Transport Company Marketing Plan

We all make use of the services provided by transportation companies. Now we are going to discuss a) transport for London, and b) First transforming travel. Both Companies are U.K’s Transportation companies.

First is the largest UK rail operator carrying 270m passenger every year. It operates rail passenger services and Britain’s largest bus operator services. In North America First is the largest provider of student transportation carrying 3 million students every day.

London underground ltd. Carry over 3 million passenger a day run 500 trains in the peak hours own 253 stations with over 12,000 staff. London bus network is largest and most comprehensive urban transport systems in the world. Each weekday over 6500 scheduled buses carry around 6 million passengers over 700 different routes, total of 1.7 billion passengers a year.

Now discussing to our two companies Strategy Planning is the managerial process of creating a business strategy to obtain a fit between the organisations resources and objectives and evolving market opportunities.

First is the leader in providing reliable, safe, innovative and sustainable transport services. Although First is a global business, it aims to be in its approach. This means that local issues are dealt with by the people live in local area. While in tfl a) Supporting economic development and population growth, b) Enhancing the quality of life for all Londoners, c) Improving the safety and security of all Londoners, d) improving transport opportunities for all Londoners, e) reducing transport’s contribution to climate change and improving its resilience, and lastly f) delivering for the London 2012 Games and securing a lasting legacy.

Before discussing the process of developing sound Business Strategy Plan, it might be pertinent to ask what a business strategy is in the first place. Business strategy, alternatively referred to as competitive strategy or just strategy, refers to taking decisions on the six key areas

1. The product markets in which the business is to compete.
2. The level of investment.
3. Functional strategies required to compete in the selected product market.
4. Functional strategies required to compete in the selected product Markets.
5. Developing suitable and sustainable competitive advantages.
6. Allocating resources over several business units.
7. Developing synergies between the different business units.

Now we will discuss the objective of studying the both of Travel Organisation

And will try to point out favouring /unfavouring with implementing PESTEL and Porter’s 5 forces. But before that we would try to focus on implementation of SWOT analysis of both the Organisation.

• (S)trengths:-

In UK to run a business would be simple if the director and the managers had to think about what went on inside the business. First travel employs over 1, 35,000 staff throughout in UK & North America and moves more than 2.5 billion passenger a year. For TFL strength already we have discussed. It has a vast experience to the people of UK, in their day to day life.

• (W)eaknesses:-

As we know First Travel deals with only some of the local part of UK. In the same way TFL is also dealing only some of the part of UK. Both of the companies can’t deal with globally which leads to weak global control over operations.

• (O)pportunities:-

Now a days people are more prices & spending conscious so if both of travel companies think globally there are more chances for growing in international Market. In world market both companies can expand their operations and can make good profit resulting in healthy stands in today’s competitive market.

• (T)hreats:-

TFL nowadays is so success that is why other local competitor are criticising the efficiency of company and they are trying to pull the leg behind.

Almost same is the situation with First Travel. We know both of companies are UK base so the key issue are same and SWOT analysis will be similar.

However business planners have also to understand what goes on outside the business. Businesses are able to identify external changes that may affect it by carrying out a PESTLE analysis. This is a business tools in which each of the letters in PESTLE describes a type of change that takes place in the external business environment.

Many of these external changes may be outside the control of the, like new government legislation. Some changes may present a threat to the business like competitor using new improved technology. Social changes may bring opportunities for example worker from outside country will bring new skills to the employment market. Environmental impacts such as emissions of smoke causing carbon dioxide. A business must assess what external changes are likely and which it needs to react to or take advantage of. Business planners can then create strategies to help the business respond effectively. We use the term Business Strategy to refer to a plan for a group of related products. First Travel & TFL Strategy relates to its transportation plans and takes into account the entire PESTLE factors in its environment.

PESTL Analysis

• (P)olitical Factors:-

Transport services are the heart of the UK economy which moves to people to school, colleges, job place and basic requirement at home, and businesses. In the year 1980s, the government started to private base bus services in the UK. It believed that allowing private firms to compete to run bus services would keep prices low and ensure companies would try harder to give customers what they wanted. The result has been more efficient, innovative and sustainable bus services.

