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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 Slide 2 | 11 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 Slide 3 | 11 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 Slide 4 | 11 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 Slide 5 | 11 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 Slide 6 | 11 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 Slide 7 | 11 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 Slide 8 | 11 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 Slide 9 | 11 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 Slide 10 | 11 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 Slide 11 | 11