Eight ways equipment suppliers can segment the tank terminal market with laser precision

- 3 Mar 2022

Segmentation is key to maximizing profits in the tank terminal market

The terminal tank industry is a vast global market with highly diverse geographic locations. Pinpointing the right contacts for sales leads can feel like looking for a needle in a haystack and overwhelm even the most-seasoned pros. Segmenting the market helps you narrow down your prospects so you can target and position your company, and develop a strategy for each segment. Ultimately, market segmentation will save you time, effort and resources while maximizing profits because you only focus on contacts that provide the best and most lucrative opportunities.


Eight major segmentation factors

There are eight overlapping segmentation factors which provide the most support when selecting high yield targets. Beginning with the broadest variable, geographic location, from there you can narrow down to the next variable and establish which contacts present the most opportunity.

1. Identify geographic location category and scope

By starting with a geographic location, you can then categorize it under either region, country, or port before determining whether the segment selection is the right size for your sales activities. If the geographic location does not warrant allocating resources because of its size, you can reduce the scope by selecting another category, or by adding a nearby location to expand the scope of your target market.

2. Applying demographics: six underlying factors

After geographic location, demographic segmentation gives an indication of similar purchasing patterns and interests. For the tank terminal market, there are six demographic factors that determine purchasing patterns and should be taken into account in every equipment supplier’s market research. These factors are tank capacity, tank quantity, tank type, terminal access modes, cargo types, and the size of the terminal operator.

3. Determine tank capacity

Tank capacity or size is an indication of terminal size and/or terminal operator size. Larger terminals will require more equipment and are often more complex, which means they are more reliant on software and automation. However, an equipment supplier can also specialize in the market for smaller tank terminals which carries its own niche opportunities. Tank capacity is also an indication of the product being stored.

4. Calculate tank quantity

In addition to tank capacity, tank quantity can indicate a company’s size or what is in storage. The average capacity per tank can be calculated by dividing the total tank size by the number of tanks. A high average tank capacity indicates that simple, less volatile products are being stored such as crude oil, while a small average tank size indicates that very volatile and complex liquids are being stored.

5. Identify tank types

Terminal operators use different types of metal depending on the product being stored. This prevents and minimizes corrosion and prolongs the economic lifecycle of the tanks. Hydrocarbon liquids are primarily stored in tanks made of mild steel. More corrosive and/or volatile hydrocarbons and chemicals are stored in coated, stainless steel tanks.

6. Determine access modes to terminal

Various modes of transportation can be used to access a terminal: barge, sea, truck, rail and/or pipeline. By determining how a terminal is accessed ahead of time, you will be able to identify potential leads rapidly, especially if you offer specialized products and services to the tank terminal industry.

7. Identify the types of cargo used

Tank storage specifications depend on what type of material is being stored. It is essential for their market segmentation strategy that equipment suppliers identify what type of products are being stored at which terminal ahead of time to determine whether there is a demand for their products and services. Not only does this save you time and effort in your sales strategy, it allows you to focus on those contacts where real sales potential lies.

8. Establish the terminal operator’s size

Large terminal operators with several terminals will have more bargaining power which is important to take into account when determining your market strategy and pricing. Larger companies often have a centralized sourcing and purchasing policy that is set out by their head office where the global vendor list is drawn up. If you are listed as a preferred supplier on the vendor list, it is corporate policy worldwide that you are the first supplier to be contacted. Being awarded such contracts can generate a great deal of business so investing large amounts of time, effort and resources in leads and negotiations up front can be very profitable in the end. However, if you are concerned about whether you can meet the demands of scale required by a global terminal operator, smaller terminal operators can also offer interesting business opportunities. The lines of communication with smaller operators tend be more flexible and shorter, which allows you to develop a more customized and personal approach per operator, and in some cases even per terminal.

The eighth factor: targeting terminals under construction or expansion, planned investments or decommissioning

Projects that are under construction or have been announced indicate demand and growth potential for equipment suppliers. This also applies to the market for decommissioning. These opportunities require a different strategy than markets where replacement demand is more common and should be factored in ahead of time.

Market segmentation pays off

According to a study by Bain & Company, more than 80% of C-level leaders claimed that segmentation is essential for growing their business. Organizations with a segmentation strategy in place showed better earnings than companies that did not follow a segmentation strategy. Equipment suppliers and service providers in the tank storage industry should segment their market in homogenous groups and make a well-thought assessment of which segments to target. With a segment-based marketing and sales strategy, their message will resonate better and will ultimately lead to better earnings.