Establishing customer need Essay Example

Establishing customer need Essay A consumer requires goods and services of all types for personal as well as household usage. Sometimes referred to as customers, each consumer is something of an enigma to marketers. How does he or she perceive products, brands, stores or even entire organisations? How are individuals product choice made? Is customer loyalty attainable? A trend of consumer behaviour has emerged in recent years to help Virgin Trains better understand critically important issues such as these. Targeting Virgin Train 1st Class traveller can be divided into two different segments. These segments are made up of business clients and consumers from social classes A, B and C1. Keynotes (2002), state that the average number of trips per week on national rail for social class A-C1 is considerably higher than that of social classes D E. Also, the age groups that use the national rail most frequently are 20-34, which are those from an employed status. We will write a custom essay sample on Establishing customer need specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Establishing customer need specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Establishing customer need specifically for you FOR ONLY $16.38 $13.9/page Hire Writer However, Virgin Trains have decided to target the first class business traveller. Tapp (2000, p16) states that most airlines are driven by the 80/20 rule which could also be applied to the rail sector. The rule is that twenty percent of customers are from the business sector contributing to eighty percent of its profits. This suggests that it may be more profitable for Virgin Trains to target the business traveller. An existing database holds information about companies who have previously booked first class seats on Virgin Trains. This will be used as a way of targeting existing customers and further lists will be bought from another source. Segmentation In order to maximise the effectiveness of the marketing strategy it is essential to segment, especially in terms of geographic location. It is important that the companies and business people targeted are geographically located along Virgin Train routes, as there is no point in communicating to companies who do not have easy access to Virgin Trains. Market research Before any service can be properly marketed Virgin Trains must know a great deal about: * The market it is to be operated in * The demand for the service itself * The needs of the users for design, quality, colour, etc. * The best media to advertise the service in * The price which people are prepared to pay for the service. Most of this information is obtained by specialist marketing people who arrange for two types of research to be carried out: 1. Secondary Research which involves finding out what has been written already about the service and the market for it. 2. Primary Research which is the testing of the service ideas by asking people what they think of it and by looking at the competition (how good are competitive services and how much is being charged for them). Secondary research is highly skilled work and requires patience and the ability to know which facts are useful and which are not. Primary research on the other hand, requires skill in writing questionnaires and in arranging samples of the public to try out the product. The scope of marketing and market research is very broad. In fact almost every aspect of the production, promotion, sales life of a service is scrutinised at some point for one particular purpose or another. Primary Research Surveys A survey usually involves asking questions of respondents people or organisations who reply to the questions asked. Virgin Trains, for instance, used a survey to find out about the quality of service and preferences of consumers. The survey showed that most of the people said the quality of service was very good. Surveys can only be useful for market research purposes if the questions asked are appropriate. For instance, sometimes it is important to ask closed questions. These are questions which have a definite answer. An example would be: how may train journeys have you had last week?. Other times, the market researcher might want to find out about opinions and allow the respondent to develop an answer. It is best then to ask open questions, which have many possible answers. For instance, why do you like this service? is an open question. Sampling A survey cannot ask every customer for his or her opinion. Only a fraction or sample of customers can be surveyed. To be useful, the sample chosen must be representative of all customers (the population). In a random sample, every potential respondent has an equal chance of being chosen. Random numbers can be used to do this or it can be done by picking people out of a hat. It is often quite difficult to construct a truly random sample. So a cheaper and quicker method is to use a systematic sample. This is where, say, every 100th or 1000th person on a list like a telephone directory or the electoral register is chosen. A systematic sample is not truly random though and therefore the results may be less reliable. In a quota sample, the sample is broken down. This is a far cheaper method than random sampling. Below is a sample of the questionnaire I used for my primary research. I did most of my questionnaire around train and tube station like Sudbury hill station. Questionnaire This questionnaire will be asking questions to you about the rail industry and what you think about the situation it is in. *Please circle the appropriate answer Q1.Have you ever travelled by train? If not go to question 4. Yes No Q2. What was your main reason for commuting? Work Pleasure Hobby/Sport Education Other Q3. How would you rate your train service? Very bad bad average good very good Q3. Would you pay more for a better service? Yes No Q4. Which of the following do you think will improve rail services? More funding Extra staff Improve catering Cleaner carriages Comfortable seating Other______________ Q5. Should the rail industry be taken back into Government ownership? Yes No Q4. Which of the following do you feel is safer to travel on? Rail Car Thank you for answering these questions. Results of Questionnaire My questionnaire received a number of votes supporting the re-nationalisation of the railways. A lot of people felt that the only real incentive for Railtrack and the operating companies like Virgin Trains is to make more profit for their shareholders. They felt Railways should be seen as part of the public infrastructure and returned to public ownership. One person said they would be prepared to pay more if the railways were publicly owned, but not to private companies just to add to their profits. Recent reports from the BBC News online suggest that it will be unbelievably expensive to re-nationalise the railways and will give less control to the government but they would have more direct control and influence over the polices and practices. My questionnaire revealed that 58% of people are willing to spend a little more if it will guarantee them a better service. Secondary research Public transport According to social trends 2000, the number of rail journeys has increased since 1981-82, and is now approaching the levels of the late 1950s. Because of the great increase in car travel, however, rail has a much smaller share of total travel in the 1950s. Below is a graph showing the percentages of each mode of passenger transport. Source: department of the Environment, Transport and the Regions Rail Journey Below is a graph showing the number of rail journeys made by each operator during 1981-1999. Source: department of the Environment, Transport and the Regions A significant development in recent years has been the increase in the number of rail operators. Following the privatisation in 1996, passenger rail services on the national network are provided by 25 franchise holders which lease rolling stock and pay access charges to Railtrack plc for use of the track. Virgin Trains are one of those franchise holder and they regulated by the Franchising Director of the Shadow Strategic Rail Authority (SSRA), which monitors their performance and controls fares. Virgin Trains runs on the National Rail line, Passenger traffic on this line rose by three per cent in 2001-01, when some 957 million passenger journeys were made (table above). This is the highest number of passenger journeys since 1962, but there had been more than a billion rail passenger journeys a year in 1961 and before. The amount of distanced travelled are much higher than the early 1960s, which suggests that people are using the railways for longer journeys than previously. This stat is good for Virgin Trains as they provide a long distance travel service to places like London, Birmingham, Manchester, Liverpool and Glasgow. Rail complaints Following the Hatfield crash in October 2000, which the Health and Safety Executive believe was due to a fractured rail, temporary speed restrictions (TSRs) were imposed by Railtrack on around one thousand sites throughout the national rail network. Due to these restrictions Virgin Trains had to issue new timetables for its services, and these, coupled with severe flooding in some areas, had an adverse affect on service timelines. For example, between July and September 2000, 80 per cent of long distance trains arrived on time (within 10 minutes of advertised time); between October and December, this figure fell to 48 per cent. Below shows the percentage and types of complaints received. Source: Strategic Rail Authority These problems contributed to a sharp increase in complaints made to the Train Operating Companies (TOCS), which run trains on Great Britains rail system. Between the fourth quarter of 1999-00 and the fourth quarter of 2000-01, the rate of complaints received per 100,000 passenger journeys rose by 54 per cent. Complaints about train service performance, although the most common type of complaint increased by only 2 per cent from 1998 to 2001.