Government operates at two levels -National level and Local level. First Travel believes in providing local solutions, therefore it concentrates on working closely with local government. Same way TFL is operates National level covering whole London & trying to cover UK also.

A key government policy affecting all transport services relates to the reduction of CO2 emissions, therefor the UK government has signed on an international treaty-the Kyoto Protocol. Countries which sign the agreement intend to the reduce the emission of harmful gases. This can succeed only through partnership with business. A good example of this is the government initiative to encourage more children to use Bus or Rail services rather than travelling to school by car or other means.

First as well as TFL both have produced a Climate Change Strategy which shapes every action the company takes. This is a part of vision to ‘Transform Travel’ It wants to change how people feel about public transport by delivering the highest levels of services and customer satisfaction. This involves recognising its responsibility to reduce CO2 emissions to as low as possible.

Tram, bus and rail travel create less pollution than other forms of transport, but there is still room to improve. Key element of Climate Change include:

• Improving the fuel efficiency of its vehicles
• Purchasing vehicles with greater fuel efficiency
• Using alternative fuels, such as biodiesel
• Operational improvements through driver training and new technology to monitor driver performance.

• (E)conomic Factors:-

Businesses need to make money to continue to exist. They do this by listening to customers to ensure they keep their customers and new ones with good services that customers want and need. First Travel changes in demand from customers, for example First responded to increased demand in the Neath valley in Wales working closely with the Neath Port Council to run improved services .Another good example for First travel designed to start special pilot services with the student in mind.

Londoners want more economical & improvement s such as the new London Over ground rail service, further reductions in the numbers of people killed and seriously injured on London’s road as well as the better air quality that the low omission zone will deliver. With more than 10 million journeys made each day on tube and bus alone, TFL’s challenge remains improving the level of passenger services while delivering the projects of its 10 bn. Pound Investment Programme.

Another economic factor affecting business is taxation. High tax on fuel encourages customers to switch from using cars to more economical nbus and rail transport. Congestion charges in cities like London also encourage drivers to switch to other forms of transport.

• (S)ocial Factors:-

Social changes may have a major impact on business:-

The number of older people in the UK is rising. There are more people with bus passes in this country than ever before. The local authority pays for providing service. Many elderly people prefer to travel by bus because it is convenient and safe.

Society’s habits and tastes are changing. People are more aware of the importance of the environment and becoming ‘green consumers’. Green consumer prefer goods and services that are environmentally-friendly and which have less impact on the environment. The green consumer, for example prefers to travel by bus or train than by air or in a large car.

People are now more mobile and travel more.

Following are some Statistics record produced by the Department of Transport pick out some major trends.

National Rail use increased, with 1.2 billion passenger journeys made-a rise of 8% on the previous year.

• Passenger journeys on local buses in UK rose by 4% in the year.
• Passenger journeys on light rail systems in UK increased by 9%.
• In London, bus and light rail passenger journey grew by 6% in the year.
• The average age of the national bus fleet fell from 8.4% to 8.1% years.

The market is growing and more people are realising the benefits of a more environmentally-friendly form of transport.

• (T)echnological Factors: –

Businesses are continually developing new technologies to provide the best solutions for the market place. Intelligent companies find out what the most appropriate technologies are for their businesses and use them. This is particularly true in transport.

A good example of this is in the provision of buses that lower the floor for the easy entry. These provide better accessibility for disabled and elderly people.

TFL has Docklands Light Railways (DLR) which uses an automatic train control system, which is monitored by the permanently staffed control centre located at Poplar. Signalling is based on the Seltrac system, developed by Alcatel (Canada), which uses the latest ‘moving block’ technology.

In other words we can say if the businesses adopt better technology results in a smooth running and making more profit.

• (L)egal Factors: –

Legal changes that affect business are closely tied up with political ones. Many changes in the law stem government policy. Many of these laws are Europe-wide for example, the standards for transport vehicle emissions. Another requirement is like companies need to buy Carbon Credits. These credits will permit companies to generate specific quantities of carbon emissions. A new front facing cameras to halt speeding motorists. The brakes are set up on speeding drivers who attempt to avoid penalty points.

