Management & Operations

How to Sharpen Your Market Research Strategies

Posted on April 1, 2001 by Jon LeSage, of Abrams Travel Data Services

Effective market research can mean the difference between unqualified success and abject failure. Unfortunately, the failures are more memorable. Remember New Coke, for example? Or how about McDonald’s McRib sandwich? Or, more recently, how about the XFL? Marketing decisions in the public transportation arena rarely have such a high profile, but transit agencies and OEMs use market research for a variety of purposes: improving customer service and ridership loyalty for transit system users, spec’ing and ordering new buses, developing transit routes to attract new riders and effectively spending advertising dollars. Because public transportation agencies operate within a political environment, market research can also provide valuable feedback as to how much (or how little) support local taxpayers are willing to extend to the transit agency. A good survey or focus group can offer transit planners critical data on the community’s opinions about the transit system. Listening pays off Using market research data, Long Beach (Calif.) Transit (LBT) launched a bus line that has been a big success—but might have gone down in flames if the research was not performed. About 10 years ago management at LBT was considering historic trolley-type buses for a new downtown route designed to improve transportation to the city’s developing downtown shopping and tourism district and out to the suburban residential communities. System riders and local residents told the agency they would prefer something different—something modern and eye-catching that would symbolize a growing, evolving city, not one stuck in the past. Transit planners listened and began a system now called Passport, which had about 40,000 riders in 1991, its first year of operation, and which served about 2.5 million riders last year. More than any other organization interviewed for this article, LBT is a believer in the power of market research data. The agency conducts a full-range of research activities, including an annual survey of riders and non-riders, focus groups for special purposes and ongoing rider surveys using part-time employees with clipboards at bus stops and paper forms placed on buses. LBT is recognized nationally for its service levels and effectiveness, much of which comes from changes emanating from market research findings, says Rhea Mealey, manager of marketing. About 15 years ago, the agency decided to begin its annual survey process, and in the meantime added other research activities. Long Beach is a diverse community in the Los Angeles metro area with an older, developing downtown; inner city, multi-ethnic neighborhoods and business districts; and affluent shopping and residential districts. “The city has large Spanish- and Cambodian-speaking populations, which makes market research more challenging, but all the more important,” Mealey says. The agency uses outside market research companies to carry out telephone surveys of non-riders and occasional focus groups, but prefers to do most ridership surveys using part-time employees and questionnaires distributed at bus stops and on-board buses, she says. Valuable data can also come from other sources beyond surveys, says Bill Coryell of North American Bus Industries (NABI). Automated fare boxes, GPS systems and other technology offer transit agency management a whole range of data that can be used in combination with market research reports. This additional data allows transit management to better understand a gamut of operational and marketing issues, such as usage volumes on particular bus routes and barriers and challenges to increasing ridership on those routes, Coryell says. Targeting advertising For the Pace Bus Co., which operates suburban bus service for the Chicago Regional Transit Authority, market research data is critical for maximum effective usage of advertising dollars. Pace conducts user and non-user surveys on an annual and as-needed basis to carry out its media planning functions. Demographic data gleaned from telephone surveys and paper surveys distributed by bus drivers and through onboard display racks offers Pace information for intelligent targeting of radio spots and various newspapers for ad placement decisions. Demographic factors such as age, ethnicity and education level allow for more precise media targeting, says Blaine Krage, a Pace spokesperson. Pace will also tie in promotional campaigns in targeted communities in conjunction with these advertising spends. Market research data also lays the foundation for promotional campaigns, Krage says. Studying market research data also enabled Pace to implement a successful special-purpose bus service that brought new riders to the system, Krage says. Buses now carry residents of Chicago’s outlying suburban communities into the downtown area for special events such as Bears football games and the Chicago Auto Show. Survey respondents indicated frustration with traffic congestion and parking for those events and expressed interest in using a specialized bus service. Researching bus orders In addition to using market research data to develop new routes and instill customer loyalty, LBT also uses it to refine its bus ordering strategies. As an outgrowth of its Passport service, LBT is now