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Relationship Marketing in Urban Public
Transport: A new approach for building
competitive advantages
Miguel Carmona
TIS.pt – Consultores em Transportes, Inovação e Sistemas, SA
9th International Conference on Competition and Ownership in Land Transport
Miguel Carmona | Lisbon | 7.09.05
Contents

Background

Core issues in Marketing theory

Marketing practice in UPT

A conceptual approach for the implementation of
Relationship Marketing in UPT systems

Main conclusions
Miguel Carmona
| Lisbon | 7.09.05
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Slide 2 | 10
Background

A generalised downward trend in UPT patronage both in the United States
and Western Europe.

Generalised financial problems – poor cost recovery performance.
Trends in urban mobility (Europe) poses demanding challenges to UPT managers
Source: Voyager project
Economic: Increasing rate of motorisation, urban sprawl, increasing energy costs and more
competition (between UPT operators).
Technological opportunities : Satellite navigation systems, E-Commerce and Tele-Working.
Demographic developments: Ageing of the population, smaller households and immigration to EU.
Social aspects: Lifestyle changes and social exclusion.
Miguel Carmona
| Lisbon | 7.09.05
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Core Marketing concepts (I)
AMA Marketing definition
UITP Marketing definition
Marketing is an organizational function and a set of
processes for creating, communicating, and delivering
value to customers and for managing customer
relationships in ways that benefit the organization and
its stakeholders.
Marketing is a targeted development of the
relationship between the company and its customers
or market, in which the business must, as far as
possible, create the conditions that make the
customer want to use as much as possible the service
being offered .
Emphasis on the relationship between the organisation and the
customer!
Miguel Carmona
| Lisbon | 7.09.05
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Core Marketing concepts (II)
Services Marketing Mix (7 Ps): Product, Price, Place,
Services
Marketing
Promotion, People, Physical evidence and Process.
The STP process: Segmentation, Targeting and
Positioning.
The Relationship Marketing perspective - is based in the
creation of value through the interactions between the
Relationship
Marketing
service provider and the customer, in which cooperation is
required to create the value that is desired by the customer
- has its roots, at least, in five research streams: services
marketing, business marketing, total quality management,
marketing channels and direct/database marketing.
Miguel Carmona
| Lisbon | 7.09.05
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Core Marketing concepts (III)
“Database marketing is a customer-based, information-intensive,
and long-term-oriented marketing method. A database can be used
to link and guide current marketing efforts as well as to build an
overall body of information to direct future efforts”.
Relationship
Marketing
Source: Jackson and Wang (1994)
Peppers and Rogers propose a Relationship Marketing approach one-to-one Marketing - based in 4 core processes:
•Individual identification of customers,
The
direct/database •Individual customer differentiation (by value and needs),
perspective
•Cost effective interaction,
•Customisation of services, by using comprehensive knowledge on
customer needs.
Miguel Carmona
| Lisbon | 7.09.05
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Marketing practice in UPT (I)
• Provision of information related with the UPT service is widespread in UPT (e.g online trip
planners, real time services information, etc).
•Communication and promotion initiatives aiming at creating a good image of the UPT service
or at managing the adoption of new service features by the customer (e.g. new ways of
payment) are often carried out. Informing the customer about the service offered and
persuading the customer to use the service seems to be top Marketing priorities.
• Activities beyond the Information/Communication/Promotion triad have also been identified
(e.g. flexible pricing schemes).
• Segmentation, targeting and positioning principles have been applied, but in the context of
communication rather than in the context of integrated planning of services.
Miguel Carmona
| Lisbon | 7.09.05
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Marketing practice in UPT (II)
Scarce evidence on the application of ICT enabled Relationship Marketing (MTR Hong-Kong
and development of prototype applications in the US)
Possible reasons…:
•Technological constraints - Technologies that allow for the automatic collection of individual
information on the use of the service are still relatively recent (e.g. contacless cards
applications),
•In many cases the lack of competitive pressure in the sector might partially explain the slow
pace of adoption of recent Marketing theory advances,
•Unclear perception on the benefits that the adoption of Marketing concepts can bring to the
organisation, by top management,
•Lack of a critical mass of Marketing expertise within the UPT sector,
•Unclear organisational frameworks and scattered responsibilities, in UPT systems.
Miguel Carmona
| Lisbon | 7.09.05
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A conceptual approach for the implementation
of Relationship Marketing in UPT
Link individual UPT
customer data over time
Legend
Individual identification – Current
or potential UPT customer
Urban Mobility Market
Mass
customisation
Statistical
analysis and
predictive
modelling
Expand
customer needs
Marketing
Database
Customer
differentiation by
value (exploiting data)
Production Communication
and
and Interaction
Logistics
Customer
differentiation by
needs (exploiting data)
Expand
organisational
capabilities
Core Capabilities of the
UPT System
Core Strategic Processes
of the UPT System
Primal drivers of
Relationship Marketing
in UPT services
Weight
of the
UPT System in the
Mobility Market
Communication and Interaction with the customer
Feedback - Learning from the customer
Teach the customer on how to use the services
Miguel Carmona
| Lisbon | 7.09.05
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Concluding remarks
•There is still a considerable gap between Marketing practice in competitive service
industries (e.g. banking, food retail distribution, etc) in particular in the field of
Relationship Marketing and CRM, and Marketing practice in UPT organisations.
•Migration of UPT systems to Relationship Marketing to be based on:
•Individual customer identification and linking individual customer data over time. The
combination of database and smart card technologies is the backbone of these
processes;
•Differentiation of customers by value. LTV or RFM models could be used for that
purpose;
•Differentiation of customers by needs;
•Cost effective interaction;
•Mass customisation.
Miguel Carmona
| Lisbon | 7.09.05
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Transportes, Inovação e Sistemas, S.A.
Av. da República, n.º 35, 6º 1050-186 Lisbon | Portugal | www.tis.pt
THANK YOU FOR YOUR
ATTENTION !
Email: [email protected]
Phone: + 351 21 350 44 00 / 07
Fax: + 351 21 350 44 01
Miguel Carmona
| Lisbon | 7.09.05
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