Customer Segmentation: Packaging Industry

Part
01
of two
Part
01

Customer Segmentation Approaches: Packaging Industry

Information on ways that B2B packaging companies segment their customers and differentiate product offerings is not available. It is likely that the information on approaches is considered a competitive advantage, and thus, no companies within the packaging industry have clearly laid out their ways to segment the customers. We have, however, provided some useful insights below.

Helpful Findings

Customer Segmentation in B2B Markets

  • A common approach in business-to-business markets is to apply a market segmentation based on company size.
  • The consumption levels of business-to-business customers are so widely different that this often makes sense due to large companies usually thinking and acting differently to small ones.
  • When it comes to customer segmentation, in B2B organizations, marketers focus on job title, industry verticals, whether the business is public or private, how large the company is, and what its buying patterns are.
  • Horizontal segmentation, which requires looking at job titles regardless of industry, enables organizations to focus more on the needs of the people working in specific roles.

B2B Customer Segmentation Challenges

Some of the challenges are:

Research Strategy

The research team started looking for information by first checking articles, blogs, journals, among others, from the websites that specialize in publishing information on B2B marketing because customer segmentation is a part of it. We were hoping to find information specific to packaging companies from these portals. We checked portals like B2B International, Search Customer Experience, Technology Advice, Digital Commerce 360, among others, for the information. While we came across many approaches for B2B customer segmentation, none were specific to the packaging industry, and all were in general. During the research, we found an article, which includes insights from research conducted by Imperial College London that looked at the effectiveness of two psychographics-based approaches for B2B Customer segmentation. However, this was more about how effective the psychographics-based approaches would be compared to the firmographics approach. Hence, the information was not found through this strategy.
We then moved on to check for case studies on b2b packaging companies. The focus here was to find case studies on B2B packaging companies' customer segmentation, then collate 3–4 such case studies and present the best available approaches combined all the studies found. We checked for case studies on companies like B2B Industrial Packaging, Amcor, Crown Holdings, International Paper, Owens-Illinois, among others, in sources like Business Grow, Magento, B2B Marketing, among others. But not a single case study was cited that could be used to present the information directly or could be used to determine the data based on any possible logic or assumption available in the case study or otherwise. Hence, this strategy could not be used further.
As a last option, we tried to find interviews from the management of some of the earlier identified B2B packaging companies. The idea here was to find their interviews that cover information on how their company segments their B2B customers. This was considered because, at times, management interviews cover information, which otherwise may not be available in reports or other publications. Checking on interviews from Ron Delia- Managing Director and Chief Executive Officer at AMCOR, Michael Casamento Executive Vice President, Finance, and Chief Finance Officer at AMCOR, Timothy J. Donahue President and Chief Executive Officer at Crown Holdings, Gerard H. Gifford Executive Vice President and Chief Operating Officer at Crown Holdings, Mark S. Sutton- Chairman and Chief Executive Officer, International Paper, among many others, in sources like Forbes, CNN, Biz Journals, Institutional Investor, and many such sources. We were unable to find any interviews covering information on how these companies segment their B2B customers and how they further do the product offering.
Part
02
of two
Part
02

Customer Segmentation: Case Studies

B2B packaging companies segment their customers and differentiate their product offerings differently. Beverage companies such as Crown Holdings, Inc. and Ball Corporation have different customer segmentation strategies and different product offerings.

Crown Holdings, Inc.

  • "Crown Holdings, Inc., through its subsidiaries, is a leading global supplier of rigid packaging products to consumer marketing companies, as well as transit and protective packaging products, equipment and services to a broad range of end markets."

Customer Segmentation
  • Crown Holdings, Inc. has organized its business within three geographic divisions: Europe, Americas, and Asia-Pacific.
  • The company's segments within the Americas division include Americas Beverage and North America Food; In European Division, there are European Beverage and European Food; and the Asia-Pacific region consists of beverage cans, non-beverage cans, food cans, and specialty packaging.
  • Other segments include specialty packaging business in Europe, aerosol can business in Europe and North America, and the tooling and equipment operations in the United Kingdom and the United States.

Product Offerings Based on Specific Customer Segments
  • The following are the product offerings from Crown Holdings, Inc. within the three geographic market segments: Americas — Food cans, beverage cans, aerosol cans, specialty cans, glass bottles, and closures and caps; Europe — Food cans, beverage cans, aerosol cans, specialty cans, closures and caps, and can-making equipment; Asia-Pacific — Food cans, beverage cans, aerosol cans, specialty cans, and closures and caps.