in-fleeting 30 Chance Coach Opus low-floor buses. Long Beach, along with Charlotte, N.C. and Oklahoma City, used market research data to make the Opus ordering decision, says Fred Gilliam, executive vice president of Chance. Chance, in turn, did its own market research when developing the Opus bus line. Chance did in-depth interviews with bus users over the phone and in person, usually during industry conventions and meetings. Those interviews and discussions helped the manufacturer spec out the bus during the R&D phase, Gilliam says. Chance purchased the original design from an Irish company, which made several modifications to adapt the bus to U.S. market requirements. Chance has an exclusive arrangement with that company and owns the design, and has similar agreements with subcontractor component manufacturers in the U.S. that supply bumpers, seats and other equipment, Gilliam says. Through customer interviews and from data collected from transit agencies surveying their customers, Chance determined that three factors were most important in the development of the Opus: high visibility, a comfortable seating arrangement that doesn’t look like a typical bus and a good climate-control system for the driver and passengers. Chance is looking forward to rolling out and delivering its first orders throughout this year, Gilliam says. Polling customer segments Thomas Built Buses is another manufacturer that believes in the value of market research. Thomas Built conducts customer research mainly through in-depth interviews over the phone and one-on-one. That includes interviewing maintenance technicians, bus drivers and operations managers out in the field. That type of market research helps Thomas Built identify its primary customer segments for product development and strategic marketing purposes, says Jeff Shank, commercial product manager. That approach allowed Thomas Built to focus on and better serve its three primary customer segments:

  • Cities with populations of more than 250,000 that prefer 35- and 40-foot buses. This is the company’s largest customer segment.
  • Smaller communities with more limited transit budgets looking for bus alternatives such as 30-footers with economical operational characteristics. This segment can also include specialty customers, such as university campuses, looking for low-floor buses and buses shorter in length than typical urban transit buses.
  • Car rental companies and airport parking companies needing 30-foot, low-floor and cutaway-type products. These buses need low-floor access for passengers hauling luggage, as well as a tight turning radius. Besides the in-depth interviews conducted on an as-needed basis, Thomas Built also does follow-up surveys with customers 60 days after delivery of new buses. Along with providing more market research data, that is also an effective customer service technique, Shank says. Building community buy-in Along with the various strategic planning benefits gleaned from market research, the feedback process can also generate a certain amount of support for a transit agency, says Barry Barker, executive director of the Transit Authority of River City (TARC) in Louisville, Ky. “The issue is engaging people in the neighborhoods in the process and giving them a stake in the finished product,” Barker says. TARC uses a full-range of market research activities, including paper and telephone surveys and focus groups. One of its more effective, recent research experiences involved placing various buses in front of city buildings and encouraging feedback from passers-by. That in-depth, qualitative research approach helped TARC decide to acquire more low-floor buses. One user segment that TARC was able to successfully engage in the research and feedback process is the disabled community, Barker says. During a recent period of contract renewal in its paratransit bus service, TARC brought in leaders of disability organizations to develop the RFPs and evaluate the proposals. That approach allowed TARC to develop an inclusive dialogue with members of that particular community, and eliminated some of the miscommunication and dissatisfaction with past policy and operations decisions, Barker says. Another successful research activity is surveys of agency employees. TARC does that occasionally and attempts to survey workers from all aspects of employment with the agency. “This process allows us to go beyond the chronic complainers and understand the genuine workplace concerns and issues,” says Barker, who says it also helps TARC management improve conditions and generate more buy-in and loyalty among employees. ***************************************** Managing Your Own Market Research Project There are numerous reasons to conduct market research projects, including improving service, increasing rider loyalty and gauging public perceptions about transit for planning and implementing a new marketing strategy. However, market research isn’t cheap, and must be carried out in an effective, intelligent manner to be worthwhile. The following action plan can assist you in setting up and running your own project: 1. Define Goals and Objectives The starting point in market research is to focus, as much as possible, on the end result. What data do you want and how will you use it? Don’t worry, at this phase, how you will get the data. You must first visualize exactly what you want to do with the market research findings. For example, your transit agency may want to attract new riders in a particular suburban neighborhood. You decide that you would like to understand why these area residents are not using bus service so that you may make system changes to attract potential riders. 