Customer segmentation strategy for rail freight market: The case of Turkish State Railways

Abstract

Deregulation in rail transport sector is creating new challenges for rail freight operators due to the new competitive environment, which is characterized by strong cost pressures and high expectations of customers. The level of cost pressure and expectations of customers might vary from segment to segment of the customers. Thus, in the light of different customer needs, differentiated segment strategies should be designed to compete with the new comers. Deregulation process has just started in the Turkish rail market with the new law recently entered into force in order to comply with the EU Directives. In the process of deregulation, the rail transport service providers can use customer segmentation in order to effectively apply differentiated marketing to certain target groups. This paper examines how the incumbent rail service provider (Turkish State Railways) could segment rail freight traffic customers (shippers and forwarders) based on their perceptions and expectations to cope with intra-modal competition to be faced in the future liberalized market. Six behaviourally distinct customer segments were identified. A multi-method approach consisting of desktop research, in-depth interviews, focus group meeting and cluster analysis was applied in this study.