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Paper Presented at the International Conference

“Shipping in the era of Social Responsibility”


In Honour Of The Late Professor Basil Metaxas (1925-1996)
Argostoli, Cephalonia, Greece, 14-16 September 2006

THE KEY STAGES OF MARKETING IMPLEMENTATION


IN SHIPPING COMPANIES: AN EMPIRICAL RESEARCH OF
MARKETING IMPLEMENTATION IN THE LARGEST
TANKER AND LINER COMPANIES IN THE WORLD

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.

Keywords: “Marketing of Shipping Companies”, “Segmentation”, “Differentiation”,


“Advertising Programs”, “Marketing Planning”, “Marketing Strategies”.
THE KEY STAGES OF MARKETING IMPLEMENTATION IN
SHIPPING COMPANIES. AN EMPIRICAL RESEARCH OF MARKETING
IMPLEMENTATION IN THE LARGEST TANKER AND
LINER COMPANIES IN THE WORLD

1. INTRODUCTION
The marketing of shipping companies activating in merchant shipping, is the science of
Business to Business Marketing (B2B marketing), which deals with the satisfaction of
charterer’s – shipper’s needs for the carriage of goods by sea, with main aim the profit of
the enterprise. This satisfaction presupposes on the one hand correct diagnosis of the
shipping market to better understand and forecast client’s (charterer’s – shipper’s) transport
needs and on the other hand appropriate organization, planning and control of the shipping
enterprise’s means. The more the shipping enterprise tries to discover what its clients need,
to adapt the chartering policy to their requirements, to offer appropriate transport services,
to negotiate the freight as a function to what it offers, as well as to communicate effectively
with the market it targets, the more are the possibilities to achieve the most appropriate,
efficient and long-lasting commercial operation of its vessels1.

All shipping enterprises have limited capabilities concerning the means, the resources and
the management abilities for their ships. This means that it is impossible to exploit all the
chances of the shipping market with equal effectiveness. The matching of the shipping
enterprise capabilities with the needs and the desires of its clients is fundamental for the
provision of the desired transport services, the satisfaction and retention of charterers and
thus the commercial success of the enterprise2. The shipping company must organize its
resources in such a manner as to be able to apply the marketing process’ stages and to
achieve a long-lasting and more effective commercial operation of its ships. The application
of marketing presupposes correct diagnosis, planning, organization, implementation and
control of marketing effort. This process is continuous and it is presented at figure 1.

Figure 1: Stages of Marketing Implementation in Shipping Companies

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2. KEY STAGES OF MARKETING IMPLEMENTATION IN SHIPPING COMPANIES
The key stages of marketing implementation in shipping companies are the diagnosis, the
planning, the organization, the implementation and the control.

2.1 The Stage of Diagnosis


The first stage of shipping marketing is the diagnosis, which is consisted of five phases.
The phase of the organization of marketing information system, the phase of analysis of
marketing environment’s threats/opportunities, the phase of shipping market’s segmentation,
the phase of segments’ evaluation and finally the phase of the target market’s choice.

Phase One: Marketing Information System


Keegan W. J. (1974) underlines the importance of reliable and updated information at the
enterprises, which are activated worldwide3. The correct, sound and timely provision of
information is more imperative to a shipping enterprise than it is to another land
enterprise, because the shipping company moves its vessels worldwide, its revenue is
realized in foreign currencies (mainly dollars) and the international events significantly
affect freight levels and consequently the position of the enterprise in the shipping world.
Therefore, much information is necessary to the shipping companies in order to offer
appropriate transport services and satisfy their clients’ needs. More specifically, persons
occupied with chartering of ships exchange such a great volume of information, useful for
understanding the tendencies of the charter market and necessary for correct decision-
making and correct planning. The information exchanged between shipowners, agents,
charterers and shippers concerns matters such as demand and supply of ships, port dues,
canal dues, fuel prices, congestion in certain ports etc4. With the assistance of information
systems, ship administrators would be able to review marketing strategies in time, to meet
new challenges and satisfy transportation needs of their clients.

