Executive Summary
Primary Problem: OC Transpo’s unreliable and disrespectful service contradicts their mission statement to “deliver safe, reliable, and courteous service at a reasonable price”, making customers dissatisfied and unhappy with their transportation services.
Target Segment: Demographic segmentation by age was chosen, dividing the segment into five groups; children under the age of twelve, youth under eighteen, young adults under thirty-five, adults under sixty, and seniors over sixty.
Alternatives
Marketing campaign for the Light Rail Transit, reducing the need to purchase vehicles which in turn, decreases the amount of pollution being emitted.
Marketing campaign to improve communication with customers by bettering their mobile application and adding entraining screens in primary bus stations.
Recommendation: The recommended alternative is the marketing campaign for the implementation of the Light Rail Transit since it provides effective solutions to OC Tranpo’s main problems.
Implementation:
Problem Statement
According to their website, OC Transpo’s mission statement is “to deliver safe, reliable, and courteous service at a reasonable price”[1]. Despite their substantial ridership, OC Transpo has a notorious reputation for unreliable and rude service, which is evident on their Twitter and Facebook page. The reputation that proceeds the company is the problem that the following marketing plan will address.
Situational Analysis
An assessment of the company’s environment was conducted in order to identify the internal strengths and weaknesses and the external opportunities and threats of the company that impact its success. The company’s microenvironment is made up of OC Transpo itself, corporate partners (taxi services and the municipal government), the competition (STO Québec and Uber) and the customers. The macroenvironment considered has several elements; culture, demographic, social/natural, technological, economic and political/legal. In each environment, these factors either help OC Transpo reach its mandate or hinder it.
In the microenvironment, OC Transpo’s strength is its practical monopoly of public transportation; it offers several different services (LRT, O Train, Para Transpo) and is accessible to a large number of customers (ridership in 2015 was estimated to be 97.3 million)[2]. Their competitors threaten them, however, with a less expensive product; STO serves downtown Ottawa for almost $15 less a month[3]. Another competitor, Uber, has the advantage of a more comfortable and private – a town in Florida even cut public transit costs in favor of subsidizing Uber instead[4]. Their Corporate partners, however, have offered OC Transpo opportunities to challenge their competitors, such as the government’s Gas Tax incentive and the partnership with Blue Line and Capital Taxi through Taxi Link and the Taxi Coupon Program, which provides OC Transpo customers with easy access to taxi services. Lastly, the customers in OC Transpo’s environment, though numerous, are a threat to the company’s success because of how vocal they are on social media.
In the macroenvironment, the technological advances in OC Transpo’s industry have contributed as a strength and a threat to the company. The Presto card is a strength because it contributes to the numerous “ways to pay” but also a threat, because the technology is complicated to use, not reliable for payments and inconvenient[5]. OC Transpo’s demographic is also a double edged sword; everyone can take public transportation, which makes it difficult to cater services. The demographics served through their fare discounts are seniors/disabled (Para Transpo), university students, youth and families[6]. Economics have affected fares as well, with a more standardized cost applied to each “way to pay” and a new low-income pass available[7]. This is a strength for OC Transpo, as it adds value to their services by making them accessible to all. Culturally, Ontarians expect companies to be increasingly environmentally friendly. This is an opportunity for OC Transpo as public transportation does cut on emissions, but it is also a threat because their fleet is using regular gasoline, instead of being electric or diesel.
Segmentation Analysis
OC Transpo serves the population of Ottawa with over nine hundred busses[8] on routes extending from the far east at Orleans to the far west at Kanata and from Barrhaven south of Ottawa to Gatineau at the north. The population of the city of Ottawa is 947,031[9], of whom about 24 percent[10] use public transportation as their main means of traveling in the city.
2.1. Market Segmentation
The market in Ottawa can be segmented using different approaches. In this report however, we focus on demographic segmentation by age. Other approaches for segmentation can be found in the appendix.
