Customer Segmentation Ideas

[DADSCMEP]

I'm a marketing advisor assisting a company that manufactures and sells a branded wooden shipping crate. The first challenge I'm trying to address is determining the best target market segments for their product. From their own past efforts and some primarily internet-based research, I haven't had much success trying to narrow the options. From automotive to aerospace to electronics, etc., any company (or the military) that needs to move and/or store heavy, high value or delicate products or parts looks like a candidate. I think their best opportunity is to follow a niche approach and isolate a few market segments where they can effectively position and differentiate themselves. Anyone have any suggestions? Not on which segments to target necessarily, but rather on a process of how to identify and qualify them (free syndicated market data, websites, trade associations, industry leaders, etc.)? Any ideas would be much appreciated.

[Admin]

Hi DADSCMEP,

The real problem in our industry is that there isn't a finite classification for us. Many manufacturers can designate themselves under various SICs. Also, many companies primary classification may be Moving and Storage or Furniture Manufacturing, etc. Many of the larger crating companies make crates as a secondary service although they may have 5- to 7-figure sales of wood containers. That's just scratching the surface of the categorization problem. It gets deeper.

So far as trade associations/publications, etc. go, we are it. There is Pallet Enterprise Magazine that dabbled in crating and many craters subscribe to it, but it is by far, mostly pallets. Some people have tried getting a crating trade organization together but it didn't hold up. I think in a few years the industry will be ready to come together.

Some crating companies have been very slow to embrace technology and basic business networking techniques. Many don't have metrics to guage their own success. Some older craters like to work 'off the cuff' while newer people who move into the industry are often more of engineers than MBA types. I'm not saying this is the case with all companies but it contributes to the problem that we, as an industry, have with a personal identity.

That being said, many companies have found their way based on the skills they have. Simply (and I would **** it if some people chimed in here and gave their opinion on my comments) if they're good engineers, they probably gravitate more toward aerospace and technology, while those with a better personality move more toward basic boxes and do more volume. Probably no surprise here. I've been in or near the industry for about 20 years and am possibly the only person who has the same presence in every aspect of the industry (aerospace, technology, moving vaults, stock boxes, mil-spec, retail, etc.) This is simply because of software that I developed is the only business tool available to benefit all crate makers.

The rules of the forum is that they generally can't be used to sell product, but Crate Pro Software is a unique and one-of-a-kind product. Setting aside the fact that I wrote it, I highly recommend it. Since the industry is very segmented into different categories, Crate Pro provides different benefits to different companies but one thing it does for most everybody is it allows the user/company to better understand and manage jobs that are outside of the company's core competencies.

Getting started, you may want to visit the Standards and Styles section of WCO. These can give you a feel for what you think your customer can or can't do. The standards can be very convoluted and difficult to get through, and are often contrary to each other. This, again, is where Crate Pro shines http://www.cratepro.com . The way it's written helps work around the problems with the standards.

Finally, we are planning a product that will help to consolidate the industry. Once complete, the product will enable crating companies to have a great deal of marketing data at their finger tips. We will also be able to consolidate raw data across the industry and have a better picture of where we stand and where to go.

I hope that answers your questions, at least in part.

Good luck!

[Crate Crazy]

Hey DADSCMEP, and welcome!!

Sorry for delay, have been on vacation. In addition to what Jeff has said.. oops sorry, I meant admin guy!

Finding "a process of how to identify and qualify them" is difficult no doubt. Some companies in the industry are using telemarketing, purchased resources/studies, direct mailing, websites etc.. to determine who is the best fit for their offering. In addition to the SIC like the admin mentioned, you can also use NAICS codes which may help in certain areas filter more suitable results.

A process in how to do it is every one of our question marks. I would suggest (since you are working with an already existing client) to look at all of their customers and group them into SIC/NAICS codes. Then you can filter based on sales volume to that customer/industry and ideally it will come up with a few SIC/NAICS codes that you may want to drill into more. Build off of successes... plus, its an easier sale for the salesmen since this is the industries they have had success in to begin with. Other than that, just get your sales guys to keep their ears/eyes open and look for referrels into different industries/customers.

Hope this helped.

/Carey