MIS is an information system, which is comprised of the following subsystems:


1. The internal file subsystem, which provides information concerning the developments
in the internal enterprise’s environment, such as ship’s operating cost, vessel’s chartering
policy, voyage estimation etc.
2. The marketing research subsystem, which includes the official primary researches,
conducted by external sources and concerns information related to a specific marketing
problem the shipping enterprise faces. The main work of marketing staff is to combine the
marketing tools in an effective marketing programme, so that the offered transport services
satisfy the charterers’ – shippers’ requirements. This work could be simplified if all factors
affecting the clients of the shipping enterprise were under the full control of marketing staff.
Usually, the factors affecting the behaviour of the charterers originate from the micro- and
macro-environment of the shipping marketing and therefore are beyond the control of
administrative staff. Therefore, shipping enterprise must follow up of the charterers’ needs,
as well as forecast future changes in their chartering policy. The answer to this problem lies
in the gathering of appropriate information given by the marketing research subsystem.
3. The marketing decision support subsystem, which consists of statistical programs and
decision models that provide necessary information for businessmen, so as to help them take
the best marketing decisions5. Although the other subsystems of the MIS aim to the
systematic gathering, classification, analysis and distribution of the necessary information
towards the staff, the marketing decision support subsystem aims to feed information for the
unusual and non-standardized problems the decision makers meet (for example the transfer of
ships from one market to another during periods of a shipping crisis).

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4. The marketing information subsystem, which provides daily information relevant to
developments in the external enterprise’s environment, that is necessary for marketing
planning. The external marketing environment of a shipping enterprise is distinguished into
the micro and macro environment and consists of the forces that affect the capacity of the
enterprise to develop and to maintain successful transactions and relations with its clients.
The micro-environment includes all those factors emanating from the shipping market itself
and affect the chartering policy of charterers – shippers and the demand for sea transport
services. Such factors are the regulations instituted by the international maritime
organizations, the ports’ policies, the banks’ policies, the developments in sea borne trade
etc. The macro-environment includes all those factors caused by social forces and physical
causes, which do not originate from the shipping market but affect the demand of sea
transport services, as well as the buying behaviour of the charterers. The ship owning
companies must have the capacity to adapt their policy to the above forces, in order to meet
the changing requirements of the charterers and to satisfy their needs.

Phase Two: Analysis of Threats and Opportunities in Marketing Environment


The shipping marketing environment changes continuously, creating new opportunities
and threats. According to Kotler P. (1991), as a marketing opportunity is defined an
attractive arena for marketing action of a company, in which the company will have a
competitive advantage. On the other hand, environmental threat is a challenge presented by
an adverse trend or development in the environment, which can undermine the position of
the company if no appropriate marketing action is undertaken6. Threats in the shipping
marketing environment are caused by the institution of new IMO stricter regulations with
consequences in ship management as well as the reduction in the supply of able seamen
with an increase of wages as a result. Opportunities in the shipping marketing environment
are created by new technology, as well as by development of world trade. In order for a
shipping enterprise to draw up noteworthy marketing plans, it must firstly gather the
appropriate information concerning its internal and external environment and thereafter it
has to investigate the environment’s opportunities and threats. With the assistance of
information systems, shipping companies may review marketing strategies, in order to
exploit new opportunities, to avoid threats and satisfy their clients.

Phase Three: Shipping Market’s Segmentation


According to Evans M (1997), main objective of segmentation is to help the company
focus its efforts to the most promising opportunities7. The segmentation of the shipping
market is a behavioral one, since it is based on the buying behaviour of the charterers –
shippers. The market segments are based on the charterers – shippers’ needs for sea
transport of cargo with a specific type of vessel to a specific geographical region and
with specific chartering terms. The shipping market is constituted by separate segments
differentiated as to the type of cargo, the type of ship, the trade routes, the type and
duration of charter. In every segment the buying behavior of the charterers – shippers
presents common characteristics. The segmentation criteria are the following:
1. According to the type of ships, the shipping market may be divided into the Dry Bulk
Carrier, Tanker, LNG/LPG, Combined Carrier, Containership, RO/RO and Reefer Market.
2. According to the type of cargo, the shipping market may be broadly divided into the Dry
Bulk Cargo, Liquid Bulk Cargo, Specialised Cargo and General Cargo Market.
3. According to the type of trade routes, the shipping market may be divided into many
segments such as the market of Mediterranean Sea, the market of Caribbean Sea e.t.c.
4. According to the duration of the charter, the shipping market is divided into the spot
market and the time-charter market. According to the type of charter the market is divided

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into the Voyage Charter Market, the Time Charter Market, the Bareboat Charter Market
and the Contract of Affreightment Market.
Figure 2 presents the shipping market’s segmentation and the orientation of charterers’
behaviour in every segment.