2.1.1 Demographic Segmentation
OC Transpo users in Ottawa can be divided into five different age groups: Children under the age of twelve, youth under eighteen, young adults under thirty-five, adults under sixty and seniors over sixty. Children under the age of twelve rarely travel on their own. They travel with their parents, older siblings or other adults. They are also financially dependant on their young parents still in their early stages of career path. The second segment is youth under the age of eighteen or teenagers. Teenagers are considered to be still financially dependant on their parents. Youth usually live at households with their parents at suburban areas and their ridership is usually localized to the areas around where they live. The third segment is young adults between the age of eighteen and thirty-five. Young adults slowly become independent of their families and move out to go to University or College or pursue a career. They don’t have stable incomes at their early stages and rely on government funding or part time jobs to take care of their living expense. They usually live in apartments or student housings at areas close to their educational institutes or place of work. They use busses to commute to classes and work but their usage is at a peak during the school season and is at its lowest during the summer season. The fourth segment is adults. Adults are those with established careers who are financially independent with full time jobs and stable incomes. Adults at their early stages live in apartments in the urban regions, then as they start families and move up the corporate ladder, they move to suburban areas and live in households. Adults use public transportation on daily basis to commute to work all year long creating peak rush hours in the morning and the afternoon on weekdays. Many people in this segment however, as they become wealthier, tend to buy cars and use them to commute instead of relying on public transportation. The fifth segment of the OC Transpo market is seniors over the age of sixty. Seniors use public transportation less frequently as they are mostly retired and do not need to commute to work. Seniors segment is expanding in Ottawa and is projected to reach about 20 percent of the population in 2030[11].
2.1.2. Primary and Secondary Segments
We will focus in our analysis on demographic segments by age. A primary market segment for OC Transpo is young adults between the age of eighteen to thirty-five. This segment makes for more than twenty-nine percent of ridership. It is comprised mainly of U-Pass holders who hold about nineteen percent of the market[12]. Many people in this segment usually exit the market when they graduate and find full time jobs that pay well. They buy cars and rely on them in their daily commute. It is hence a continuing challenge for OC Transpo to retain those customers in the long run and develop customer loyalty among them. Working adults are another primary market segment. Over twenty-seven percent of the monthly passes sold are regular passes6 which are sold for adults who are not students nor seniors. These two primary segments are up to date with the latest technologies and use internet and other cellular data more than the other segments. For that reason, promotion measures to penetrate these segments are similar. The place aspect of marketing however is different between those two segments since young adults live primarily in urban areas and adults live in suburbs. Adults living in suburbs would appreciate an improvement to express lines more than those living in urban areas and rarely use express buses. Price is also another aspect that differs between those two segments. The U-Pass program saves students a lot of money because they are usually low on funds. Working adults however can afford to pay a higher price for a monthly pass since they tend to be more financially secure.
The other three demographic segments are less significant because they possess a smaller share in the market. Seniors tickets are subsidized heavily and count for small revenue for the company. In addition, seniors do not ride the bus on daily basis to commute to work since a significant amount of them are retired. Teenagers under eighteen are also less frequent users since they rely on school busses mainly to get to school and use the bus occasionally to go to shopping malls or on trips around the city. Finally, children under twelve rarely use the bus on their own and do not generate a significant profit for the company.
2.2. Perceptual Map
Aligning with the mandate of the company which is “to deliver safe, reliable and courteous service at a reasonable price” a 2D perceptual map can be drawn. The two axes of the map would be affordability and convenience. OC Transpo hopes to be perceived by the users of its service as an affordable and convenient way of transportation. It can be seen from the problem statement discussed earlier that OC Transpo is not where it wants to be right now and so this marketing plan should aid the company in reaching their desired position on the perceptual map.
2.3. Competitive Advantage
OC Transpo has a competitive advantage in the city of Ottawa because it provides a service that is less costly than its competitors. Its buses also rely on using the Transitway which is much quicker than other congested roads during rush hours. Competitors like Uber still cannot compete with OC Transpo services because their services are much more expensive to use even though those services are much more personal, quicker and thus more convenient during regular hours.
