2 Global Market Segmentation for Logistics Services

While logistics services have become a significant source of competitive differentiation between firms, significant challenges exist relative to developing logistics service offerings for global business customers. Diverse regulations across borders, longer lead times, and increased transportation costs all add to the difficulty of managing logistics services internationally. As a service offering, logistics is often characterized as having intensive customer contact, extensive customization requirements, and a reliance on extrinsic cues for service performance. Because of these qualities, logistics services are also subject to cultural influences that exist in crossborder trade. In this paper, we argue that Logistics Service Quality (LSQ) components can be used to identify global, horizontal, and vertical segments of logistics services customers, and that cultural and organizational characteristics may modify the LSQ/Customer Satisfaction relationship. By identifying specific customer segments, some which may transcend national borders, logistics managers can benefit from reduced costs, enhanced revenue, and the ability to differentiate their offering from the highly competitive marketplace.