Tailor made. The best segmentation strategies don't just pay lip service to the approach, they organise their operations around addressing customer needs. Volvo Construction Equipment is doing just that, starting with Oil and Gas, as Clive Couldwell reports.



"In oil and gas, it's especially important that we make sure contractors are supplied with the machinery, vehicles and special purpose equipment they ask for at the right price, and with the support they need from day one," says Volvo Construction Equipment's senior vice president of Key Accounts, Lars-Göran Andersson.

Volvo has been targeting on-shore oil and gas customers since June 2007. There is a large demand for new pipelines from Central Asia to consumers in the West and China, as the clamour for oil and gas grows to satisfy energy consumption which has been forecast to grow from 421 quadrillion BTUs in 2003 to 563 quadrillion BTUs by 2010.

Over 157,000 km of new pipelines are currently being planned or are under construction. Says Volvo Construction Equipment's director of Oil and Gas Solutions, Bernard Quereillahc: "The North American, Russian and German projects have many big inch pipelines to lay. At the moment, there are long waiting time for competitor machines so we know there is an opportunity for Volvo."

But feeding the world's energy needs has challenges of its own. Volvo's customers are predominantly large contractors operating globally on some of the world's biggest projects. They usually find themselves embedded in the harshest of environments. "It's tough for the contractor and the supplier. You're facing conditions that are always changing, and working with people from different countries and cultures. Response times also have to be very short," adds Quereillahc.

Operators therefore demand a great deal from their suppliers: "Because customers are out on their own, very often operating in remote places, they must trust their machines, know how to handle them and rely on a small number of suppliers who can support them effectively," says Andersson. "Demands are much higher than in other segments because operators rely on their supplier for two years or more. Suppliers must also be prepared to provide as much equipment as possible to match the demands of the project. You're always being called upon to provide extra capacity, working to keep up with the schedule. If an operator is forced to stop for two weeks because you haven't got the machines, then that can really damage progress on the project."

Volvo Construction Equipment's approach to oil and gas is also being supported by specially-adapted machinery to lay heavy pipes which may be between 20 and 60 inches in diameter and stretch over long distances - anything from 700 km to over 7,000 km.

Created with oil and gas customers in mind, one of the key benefits of the company's new PL pipe layer range lies in the cost saving versatility of its design. Conventional track-type tractor platforms cannot be adapted for other uses, while the Volvo machines with their excavator platform are multi-purpose. When not being used for pipe laying, they can be quickly converted into a high production excavator, or used as a lifting tool in a variety of applications where their heavy lift capability - 20-30% higher than the competition - can be brought into play.

The five-model family also uses an on-board Load Management System (LMS) unique to Volvo which, in an increasingly health & safety conscious industry, makes the machines more stable as they move heavy pipe over uneven ground. "Working in remote areas where it's usually difficult to transport heavy loads, you can always take a bigger machine but then you have the problem of transporting it," says Quereillahc. Larger models in the PL range can self-disassemble and reassemble on their own in just over 30 minutes.

Although a relatively new market for Volvo Construction Equipment, oil and gas is clearly benefiting from the new segmentation approach. "The pipe layers are key machines for this market and open the door to other equipment opportunities. You can sell fleets of machines, in the hundreds, per project. Selling technology some countries have not seen before can also open up the market," says Quereillahc. "However, oil and gas is such a specialised market you must have price transparency. Unlike other industries, this is where the business is challenging. It's a small world and everyone knows each other, but projects are so big and demanding in terms of availability for parts and service that dealers involved will need lots of support from Volvo."