Strategic Alternatives
The solutions proposed in this analysis will be targeting the young adults segment discussed earlier. In regard to the segment needs and wants, people in this segment need a method of transportation which is easily accessible at a fixed and accurate schedule and is faster, cleaner, and affordable. Below are the two solutions considered in this analysis and a swot anaylsis for both alternatives is found in the appendix.
1) Marketing Campaign for the Light Rail Transit; new, modern and green alternative.
The Light Rail Transit will be a huge step forward for OC Transpo to take a good advantage of the newly proposed Gas tax program[13] which is an external opportunity mentioned in the swot analysis. It will also reduce the threat of more people buying new vehicles leading to more pollution which will be attractive to green customers. It will focus on several goals that will make the lives of the customers in the target market easier, satisfying, and increase the revenue of OC Transpo[14]. The train will reduce the number of people using buses, which will definitely enhance the accuracy of the bus trip schedules. The campaign will focus on how the train will enhance the customer’s quality of life by providing them with a safer method of transportation. It will also raise awareness on how the targeted customers will save a money as there will be no more need to buy a car and pay for gas. It will also include all the needed details about the available subscriptions and the methods of payment for the customers[15]. Since most of the people aged 18-35 are more up to date with all of the technological advances, one of the most effective ways to make sure that the market campaign reaches customers will be by using social media. Advertising on social media is less costly than any other means of advertising[16]. As a result, the LRT marketing campaign will lead to an increase in the number of the customers, decrease the number of people buying cars, and therefore result in a huge increase in revenue and will most importantly improve the poor reputation of OC Transpo addressed in the problem statement.
2) Marketing campaign to improve the methods and means of communication with the customers.
The marketing campaign will be mainly focused towards enhancing the methods and forms of communication with the customers of the target market, which will in return result in customer satisfaction and an improvement of the reputation of OC Transpo. The campaign will be focused on two main goals and objectives:
a) The improvement of OC Transpo’s phone application.
b) The addition of entertaining screens in major bus stations with all the schedules of the trips available on the screen.
The improvement of the OC Transpo application will make the life of the customers much easier. Lots of OC Transpo’s customers are using an alternative application called “bus buddy”[17] as they find it more user friendly. A better OC Transpo app will not only make the life of customers easier, but it will also reduce the threat of the Uber competition mentioned in the swot analysis. Improving and enhancing the phone application will attract more customers to use the application. More users of the application means that more customers will be aware of any delay or change in any trip ahead of time, and so they will be more satisfied and the reputation of OC Transpo will be improved.
The addition of entertaining screens in the stations will be a very good way to communicate with the customers waiting for their buses. Not only will it let the customer know exactly when will their bus arrive , but it will also entertain the customers by displaying different shows, movies, songs, etc.. This will also lead to customer satisfaction and improve OC Transpo’s reputation. The improvement of OC Transpo’s mobile application and the addition of entertaining screens will attract a lot of customers, the number of people buying cars will decrease, and the revenue of OC Transpo will increase with relatively low costs.
Recommendation
Deciding upon which alternative to implement was based on a number of criteria. Firstly, and most important, the extent to which the alternative goes to the root of the problem and solves it was analyzed. Another criterion that was considered was reliability in terms of each alternative’s costs and feasibility. Finally, the required implementation time is considered.
The first alternative, the introduction of the Light Rail Transit service, provides an effective solution to the marketing problem. The train will reduce congestion in buses and customers’ anger and dissatisfaction with scheduled services. Put differently, the LRT is a potentially successful solution. Improving OC Transpo’s bus application and installing entertaining screens are good means of maintaining disgruntled customers; however, doing so is only a short-term solution. In other words, even if customers have access to scheduled bus arrival times and entertainment facilities at stations/stops, delays due to congestions would still occur.
The second criterion is the degree of reliability of each alternative. While the introduction of the train is a viable option for OC Transpo after detailed analysis of the project, installing entertainment screens on each and every station might not prove to be cost effective. Since not so much is known about budget allocation for installing entertainment screens, this alternative is not as reliable as the train. However, updating and enhancing the mobile application should still be considered to lure away customers using bus buddy app18.
