Tag: Segmentation

The Growth Story and Segmentation of Chemical Industry in India

The chemical industry in India is counted among those industries that began working immediately after the country’s independence in 1947. So, it is one of the oldest contributors towards the Indian economy. At present, the average annual growth rate of the industry is 12.5 percent.

The Indian chemical industry is divided into a number of segments and each segment has significantly contributed towards the overall growth rate of the industry. Various favorable factors have supported the industry to show desired progress rate. You can learn about these factors and have an overview of the industry from the following discussion.

It was till 1991 that India was a closed economy. However, the adoption of liberal policy in 1991 benefited most of the industries, including the chemical industry in India. Since then, the industry has gained recognition in the global economy. Today, it ranks 12th in the world in terms of production size. Also, the industry contributes 13 percent towards the total export from India at present.

It has been estimated that in the coming few years, the industry is going to attain the worth of 100 billion US dollars. To achieve this target, there is need for the improvement in the following areas:

  • More entrepreneurs are required to steer the industry on the path of expected growth.
  • Growth of the overseas sales network to help industrial chemical manufacturers in India to find international buyers.
  • Increase in direct employment within the industry.
  • Stress on chemical manufacturing knowledge and specialty.
  • Improvement in the health and safety standards.
  • Increased use of information technology in the industry.
  • And of course, the increase in specialty chemical plants.

The chemical industry in India is divided into various segments. Some of the main segments and their progress statistics are as below:

  • Inorganic chemicals constitute one of the major segments of the country’s total chemical production. A growth rate of 9 percent is recorded for the segment that includes alkalis, fertilizers and detergents as main chemicals.
  • Drugs and pharmaceuticals are among the most exported chemicals from India. This segment of the Indian chemical industry ranks at 4th position in the world. The growth rate of 8 to 9 percent is recorded by the segment.
  • Agro-chemical products include pesticides and fertilizers as the main chemicals in this category. The 10 percent domestic market growth rate is recorded by this segment.
  • Dyes and paints segment has a growth rate of about 12 percent. The segment also includes polymers and other related chemicals.
  • Petrochemicals in the Indian chemical manufacturing industry have the fastest growth rate of 15 percent.

Considering the growth trends in different sections of the chemical industry in India, one can easily place the industry among major contributors towards the overall growth of the country’s economy. To improve the sales network for the Indian chemicals, the manufacturers and suppliers need to rely upon the online b2b networks. The b2b directories are the places where small and medium sized chemical manufacturing enterprises can gain more benefits.

What is Customer Segmentation?

Like so many buzz words in business & marketing, “customer segmentation” is one of those terms that is interpreted by folks to mean many different types of things. If the word “segmentation” were blurted out in a room of 20 business people, chances are it would conger up 20 different images.

So what is customer segmentation, and how can it be used to propel one’s business?

Segmentation defined

Customer segmentation is a method for grouping customers based upon similarities they share with respect to any dimensions you deem relevant to your business – whether it be customer needs, channel preferences, interest in certain product features, customer profitability, etc.

The key is for you, the marketer, to first decide on what basis you wish to segment your customers (or prospects for that matter). And, the only way to answer this question is to first determine what your objective is for the segmentation, and thus what you want the segmentation to “do for you”.

Common segmentation objectives

Common objectives for segmentation include but are not limited to: the development of new products, the creation of differentiated marketing communications, the development of differential customer servicing & retention efforts, channel strategy, and the maximization of profit/ROI for existing products.

Once you have decided what your objective is for the segmentation, you can answer the question, “what do I want the segmentation to do for me?”

A brief example: segmenting for customer winbacks

Let’s say you worked for a subscription-based magazine such as Time Out New York (TONY). Your boss has asked you to optimize TONY’s retention strategy utilizing the current save tactic of sending people who have recently canceled their subscriptions (aka “attritors”) 1 of 3 “win-back” mailers. This existing save tactic has been employed by TONY for the past 2 years, and the method for determining which attritor receives which mailer has been based largely on “intuition” (aka random selection).

Your first step in undertaking this project would be to clearly state your objective. Your objective, as per your boss, is to optimize TONY’s retention strategy for recent attritors. This is shorthand for saying, “I want you to maximize your return on your retention-dollars invested”.

Without getting into the nitty gritty of the approach, what you essentially want to do is determine the relative ROIs for each of the 3 mailers at the individual attritor level. For each mailer, you then want to identify those attritors with high ROIs (i.e., those attritors who re-instated their TONY subscriptions after receiving the mailer and provided you with future profits that well-exceeded the cost of the mailer).

Next, for each win-back mailer you want to identify those attributes which the high-ROI attritors have in common, essentially creating a profile for “high-ROI attritors” for each mailer.

The final step is to operationalize the three profiles you’ve created so you can use them to determine which of the 3 mailers, if any, to send to future attritors. This essentially entails implementing a process in which new attritors are matched up against the 3 profiles to determine which, if any, best describe them.

A more sophisticated approach would be to build predictive models that would calculate the expected ROI for each mailer for each attritor, and then send out the mailer with the highest expected ROI to the attritor. And, for those attritors in which all 3 mailers have negative expected ROIs you might choose not to send any win-back mailers.

Closing thoughts

In closing, segmentation can be tricky and complex, and no doubt requires a great deal of expertise & experience. Putting in place flawed segmentation strategies can be far more detrimental to a business than not having them at all. However, when designed the right way, segmentation strategies can provide tremendous returns relative to one-size-fits-all approaches.

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