the marketing plan.
The management of a marketing department should also decide which level of marketing
expenses is necessary in order to achieve the marketing objectives. The enterprise already
knows from the previous stage the means and resources it possesses for materializing its
objectives. Companies entering a market try to learn what is the ratio of marketing budget
to the sales of their competitors. A company should analyze the marketing work required
in order to achieve a given volume of sales and then to cost this work. The distribution of
marketing budget among the tools of marketing mix constitutes a basic stage in the
planning procedure of marketing programmes.
An empirical research was carried out for the ten largest tanker shipping companies and
for the ten largest liner operators of container ships, in order to be confirmed that the
companies organization models in the world understand the importance of marketing
and apply improved marketing strategies16. According to Hoffman D. and Bateson J.
(1997), the study process of the most successful enterprises in the world and the effort for
interpreting their strategy is called benchmarking17. According to benchmarking the
best enterprises in a market are determined as organization models and as a comparison
measure for the smaller enterprises of the branch.
Empirical research was based on advertising material of the above enterprises, as well as
on data requested directly from the companies18. More specifically, information was
gathered for their competitive advantages, their business relationships to charterers, their
ships performance, their safety system, etc. The data was appropriate and sufficient for
drawing significant conclusions from them regarding the marketing philosophies they
adopt and the marketing strategies they apply. The accuracy of collected information is
not questioned, to the degree that this was drawn out of its initial source of gathering. In
addition, the reliability of each source is a basic evaluation criterion of researchers skills.
The companies, from which the data was gathered, maintain separate market research
depts, which are manned with appropriate trained analysts. The work of these analysts is
the systematic collection of the necessary information and its distribution to the decision
makers of the enterprise. After the critical appreciation of sufficiency, accuracy and
reliability of collected data, and after the careful study of the records, considerable
conclusions ensued regarding the manner by which they perceive their clients
requirements, the segmentation, differentiation and promotion strategies they apply and
the marketing philosophies they adopt.
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planning strategies for improving the work conditions and for increasing the ship
efficiency. Thus, Bergesen achieves quality and personnel differentiation.
Tanker Pacific Management has made a good image in the tanker market and has built
the reputation of the most reliable and responsible company. This has as a result, the
maintenance of long-term relations with charterers. The company achieves image
differentiation through the application of good business relations policy.
The A.P.Moller Maersk Group achieves quality differentiation through the
implementation of auxiliary marine activities policy (such as, oil processing industries)
and through the application of an environmental protection policy. The company
achieves also personnel differentiation through constant training programs.
Nippon Yusen Kaisha achieves quality differentiation through maintaining new,
modern and specialized fleet, which can provide safe, rapid, and reliable itineraries.
Angelicoussis Shiphld also achieves quality differentiation through maintaining new,
modern and specialized fleet, which can provide safe, rapid, and reliable itineraries.
In addition, the largest tanker companies use advertising as a basic competition tool.
The companies provide high quality transport services, and have as a motive to reveal this
quality through advertisements. In this way, they place their competitors in an inferior
position, if the last provides lower quality services. The tanker companies have developed
various advertising programs. These programs include design of web page on the internet,
creation of brochures, donations in researches, advertisements in shipping press etc.
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Evergreen achieves quality differentiation for the service provided through the
application of a technologically advanced EDI System between the company and the
shippers. The system provides fast and valid information, while time and effort are
saved. The company won the E-Commerce Excellence Award 2004.
Cosco has built the best image in the market of containerships and has the reputation
of the most reliable company. As a result, the company maintains long-term business
relationships and achieves image differentiation. Cosco won the Sailing Schedule
Reliability Reward on Australia East Asia Trade as well as the International
Quality Management Platina Medal.
P&O Nedloyd, (like Evergreen), achieves quality differentiation through the
application of a technologically advanced EDI system between company and shippers.
NOL / APL achieves quality differentiation through maintaining a new and modern
fleet of specialized containerships, such as reefer containerships, with ventilation, of
pressurized gas, with movable sides, of liquid bulk cargoes etc.
MSC gives high priority to the development of its fleet. During the last six years, the
company showed a remarkable doubling of its fleet (from 120 ships in 1997, to 240
ships in 2003). In this manner, MSC achieves quality differentiation.
NYK in comparison with the other liner companies possesses the most advanced and
organized logistics services system, i.e. a complete cargo transport from the storage
area to the point of destination. In this way, NYK achieves quality differentiation.
K Line has created a strict management system, called the K Line Environmental
Management Program, which transpires the safety management philosophy
throughout the organization. In this way, the company achieves quality differentiation.
Yang Ming has built a very good image in the liner market and has the reputation of a
company, which is based on teamwork, innovation, honesty and pragmatism. In this
manner the company achieves image differentiation.
Hapag Lloyd Group achieves quality differentiation through the policy of
constructing, hiring and selling containers to other liner companies. The Hapag Lloyd
Group is the largest manufacturer and leasing company of containerships.
In addition, the largest liner companies use advertising as a basic competition tool.
The companies provide high quality transport services, and have as a motive to reveal this
quality through advertisement. The liner companies have developed similar advertising
programs to those developed by tanker companies. Figure 4 presents the basic results of
empirical research.
CONCLUSIONS
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