In addition to these two criteria, the time required for implementation is an important factor to take into account when choosing between the two alternatives. OC Transpo is already using the slogan “on track 2018” to communicate to customers the train’s operation date. Having such a clear target gives the first solution an advantage over installing entertainment screens. Installing screens in stations would still require further investigation into how much time would be required if it were to be done. Given that annual University of Ottawa enrollment rates have been increasing since 2006 and are expected to further increase annually[18], implementing the LRT becomes an essence in the near future.
As evident from the above discussion, the best recommended alternative is the implementation of the LRT. A decision criteria grid is included in the appendices to numerically support this choice. One possible drawback resulting from the implementation of this alternative is associated costs. For example, train operation and maintenance costs should be taken into account by OC Transpo. In order to compensate for such costs, ticket prices should be high enough to cover costs; however, they should still be reasonably priced and provide value from a customer point of view.
Implementation (don’t need to write 7 p’s. only the 4 P’s as follows)
Product:
Price:
Promotion:
Place:
Conclusion
Although OC Transpo describes themselves as being a safe, reliable, and inexpensive public transportation service, their reputation according to customer review does not claim so. As a result, based on the alternatives described above, implementing the Light Rail Transit alternative is the most advantageous option for OC Transpo to increase customer satisfaction and conveniency. On the other hand, it is still recommended to improve their phone application in order to facilitate customers’ daily commute. Despite the high costs associated with the LRT alternative, it is better for the environment, better for traffic congestion, and most importantly, better for all OC Transpo users.
Appendix
Environment
Positive
Negative
Internal
Strengths:
· Light Rail Transit[1]:
-increase capacity by 11,000
-increase frequency to every 3:15 min
· O Train[2]:
-10,300 daily passengers
· Safety measures[3]:
-yellow call boxes
-Passenger Assistance Alarms (PAAs)
-Safe Stop protocol
· Fares[4]:
-multiple payment methods (tickets, passes, presto card), value depending on use
-discounts: seniors, youth, university students, children
-multiple purchasing locations: online, on the bus, third party vendors, OC kiosks
-new simplified fares, more equity
· Para Transpo[5]; accessibility for seniors and disabled
· Park n Ride[6]:
-facilitates commuting
-7,000 free spots
-Gold Permit Parking: $57 per month, guaranteed parking space
Weaknesses:
· Municipal government Funding[7]:
-a lot of red tape when trying to make improvements
· Construction of LRT[8]:
-disrupted service
-new routes lead to confusion for passengers
-longer/detoured routes are nuisance for passengers
-loss of convenience when stations are closed
· Frequent service changes[9]
External
Opportunities:
· Relationship with Corporate Partners[10]:
-local businesses invest $240 million into LRT in 2013
· Gas Tax[11]:
-Government incentive program
-$20,000,000 in funding[12]
-2 cents of every litre goes to expansion and improvement of services
· Taxi link[13]:
-relationship with taxi companies Blue Line and Capital
· Taxi Coupon Program[14]:
– accessibility for Para Transpo customers
Threats:
· 4/5 commuters use private vehicles[15]
· Société de transport de l’Outaouais[16] :
-competition in downtown core
· Uber : competition
· Social Media Backlash :
-#octranspo on Twitter[17]
-Social Media Comment Policy[18]
· Presto Card:
-issues with service
-confusion upon implementation
-easy to get away with not paying
Segmentation Grid
Segmentation by Demographics (Age)
Demographic
Characteristics
Important points to consider
Children (under 12)
· Dependant on family members
· Rarely ride on their own
· Fares must be low because they are dependable on their young parents
Youth (12-18)
· Dependant on family
· May use the bus to commute to school
· Live with parents in suburban areas
· Their commute is mostly limited to the areas where they reside
Young Adults (18-35)
· Primarily university students
· No stable income
· Use the bus to commute to classes or work
· Live in student housing or apartments in urban areas
· Alternative options include using Uber, taxi service
· Most significant segment as they
Adults (35-60)
· Stable income
· Live in households outside downtown area
· Alternative options include owning and driving a car
· Use the bus to commute to work
· Other uses include grocery shopping
· Create rush hours in the morning and the afternoon
· Tend to buy cars and drive to work as they become wealthier
Seniors (60+)
· No stable income, they live on their savings
· Due to old age, cannot drive everywhere
· Senior segment is expanding in Ottawa
Geographic Segmentation by Place of Residence
Geographic Segments
Characteristics
Urban Residents
· Employed residents and students can either bus, bike, or walk to work or school
Suburban Residents
· Need the bus or other means of fast transportation to travel long distances to work or school areas
Rural Residents
· Not serviced by busses
· Must drive to their destinations
Behavioral Segmentation by Rate of Usage
Behavioral Segments
Characteristics
Students who live far from school
· Use the bus to commute to school during school season
Employees who live far from work
· Use the bus to commute all year long
Convenience shoppers
· Use the bus a few times a week to go shopping for groceries and other items
Perceptual Map
Swot analysis of two strategic alternatives:
Strategic alternatives
1) Marketing Campaign for the Light Rail Transit; new, modern and green alternative.