Figure 2: Segmentation of Shipping Market

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 company’s 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

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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 segment’s 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 enterprise’s 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.

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2.2 The Stage of Planning
The planning of marketing includes the strategy planning and the programme planning of
marketing. Worsam M. (1998) defines marketing planning as the planned application of
marketing resources aiming to achieve marketing objectives10. The planning process
includes the following phases:
1. During the first phase, the missions of the enterprise as well as the business objectives
are determined. Most activity sectors of the enterprise aim at a mix of objectives that
includes increase of fleet’s effectiveness, improvement of market share, interception of
shipping risk, fixture of profitable charters etc.
2. During the second phase, the tracking down of the strengths and weaknesses of the
enterprise in relation to opportunities and threats from the external environment is
conducted. Therefore, in this phase, the company may understand its relation to the
shipping environment in which it is activated.
3. During the third phase the marketing strategies and programmes are determined.
4. The last phase includes the evaluation of expected results and the tracking down of
alternative marketing plans.
The planning of marketing ends up at a document called “marketing plan”. McDonald M.
adds that success of a marketing plan depends on the quality of information gathered during
the previous marketing process stages11.
Marketing strategies are the means by which a company achieves marketing objectives
and is related to the tools of marketing mix. Marketing mix is the sum of marketing tools
used by the enterprise in order to achieve its objectives in the target - market. The tools of
marketing mix for a shipping enterprise which is activated in tramp or liner shipping market
are: the Product (Tramp or Liner Service), the Price (Freight or Hire), the Process
(Negotiations’ Procedure & Execution of the Charter), the People (Office Personnel &
Ship’s Crew), the Place (Ports & Geographical Area of Ship’s Employment), the Promotion
(advertising programs), and the Physical Evidence (Ship’s Characteristics & Seaworthiness
of the Vessel). Additionally, a new tool of the shipping marketing mix is the “PAPERLESS
TRADE” and constitutes the eighth tool of the shipping marketing mix. Shipping companies
in order to respond fully to the demands of the competitive shipping market, is necessary to
use modern electronic communication means by which time, cost and effort are saved and
quality improvement in the services offered is achieved12. Figure 3 presents the shipping
marketing mix (the 8 Ps)

Figure 3: The Tools of Shipping Marketing Mix

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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 enterprise’s 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.

2.3 The Stage of Organization


The function of organization determines which objectives will be met and by whom. In
this stage, all the resources of a shipping enterprise are utilized, depending on the
demands and opportunities of the market. Appropriate individuals must staff the
marketing and sales departments. Persons employed in marketing departments should be
qualified with marketing knowledge, chartering knowledge and knowledge of shipping
financial policy. In addition, employers of marketing department should be updated with
regard to developments in shipping, economy and politics.

According to McDonald M. (1999), the operation of a typical marketing department is


not necessary for planning and controlling the marketing process13. This is the case in
small shipping companies that manage two or three ships where the general manager
understands the needs of clients in depth. However, as the enterprise’s fleet grows, the
spectrum of its services increase and the competitive pressures in global environment
are broadened, the need for organizing the marketing by a central body becomes more
and more imperative. The benefits of a marketing department are:
ƒ It ensures that every employee of the enterprise understands the marketing philosophy
and the policy of the enterprise and executes his duties according to it.
ƒ It plans the activities of the shipping enterprise concerning the market research, the
promotion and publicity of the sea transport services.

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2.4 The Stage of Implementation
A correct drawing up of the shipping enterprise strategy is achieved via rationally
planned business actions and via the provision of appropriate transport services. Marine
transport services are priced, promoted and offered to charterers for a payment of
freight. The action plans must be applied correctly, so that the proper transport service is
provided to the appropriate charterer, at the right time and port, with the appropriate ship
and at freight levels satisfying not only the shipping enterprise, but also its clients.
Marketing of shipping companies is the provision of appropriate sea transport services by
the right people (personnel and crew), to right people (charterers - shippers), at the proper
place (ports) and time, at a fair price (freight or hire), with a suitable promotion14.