What they did
  • Crown Holdings, Inc. began the construction of a new high-speed, online beverage can plant in Rio Verde, Brazil to capture the growing market of beverage cans there. Operations here were expected to begin by the fourth quarter of 2019.
  • New production of aluminum cans meant for beer and non-alcoholic beverages were commenced at a new facility in Valencia, Spain in October 2018 to meet the growing demand there.
  • In Cambodia, a third line production of aluminum beverage cans commenced at the existing Phnom Penh facility in January 2019.
  • Production beverage cans "began in the fourth quarter of 2018 at a new one-line plant in Parma, Italy."

Why
  • The new production of beverage cans in Rio Verde was meant to enable the company continue to grow its market share there as beverage can is growing against returnable glass in Brazil.
  • New production in Spain was meant "to meet the growing demand and preference for aluminum cans for beer and non-alcoholic beverages in the Iberian region."
  • The third line production of aluminum beverage cans was initiated in the existing firm in Cambodia to support the growing consumer preference.
  • The company's production of beverage cans commenced in Italy in order to add to its "widespread presence in Europe where the beverage can market grew at a compound annual growth rate of 3% for the five years ending in 2018."

Results
  • The new production in Rio Verde drove volume up 7%.
  • Segment income went up $10 million in the quarter and it benefited "from numerous cost improvement initiatives offsetting the decline in volumes."
  • Unit volumes in European Beverage improved 5%, primarily from the two new facilities in Italy and Spain offsetting softness in Turkey and the UK.


Ball Corporation

  • "Ball Corporation and its consolidated subsidiaries is one of the world’s leading suppliers of metal packaging to the beverage, food, personal care and household products industries."

Customer Segmentation
  • The company's customer segmentation is as follows: "(1) beverage packaging, North and Central America; (2) beverage packaging, South America; (3) beverage packaging, Europe; (4) food and aerosol packaging and (5) aerospace."

Product Offerings Based on Specific Customer Segments
  • Ball Corporation's product offerings as already mentioned include "(1) beverage packaging, North and Central America; (2) beverage packaging, South America; (3) beverage packaging, Europe; (4) food and aerosol packaging and (5) aerospace."

What they did
  • Ball Corporation decided to capitalize on the rising demand for beverage cans through investing in capacity and products. The company expected capital spending to reach $600 million by 2019.
  • Ball Corporation continues to execute its strategies of achieving better value for standard products and higher growth for specialty products.
  • The company also decided to focus on cost-cutting actions in order to bolster margins.

Why
  • The focus to capitalize on the rising demands for beverage cans was meant to boost growth.

Results
  • "The company expects to achieve EBITDA of $2 billion and free cash flow of more than $1 billion in 2019, backed by continued strong demand for aluminum packaging and robust aerospace backlog."
  • The Beverage Packaging business for the company in South America is also expected to improve by 2019 as beer customers are shifting from glass packaging to aluminum cans.


Research Strategy

First, we started our search by looking for top B2B packaging companies and here, we managed to find a number of lists of these companies.

Since the research criteria suggested that we should focus on B2B packaging companies that offer standardized products with minimum variations among key players and price as a key selection criteria for customers and if required, we could expand to B2B companies that offer standardized products in general, we decided to focus on B2B beverage packaging companies. From the lists we found earlier, we selected some companies and checked their background information and finally we managed to settle down on two B2B beverage packaging companies namely, Crown Holdings and Ball Corporation.

We then went ahead to search for case studies on how these companies approached their customer segmentation and differentiated their product offerings. We managed to get this information from different websites and the companies' annual reports.




Sources
Sources

From Part 02
Quotes
  • "Crown Holdings, Inc., through its subsidiaries, is a leading global supplier of rigid packaging products to consumer marketing companies, as well as transit and protective packaging products, equipment and services to a broad range of end markets."
Quotes
  • "Production beverage cans began in the fourth quarter of 2018 at a new one-line plant in Parma, Italy. "
  • "New production in Spain was meant to meet the growing demand and preference for aluminum cans for beer and non-alcoholic beverages in the Iberian region."
Quotes
  • "Segment income went up $10 million in the quarter and it benefited from numerous cost improvement initiatives offsetting the decline in volumes."
Quotes
  • "Ball Corporation and its consolidated subsidiaries is one of the world’s leading suppliers of metal packaging to the beverage, food, personal care and household products industries"
Quotes
  • "The company expects to achieve EBITDA of $2 billion and free cash flow of more than $1 billion in 2019, backed by continued strong demand for aluminum packaging and robust aerospace backlog."