2. Determine Your Budget Range Many organizations, public or private, do not include budget line items for market research; the funds may come out of the marketing budget. Whatever the source, it’s imperative that you at least understand a general range of funds you can expend for this project. Going through this exercise will help you determine the methodology and scope of your research project and whether it would make more sense to do the research in-house or to outsource the project. Telephone surveys are the most commonly used market research methodology for the type of research you’ve identified—gauging non-rider perceptions of the bus system. For this example, let’s assume you need to collect a minimum of 200 completed surveys from your suburban area residents. If you outsource the project, most full-service market research companies will charge between $15,000 and $30,000. 3. Define Logistics and Methodology How will you carry out the research project and collect the data you need? What is the best method for capturing the data you want to collect—should you do a mail-out survey, a telephone survey or a door-to-door survey? Should you set up an intensive focus group of area residents that don’t use the transit system? Should you send interviewers to a local shopping mall to do in-depth interviews with shoppers? Will you need to offer a cash incentive to secure participation, or some other enticement such as discount coupons? Will you run the research project in-house, using marketing staffers experienced in carrying out surveys and doing the data collection with part-time employees or temps? This is a critical decision—if you’re not confident that you can run the project internally following generally accepted market research principles and methodologies, it’s much better to bring in some outside experts. If you’re qualified and experienced, running the project internally can save you some money, especially surveys of riders conducted at bus stops. However, it will generally be more cost- and time-efficient to outsource telephone surveys. By the time you factor in writing the survey instrument, securing an accurate and recent database of area residents, conducting all of the survey interviews, analyzing the data, running data reports and cross-tabulations and creating a concise, readable report on the findings, it’s going to make your life a lot easier to work with a research vendor that does this sort of telephone survey every day. One important note: By the time you reach this point in the project planning process, it’s highly advisable to have buy-in and support from upper management on the objectives, budget and methodology. Otherwise, you may end up with a survey report that ends up being filed away to gather dust. You’ll have wasted good time and money. 4. Dig into the Data Once your data is collected and you prepare to report the findings, it’s time to intensively analyze the data and find out what story it wants to tell you. As much as you can, set aside your preconceived judgments and perceptions about the subject matter. Maybe you’ve worked for this transit agency for 15 years and have heard every possible objection local citizens have to riding your buses. Forget all of them, and dig into the data. There may be subtle patterns and trends you would miss approaching the data with a closed mind. Analyze the data from several different angles. Run as many cross-tabulations as possible to determine the opinions of sub-segments of your studied population. There may be certain cultural or ethnic factors for rider resistance, or other demographic issues. A neighborhood that you once thought to be fairly homogenous could have differences that you would have never known about unless you conducted this sort of market research, which could mean that these neighborhood segments need various types of bus service to attract more riders. 5. Be Creative about Reporting and Presenting the Findings Market research data can be a little bit dry, to put it mildly. Nobody wants to spend five hours reading and analyzing a 250-page report with 68 summary findings and 105 charts and graphs. Try to boil down the data to its most critical elements and keep it simple. A well-written executive summary is essential. It’s a good idea to spend some time creating an effective PowerPoint presentation, or some other method of visual presentation, when presenting project findings to key decision-makers. A concise, 15-minute PowerPoint presentation to upper management is 1,000% more effective than a 250-page report that offers an excruciating level of statistical analysis. If you’re going to use an outside market research agency, you’ll probably want them to prepare the report and presentation under your guidance. If you’re going to spend the money, you might as well have them carry out this phase of the process—a good market research company will be able to analyze the data and put together a dynamic presentation of the results. Ask to see examples of the firm’s work during the RFP process.
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