2.5 The Stage of Control


The last step of the process is control, which includes the follow up of above actions
and the correction of any deviations. The shipping company needs processes of
measuring the marketing plans’ results and of re-feeding them in order to be ascertained
that objectives of the marketing department will be achieved. Control of the yearly plan
is the means by which one may be certain that the company achieves its marketing
objectives. According to Berkowits, Kerin, Hartley and Rudelius (1997), during the
control process the performance achieved is measured, a comparative analysis of
exemplary performance of marketing plans against current performance is carried out,
causes for possible deviations are sought and business measures are taken for their
correction15. The control may be preventive, if it precedes the marketing plan, parallel,
if the marketing plan is currently in progress, or repressive, if it is carried out after the
marketing plan’s implementation.

3. AN EMPIRICAL RESEARCH OF MARKETING IMPLEMENTATION IN THE LARGEST


TANKER AND LINER COMPANIES IN THE WORLD: RESEARCH METHODOLOGY
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 “benchmarking”17. 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 researcher’s 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

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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.

3.1 Empirical Research in the Largest Tanker Shipping Companies


The tanker shipping companies participating in the research were the following: Frontline,
Mitsui OSK Lines, Teekay Shipping, Worldwide, Overseas Shipholding, Bergesen, Tanker
Pacific Management, A.P.Moller – Maersk Group, Nippon Yusen Kaisha and
Angelicoussis Shiphld, which manage 73.8 mil. dwt (440 tankers), i.e. the 33% of the total
tankers tonnage in the world19. The above companies are the ten largest shipping companies
in the tanker market worldwide and they offer high quality maritime transport services.

How do they Perceive the Charterers’ Requirements?


The study showed that the largest tanker companies in the world have a very clear picture
of their clients’ requirements. All companies classify the charterers’ requirements in the
same manner with the one the charterers rank their needs. The tanker companies believe
that their selection criteria from a charterer is the provision of safe carriage of goods by
sea and the compliance of the company with international safety standards, regarding the
construction, operation and management of ship. The image of the shipowning company
in the market and the history of losses and damages, play a decisive role in the selection
of a tanker company by the charterer. The freight, though it is taken seriously into
consideration by the charterers, does not constitute the decisive factor for selecting a ship
owner. The largest tanker companies in the world have perceived that the decisions of the
charterers are oriented towards safety and not towards freight. This deep knowledge for
their clients’ transportation needs is due to two reasons. Firstly, the companies maintain
market research department, manned with experienced analysts, who provide to the
management the appropriate information concerning the charterers and secondly, the
companies apply a policy of maintaining good business relations with their clients.

Which Marketing Philosophy do they Adopt?


The largest tanker companies know that the charterers’ requirements are orientated
towards safety and so they have adopted the philosophy of social marketing. According
to Kotler P. (1994), the philosophy of social marketing presupposes that the duty of the
enterprise is to determine the clients’ needs and to provide the desirable satisfaction
more effectively and efficiently than their competitors, in a manner that promotes the
protection of environment20. Based on the above philosophy the tanker companies have
set the following objectives:
ƒƒ Primary aim of the companies is their compliance to the international standards of ship
safety and management.
ƒƒ The companies are specially sensitized in environmental matters resulting in paying large
amount of money for research and development of environment protection programs.
ƒƒ Another objective is to provide an appropriate chartering negotiation procedure, which
is based on the rules of honest negotiation, as defined by BIMCO.
ƒƒ The companies aim to provide high quality transport services. This includes appropriate
voyage planning, trade and itinerary flexibility, rapid voyage execution, rapid and correct
loading and unloading process and reduction of the “turn around” time to the minimum.
ƒƒ The companies seek to maintain good business relationships with charterers.

