Page 4: Market segmentation
Castrol operates in a tough competitive world in which winning businesses are those which best understand the needs of the market. Castrol knows that the route to success lies in providing the best products for different segments of the market. One way that the market is segmented is by product category - motor cars, motor cycles, trucks, leisure boats, and aircraft.
Another way is to segment according to geographical region. Although Castrol is a global supplier of products enabling it to maximise economies of scale (i.e. lower production costs), it also recognises the importance of understanding the specific needs of customers in distinct regional and local markets. The Castrol organisation is therefore divided up into a number of geographical markets.
These different areas are characterised by groups of consumers with different needs, for example:
- Incomes in the United States are higher than in Western Europe and cars are typically larger. Here Castrol will supply the oils that are required by the car manufacturers that supply to North American markets.
- Roads and climate are different in Central Africa than in Northern Europe. For example, in Central Africa, motor vehicles may have to contend with bumpy roads, blazing heat and tropical thunderstorms.
- In Northern Europe car engines have to be designed for frozen winter conditions.
Another type of segmentation is by the type of vehicle user.
- A young affluent city worker may want to purchase a car (and hence car engine) that is a status symbol.
- In contrast, a first time driver, or young person may want a car which represents their growing independence.
- A young family may want a car which enables them to transport a growing family in a safe and comfortable way.
Castrol needs to carry out research to find out the best types of oils to suit the vehicles for these different market segments. This involves close partnership with the Original Engine Manufacturers to provide the high-tech oils to meet the needs of high quality engines.
Castrol's guiding principle is to provide the oils that give users peace of mind in different contexts. For example, the purchaser of a high specification car will want to know that the engine can cope with a range of challenges - from long distance driving, city driving, and even in some cases to racing (Castrol has been the number one oil of choice for racing driving for many years). A young mother who takes her children to playgroup will want the peace of mind of knowing that her car will not break down - so having the right oil is a key consideration of safe motoring.