Strengths
· Increase in the customer’s numbers
· Improve the reputation
of OC Transpo
· Safer method of transportation
· Reduced traffic
Opportunities
· Take advantage of the gas tax program imposed by the government
Weaknesses
· Costly.
· loss of convenience when stations are closed
Threats
Reduce the number of people buying cars
· Over take Uber in the customer’s mind
2) Marketing campaign to improve the methods and means of communication with the customers.
a)The improvement of OC Transpo application
b)The addition of entertaining screens in major bus stations with all the schedules of the trips available on the screen
Strengths
· People in the target market are up to date with technology, which will lead to more users of the application; customers will be aware of any delay in their trips
Opportunities
· Increasing the revenue of OC Transpo by offering advertising opportunities to other companies on the screens present in the stations and on the app.
Weaknesses
· Will not solve the actual problem of bus trips not running on time as scheduled.
· Threats:
R Reduce the competition arising from other applications such as bus buddy.
· Reduce the competition arising from Uber.
Figure “number”: University of Ottawa Increasing Enrollment
Decision Criteria Grid (Appendices)
Solution Effectiveness
Degree of Reliability
Required Implementation Time
Overall Score (/10)
Importance Weight
0.4
0.4
0.2
Light Rail Transit
10
8
8
8.8
Mobile Application/ Entertainment Screens
6
4
5
5
Endnotes
[1] OC Transpo. 2015. Confederation Line: Ottawa’s Light Rail Tranit System. November 18. Accessed January 20, 2017. http://www.rpicibic.ca/documents/2015_RP_NW/Presentations/OTrain_Confederation_Line_Projec t_Update.pdf.
[2]–. 2017. O-Train Trillium Line. Accessed February 20, 2017. http://www.octranspo.com/index.php/routes/o-train- trillium-line.
[3] –. 2017. Safe Travels. Accessed February 20, 2017. http://www.octranspo.com/safe-travels.
[4] –. 2017. How to pay. Accessed January 20, 2017. http://www.octranspo.com/tickets-and- passes/how_to_pay#daypass.
[5] –. 2017. Para Transpo. Accessed February 20, 2017. http://www.octranspo.com/accessibility/para_transpo.
[6] –. 2017. Gold Permit Parking. Accessed February 20, 2017. http://www.octranspo.com/routes/gold_permit_parking.
[7] –. 2017. Funding. Accessed February 20, 2017. http://www.octranspo.com/index.php/about-octranspo/funding.
[8] –. 2015. Confederation Line: Ottawa’s Light Rail Transit System.
[9] –. 2017. Live Transit Updates. Accessed February 20, 2017. http://www.octranspo.com/index.php/updates/#general_sc.
[10] –. 2015. Confederation Line: Ottawa’s Light Rail Transit System.
[11] Ontario Ministry of Transportation. 2017. Gas Tax Program Service Commitment. February 21. Accessed February 25, 2017. http://www.mto.gov.on.ca/english/service-commitment/gas-tax-program.shtml.
