An exploratory study of market segmentation in container shipping in Kenya
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Njoroge, Simon Peter
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Abstract
The ocean shipping market has been characterised by tremendous change since the advent of containerised liner shipping in the mid-1950s. Liner shipping firms are increasingly seeking to improve their positions in the market by retaining existing customers and attracting new ones with innovative product offerings. The ship owners and their management are obliged to operationalize specific concepts of marketing to secure and retain their competitive advantage and secure returns for their shareholders. One way to do this is to focus their efforts on distinct pockets of the market where customers with similar service requirements could be optimally targeted with the most attractive offers. By successfully segmenting its market, a carrier could derive greater value from capitalising on the potentially substantial future growth of export container traffic. The respondents for this study were drawn from the members of the Kenya Shippers Council and their carrier selection decisions investigated. Three service related aspects of containerised transport were related to the key exporter related attributes of freight bill, cargo volume and cargo type. The study undertook a logistic regression analysis of these factors to determine the significance of the relationship. The findings provide evidence of the existence of defined sets of export shippers for whom the selection of carrier is influenced by their export cargo type and cargo volumes. The study reveals that exporters with annual shipments of 50 forty foot equivalent units and annual freight bill of 50,000 US dollars should be targeted by ship owners and shipping line managers with service propositions focussing on reliability of service, safety of cargo and accessibility of services. The study contributes to a better understanding of the importance of and attitude towards market segmentation in the growing export of goods by sea from Kenya. A similar study would be useful for developing an understanding of customer segmentation in other modes of transport for the export of goods from Kenya and the rest of East Africa.