A Market-Based Approach to Competing With the Car Sonora CA

Business icons such as Starbucks and Wal-Mart or even your local car dealership have used market research for the past half century to develop and deliver products and services designed specifically to meet customer preferences. Successful, consumer-focused companies work hard to understand their customers' values, attitudes and preferences. Over the years, market research has become more sophisticated and effective at ensuring companies provide what customers want. So why can't public transit take a similar approach?

Thanks to a commitment from our board of directors and senior staff led by President and CEO Fred Gilliam, Capital Metro is taking an innovative, private-sector approach to identify and target specific market segments and understand what it will take for people in those segments to choose public transit instead of our primary competitor: the car (and especially here in Texas, the truck).

Working with an expert team of consultants from Cambridge Systematics, NuStats Research and Sherry Matthews Advocacy Marketing, Capital Metro is surveying 1,000 central Texans to more fully understand their daily travel-related attitudes, preferences and choices. The process includes two parallel efforts. The first seeks to understand the critical attitudes and tradeoffs of all potential travelers, and will result in identifying key target markets. The second phase, which has not yet been contracted, will describe the transit competitiveness of every neighborhood in Capital Metro's service area. The first phase of the project is nearing completion. Cambridge Systematics' analysis helps us immediately tailor marketing campaigns and messages to the appropriate audience.

"We apply this in-depth understanding of both customers and markets to position effective transit service tailored to specific conditions in each travel market," said Cambrige Systematics' project lead, Chris Wornum. "We then will provide tools for Capital Metro to not only design and implement services in each travel market, but to also develop a relevant and meaningful marketing campaign to attract more riders."

Just as in any private business, Capital Metro understands that in our universe of potential customers, not all are the same. Unlike our private sector counterparts, however, Capital Metro and most of our peer transit agencies have not applied the sophisticated techniques private companies use to divide their potential customers into discrete market segments. Our project will query households about their attitudes and sensitivities toward their local travel experiences. For example, how much do people value their privacy when they travel? How important is it to feel safe? Is reliable door-to-door travel time important? By understanding how important such attitudes are for a representative sample of the entire potential transit service customer base, we will group them into distinct market segments that provide the most useful understanding of the services we must provide to attract riders from each segment. Once we know how to segment the universe of potential customers, we will determine each segment's concentration by neighborhood.

The study helps us quantify the tradeoffs each segment will make in choosing among a range of travel modes. For example, how much will ridership change for each dollar increase in transit fare or minute of headway? What is the likelihood that there will be a seat available? Or, what will be the effect of providing next-bus arrival times at each stop? Understanding these tradeoffs will help Capital Metro staff and policymakers provide the right amount of attention to each characteristic of its service.

Capital Metro and our peer agencies must provide the right service from the right origin to the right destination. Very few private businesses face such a complex challenge. Origin-destination pairs constitute unique travel markets that have a host of specific conditions.

"The market segmentation study and later, the service planning software tools will enable Capital Metro's planning team to take the first step in developing a set of sophisticated metrics, which provide robust transit market conditions indicators and opportunities for each neighborhood in a transit agency's service area," said Wornum.

Using this comprehensive understanding of potential customers and each travel market, Capital Metro planners will be able to design the optimal transit services to the specific travel market conditions, while the marketing team will develop a highly targeted campaign to attract new customers. This effort, known in the private sector as competitive positioning, has demonstrated that some markets can attract much higher transit ridership with the appropriate service coupled with cooperation from local governments. Strategies may involve a specific mix of transit priority measures (including exclusive right-of-way, signal preemption, queue-jumping lanes, bus bulbs, etc.), land use conditions (density, mix and design), parking policies (both cost and supply), and improvements to the pedestrian environment.

Capital Metro understands it must provide transit service from the "right" origin to the "right" destination that appeals to a specific customer. Designing such perfect-fit transit service is a challenge that the agency is eager and ready to take on.

Todd Hemingson is VP Strategic Planning & Development and Rick L'Amie is VP Marketing, both for Capital Metro.