[12] OC Transpo. 2017. Funding.
[13] –. 2017. Safe Travels.
[14] –. 2017. Taxi Coupon Program. Accessed February 20, 2017. http://www.octranspo.com/accessibility/taxi_coupon.
[15] Statistics Canada. 2016. Commuting to work. September 15. Accessed February 20, 2017. https://www12.statcan.gc.ca/nhs-enm/2011/as-sa/99-012-x/99-012-x2011003_1-eng.cfm.
[16] Société de transport de l’Outaouais. 2017. STO – Société de transport de l’Outaouais. Accessed February 20, 2017. http://www.sto.ca/index.php?id=2&L=en.
[17] Twitter. 2017. #octranspo. Accessed February 20, 2017. https://twitter.com/search?q=%23octranspo&src=tyah.
[18] OC Transpo. 2017. Social Media Comment Policy. Accessed February 20, 2017. http://www.octranspo.com/index.php/about-octranspo/comment_policy.
[1] OC Transpo. About OC Transpo. 2017. Assessed January 20, 2017. http://www.octranspo.com/about- octranspo
[2] Pearson, Matthew. OC Transpo ridership budges second half of 2014. February 12, 2015. Assessed January 27, 2017. http://ottawacitizen.com/news/local-news/oc-transpo-ridership-nudges-up- in-second-half-of-2014
[3] OC Transpo. Fares. 2017 Assessed January 20, 2017. http://www.octranspo.com/tickets-and- passes/fares
[4] Brustein, Joshua. Uber and Lyft Want to Replace Public Buses. August 15, 2016. Accessed January 20, 2017. https://www.bloomberg.com/news/articles/2016-08-15/uber-and-lyft-want-to-replace-public-buses
[5] Presto Pain. Does paying with PRESTO feel like getting a root canal? 2017. Accessed January 20, 2017. http://prestopain.ca/
[6] OC Transpo. Fares. 2017. Accessed February 20, 2017. http://www.octranspo.com/tickets-and-passes/fares
[7] Ibid.
[8] Ibid.
[9] City of Ottawa. 2014 Annual Development Report. Ottawa: City of Ottawa: Planning and Growth Management. Research and Forecasting Unit. June 2015. Accessed February 20, 2015. http://documents.ottawa.ca/sites/documents.ottawa.ca/files/documents/adr_2014_en.pdf
[10] OC Transpo. 2011 Marketing Plan. Accessed February 20, 2017. http://ottawa.ca/calendar/ottawa/citycouncil/ec/2011/02-07/OC%20Transpo%20Marketing%20Plan%202011%20doc%202.pdf
[11] City of Ottawa. Growth Projections for Ottawa 2006-2031. Prospects for Population, Housing and Jobs. City of Ottawa: Department of Planning, Transit and the Environment. Accessed February 20, 2017.
[12] OC Transpo. Reports and Stats 2014. Accessed February 20, 2017. http://www.octranspo.com/about-octranspo/reports
[13] “Ontario Ministry of Transportation.” 2017. Gas Tax Program Service Commitment. February 21. Accessed February 25, 2017.
[14] “The Benefits of Light Rail.” March 2017. Accessed March 13, 2017. http://bomanovascotia.com/wp-content/uploads/2016/03/Ottawa-Benefits-of-Light-Rail-.pdf.
[15] “Simplified fares.” Welcome to OC Transpo. Accessed March 13, 2017. http://www.octranspo.com/ready4rail/simplified_fares
[16] “Traditional Media vs. Social Media Advertising – Cost Comparison,” LYFE Marketing, , accessed March 13, 2017, https://www.lyfemarketing.com/traditional-media-versus-social-media/.
[17] Dunkelman, Laurence. “BusBuddy Ottawa on the App Store.” App Store. November 01, 2016. Accessed March 13, 2017. https://itunes.apple.com/ca/app/busbuddy-ottawa/id492498405?mt=8
[18] University of Ottawa.” Institutional Research and Planning”. Accessed March 22, 2017. https://www.uottawa.ca/institutional-research-planning/file/162
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