Now from the above discussion it is possible to see PESTEL factors as threats. However First Travel and TFL both prefer to see them as opportunities. Social trends are creating increasing numbers of passengers seeking comfortable easy to access all types of transport means. Government pressure is encouraging more and more individuals to use public transport. Many people are seeking a ‘greener’ form of transport. A detailed PESTEL analysis helps both the companies to make appropriate plans to rise to the changing environment. Both the businesses are able to move forward with confidence and grow its business.

Porter’s Five Forces:-

As Porter’s 5 Forces analysis deals with factors outside an industry that influence the nature of competition within it, the forces inside the industries (microenvironment) that influence the way in which firms compete, and so the industry’s likely profitability is conducted in Porter’s 5 forces model. Understanding the nature of each of these forces gives organisations the necessary insight to enable them to formulate the appropriate strategies to be successful in their market (Thurby, 1998)

This analysis can be applied with the SWOT analysis of the firms. From the following Diagram of Porter 5 Forces we can get transparency of the analysis.

Diagram of Porter’s 5 Forces

SUPPLIER POWER

• Supplier concentration
• Importance of volume to supplier
• Differentiation of inputs
• Impact of inputs on cost or differentiation
• Switching costs of firms in the industry
• Presence of substitute inputs
• Threat of forward integration
• Cost relative to total purchases in industry

BARRIERS TO ENTRY

• Absolute cost advantages
• Proprietary learning curve
• Access to inputs
• Government policy
• Economies of scale
• Capital requirements
• Brand identity
• Switching costs
• Access to distribution
• Expected retaliation
• Proprietary products

THREAT OF SUBSTITUTES

• Switching costs
• Buyer inclination to substitute
• Price-performance
• trade-off of substitutes

BUYER POWER

• Bargaining leverage
• Buyer volume
• Buyer information
• Brand identity
• Price sensitivity
• Threat of backward integration
• Product differentiation
• Buyer concentration vs. industry
• Substitutes available
• Buyers’ incentives

DEGREE OF RIVALRY

• Exit barriers
• Industry concentration
• Fixed costs/Value added
• Industry growth
• Intermittent overcapacity
• Product differences
• Switching costs
• Brand identity
• Diversity of rivals
• Corporate stakes

(Source: gstatic.com)

Threat of New Entrants: – The UK Transport is primary dominated by few competitors. In our case study both of i.e. First Travel & TFL Both dominate the market though to survive in the market and if they are not better off to the passenger another private company may attack.

Barriers to Entrants: – Both the companies have made a very high barrier for new Entrants so it will be very much difficult for new companies

Bargaining Power of customer: – There are more chances of customer to have an alternative mode of transportation.

Bargaining power of supplier: – There are less chances of alternate of transportation but the customer are more price & convenience conscious.

The marketing Mix: – The selected target markets are targeted with a marketing mix which is a unique blend of product, pricing, distribution and communication strategies, created to produce mutually satisfying exchanges with a target market. Distribution is referred to as place and communication as promotion, thus giving us the four P’s of marketing of the marketing mix: Product, Place, Price, and Promotion. Over the years several more P’s have got added to the marketing mix such as Positioning, Packaging, People and Process. The strategies for each of components cannot be decided upon independently. The strategies must complement each other and blend together very well for the marketing plan to be successful. The best promotion strategy and lowest price cannot save a bad product. So also the best product will not sell unless there is an appropriate distribution and communication strategy in place.

If we apply the above marketing mix strategy in our both of our companies we can say that it will be very fruitful result.

Market Segmentation and Targeting: – A market segment is a group of individuals or organisations that primarily share homogeneous need as well as other common characteristics such as age, gender, income lifestyles or values. These common variables can run into hundreds and because of shared needs and characteristics, it likely that such individuals will have relatively similar product needs.

A marketing plan begins by identifying the various market segments in a given market. The next step is to conduct a segment attractiveness analysis depending on the size, sales potential and competitive factors. The firm now decides selects one or more segments that it chooses to target with its marketing strategy. A fundamental rule of marketing is that “If you are not thinking of your marketing in terms of target markets, you are thinking nothing.”

Conclusion: – In a nutshell we can say Business strategies are the basis of all marketing decisions and strategies of the firms. The goal of all business strategy is to achieve long term profitability and Sustainable Growth for the organisation.