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Which Marketing Strategy do they Apply?
The largest tanker companies apply a high degree differentiated marketing strategy,
according to which they address to selected market segments by adapting their policy to
each one of them. Thus, the segmentation of the tanker market is based on:
• The type of cargo: they distinguish the market into two basic categories. The oil market
and the oil product market. The latter includes as many categories as the products are.
• The geographical field of tankers employment: various market segments ensue.
• The type and duration of charters: every charter market has a segment that includes short-
term charters (spot market) and a corresponding one, which includes long-term charters.
The needs of charterers are differentiated from market segment to market segment. The
appropriate marketing mix is offered in every market segment. The tanker companies use
differentiation strategies of transport service, in order to gain the preference of the charterers.
The tanker companies use geographical, quality, personnel and image differentiation. Their
competitive advantages that differentiate them from their competitors are the following:
ƒƒ Frontline possesses a large and modern fleet of tankers, which can meet the strict
legislation of the extremely sensitized environmentally regions. Frontline achieves
geographical and quality differentiation through its capacity to possess a high
technology fleet employed in any sea, without trading and geographical restrictions.
ƒƒ Mitsui O.S.K. Lines has created a strict management system called the “MOL
Environmental Management System”. According to this system, the crews are
trained at the simulation centers of the company. In addition, the ships are
constructed in such a manner (PBCF system) so that risk of the marine
environmental pollution is reduced, fuels are saved and speed is increased by 2%.
Mitsui obtained in 2003 the “Certificate of Environment Management International
Standards - ISO 14001”. Mitsui achieves personnel differentiation through the
application of continuous training programs, as well as quality differentiation
through the application of a strict environmental protection policy.
ƒƒ Teekay Shipping has created a marine management system, called the “Marine
Operations Management System”, which imparts the philosophy of safety
management to the entire organization. The system includes efficiency indicators for
constant monitoring and improvement of all enterprise’s operations. Teekay obtained
in 2003 the “Certificate of Environment Management International Standards - ISO
14001”. Teekay achieves quality differentiation through the application of a strict
safety management policy.
ƒƒ Worldwide spends large amounts of money for research and development of marine
environment protection programs. Its fleet includes high technology ecological tankers.
Worldwide won in 2003 the “Green Award”. Worldwide achieves quality differentiation
through the application of an environmental protection policy, as well as image
differentiation through the public acknowledgement of its active role in the environmental
protection efforts.
ƒƒ Overseas Shipholding Group applies a technologically advanced system for the unification
of management, of chartering department and of fleet, called the “OSG’s Networking
System”. The system coordinates the orders and actions at company and onboard the vessel.
The company obtained in 2003 the “Certificate of Environment Management International
Standards - ISO 14001”. Overseas achieves quality differentiation through the application
of technologically advanced intracommunication systems.
ƒƒ Bergesen gives high priority in maintaining a safe work environment for seamen. This
is achieved through maintaining a safety committee for each ship (Protection and
Environment Committee). The committees’ annual reports help the company in

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planning strategies for improving the work conditions and for increasing the ship
efficiency. Thus, Bergesen achieves quality and personnel differentiation.
ƒƒ 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.
ƒƒ 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.
ƒƒ Nippon Yusen Kaisha achieves quality differentiation through maintaining new,
modern and specialized fleet, which can provide safe, rapid, and reliable itineraries.
ƒƒ 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.

3.2 Empirical Research at the Largest Liner Operators


The liner companies participated in the research were the following: A.P.Moller – Maersk
Group, Evergreen, Cosco, P&O Nedloyd, NOL/APL, MSC, NYK, KLine, YangMing, and
Hapag Lloyd which manage 1,988,980 mil. TEU (703 containerships), i.e. 47.6% of the total
number of containerships in the world and the 35% of total TEU21. The above companies are
the ten largest liner operators and they provide high quality transport services. Empirical
research showed similar results to those showed for the tanker companies. It should be
noted that the liner operators were the first companies in the world, which understood the
importance of marketing and were the first, which applied improved marketing strategies.

How do they Perceive the Shippers’ Requirements?


The study showed that the largest liner companies in the world have a very clear picture of
their clients’ requirements. All companies classify the shippers’ requirements in the same
manner the shippers rank their needs. More specifically, the liner companies believe that
their selection criteria from a shipper are the voyage duration, the frequency and the
flexibility of the itineraries, the reliable execution of the transport and the immediacy of the
itineraries. The provision of a safe carriage of goods and the compliance of company with
the international safety standards are important selection criteria of the carrier by shipper.
The carrier’s image in the market and the history of losses and damages, play decisive role
in selecting the liner company by the shipper. The freight, although it is taken seriously
under consideration by the shippers, is not the decisive carriers’ selection criteria. This deep
knowledge of their clients’ desires are owed to the fact that the companies maintain good
business relationships as well as market research departments, manned by experienced
analysts, who collect the necessary information regarding the shippers.

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Which Marketing Philosophy do they Adopt?
The largest liner companies know that the clients’ requirements are orientated towards
quality. Therefore, the companies have adopted the marketing philosophy with the
market as a focal point, which according to Kotler P. (1994) presupposes that the duty
of the enterprise is to determine the needs of its clients and offer the desired satisfaction
more effectively and efficiently than its competitors22. Based on the above philosophy
the liner companies have set the following objectives:
ƒƒ Primary aim of the companies is the provision of high quality shipping services.
ƒƒ The liner companies give special emphasis to the provision of logistic services.
ƒƒ The next objective of the companies is their compliance with the international standards
of ship’s safety management.
ƒƒ The companies seek to maintain a good reputation and image among banks, insurers,
suppliers, agents and shippers.
ƒƒ The liner companies maintain advanced systems of transport monitoring and of
constant updating of shippers.

Which Marketing Strategy do they Apply?


The container is a means of cargoes’ transport, which is based on the system of unitization.
According to this philosophy, cargo is transported in identical units of standard dimensions
that are loaded and unloaded in the same manner, constraining the cost of transport,
packaging and handling to the minimum. The above – mentioned system leads to
uniformity of the transport service provided. However, in order to cover the different
transportation needs of shippers and to serve the specialized cargoes, special containers
were created. Thus, the largest liner companies of containerships apply a low degree of
differentiated marketing strategy. They address to selected market segments by adapting
their policy to each one of these. The segmentation of the liner market is based on:
• The type and volume of the cargo: the market is distinguished into two basic
categories. The market of standard containers and the market of special containers. The
latter includes as many subcategories, as the special containers are.
• The geographical field of containerships employment: a series of individual markets ensue.

The shippers’ needs are differentiated from market segment to market segment. In every
individual segment the buying behavior of the freighters displays common characteristics.
The liner companies understand the different needs the shippers have in the above market
segments and plan the appropriate marketing programs, so that they provide the desired
transport services. The appropriate marketing mix is provided in each segment.

The liner companies use differentiation strategies for the transport service, in order to win
the shippers’ preference. The liner companies use geographical, quality, personnel and
image differentiation. The competitive advantages of the largest liner companies that
differentiate them from their competitors are the following:
ƒƒ The A.P.Moller – Maersk Group possesses a large and modern fleet of containerships,
and manages a large network of routes servicing the needs of trade throughout the
world. In this way, the company achieves geographical differentiation. In addition, the
company achieves quality differentiation through the application of Safety and Risk
Management System. The company has won the awards “ISP”, “Customs-Trade
Partnerships Against Terrorist Validation Award”, “Maritime Excellence Lifetime
Achievements Awards”, and the “Transportation Safety Administration Award”.

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ƒƒ 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”.
ƒƒ 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”.
ƒƒ P&O Nedloyd, (like Evergreen), achieves quality differentiation through the
application of a technologically advanced EDI system between company and shippers.
ƒƒ 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.
ƒƒ 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.
ƒƒ 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.
ƒƒ 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.
ƒƒ 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

This article presents the stages of marketing implementation in shipping companies.


Marketing of shipping companies is the provision from the right people (the personnel
of shipping enterprise), the appropriate maritime transport services, to the appropriate
clients (charterers – shippers), at the right place (port or geographical area), at the right
moment of time, at the appropriate freight, with the appropriate promotion.
Additionally, the article attempts a comparative analysis of marketing implementation
in the largest tanker and liner shipping companies in the world. The empirical research
proved that the tanker and liner shipping companies - organization models in the world -
understand the importance of marketing implementation and apply improved marketing
strategies (differentiation, segmentation, promotional strategies). The marketing

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administration is carried out by a separate department, which undertakes the analysis,
planning, application and control of the marketing process.

Figure 4: Results of empirical research

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