Iarnród Éireann, a semi-state body, was
established in 1987 after legislation
reorganised the national transport company,
Córas Iompair Éireann (CIÉ).
Three operating subsidiaries were created:
Bus Éireann - delivers provincial bus
services
Bus Átha Cliath - operates buses within
Dublin
Iarnród Éireann - is charged with
responsibility for national passenger
and freight rail throughout the country
as well as port services at Rosslare and
a road freight function.
Hitting
the
Target
Iarn ród Éirean n is t h e operating
subsidiary of CIÉ responsible for the
national railway system and road freight
service. Its objective as a public service
provider is to deliver a satisfactory travel
experience for customers by ensuring that
its stations, trains and staff meet railusers’ expectations.
For Iarnród Éireann, delivering customer
satisfaction presupposes that it knows who
its customers are and, more importantly,
that it recognises what these customers
expect from a train journey. To acquire
this knowledge and to monitor levels of
customer satisfaction, Iarnród Éireann
makes extensive use of its own data and
commissions market research from
outside professionals. Services, schedules
and future marketing strategies hinge on
such market intelligence.
This study outlines the processes involved
in identifying the various types of trainuser and how the company’s range of
services has been designed to address their
needs.
Background
Iarnród Éireann needs to satisfy three distinct
stakeholders when it transports passengers and
freight across 3,000 kilometres of track.
Stakeholders are those people who have
particular interests in a company. These interest
groups consist of:
1. External Customers
The company’s customers are primarily
concerned with safety, the quality of
customer care, consistency of service,
reliability and value for money.
2. Staff (internal customers)
Of prime importance to staff are issues
such as safe work practices, training
and development opportunities and
internal communication procedures.
3. Shareholders
Shareholders monitor safety practices,
commercial efficiency, the quality and
cost effectiveness of the services
provided and the speed and cost
implications of innovation and change. In
the case of Iarnród Éireann, the single
shareholder is the Minister of Public
Enterprise, who holds the shares on
behalf of the Irish people.
Iarnród Éireann has identified a number of
key issues that affect the network as a
whole and impinge on every stakeholder
group.
Customer Volume
In 1996 passenger numbers stood at 8.4
million. In 1997, 9.1 million passengers
were carried resulting in an 8.3% growth
over 1996. Increasing passenger numbers
can cause difficulties as well as financial
advantage. Capacity problems can lead to
overcrowding, which is a prime cause of
customer dissatisfaction. As capacity cannot
increase overnight, marketing strategy is
being used to address this issue in the interim.
A compulsory seat reservation system, or a
higher pricing structure for peak travel times
are two strategic options that relieve peak
overcrowding.
Punctuality
Since the introduction of a new breed of
locomotive (the 201 class), punctuality has
improved across the network. In tandem
with this, a programme of investment to
upgrade over-age track around the country
(which causes speed restrictions on lines
such as the Westport route) is also being
put into action.
Integration of Services
Full scheduling compatibility between rail
and bus services and rail and ferry
terminals is very difficult to implement.
Operators are constantly trying to improve
integration.
Competition
Iarnród Éireann faces different types and
levels of competition. In general, its main
threat is the car. The car is likely to
become even more of a competitor as
levels of car ownership increase, the
quality of cars improve and the national
road network is upgraded. Private and
public coach operators also hold a market
share.
At some stage in the future, Iarnród
Éireann may face competition from other
rail operators with the advent of EU
legislation.
These crucial issues affect how Iarnród
Éireann will implement its future strategy.
Research findings have revealed that rail
travel is regarded as a fast, reliable, safe,
comfortable and relaxing mode of public
transport. It is the preferred travel option for
longer internal journeys and for commuting
to work where railway is accessible. It is also
rated as good all-round value for money.
The Challenge
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The challenge for Iarnród Éireann has
been to identify and respond to these key
issues in a way that will have the most
positive impact on its customers, its staff
and its shareholders while improving its
competitive position within the transport
market.
Enterprise.
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The Marketplace
Iarnród Éireann is a service provider in the
national transport market. This market
includes all carriers: the national rail network,
our road infrastructure, motor cars, coaches,
buses, courier/transport companies and
internal flights. People who wish or need to
travel, or who need goods transported, are the
company’s potential customer base.
However, in order to target potential and
actual rail-users more efficiently, Iarnród
Éireann divides its customers into smaller
groups or segments. Rail-users all buy a
service but they are not identical and
usually want and expect different things
from this method of travel. Safety may be
a top priority for one passenger, while
cost, speed or punctuality may rank higher
with another.
The company’s passenger types are broken
down into the following segments:
■
Commuter
■
Business
■
Student
■
Leisure.
A further subdivision is made by route
with every line having its own profile in
terms of passenger type and the reason for
and frequency of travel.
As soon as market intelligence was gathered,
Iarnród Éireann formulated a marketing plan
to help shape its strategy. A marketing plan
forces a company to set achievable and
quantifiable goals, having made a realistic
assessment of its current operations. Through
a process known as differentiated marketing,
Iarnród Éireann’s marketing plan was
designed to deliver a marketing mix (of
product, price, promotion and place) that was
suitable for each of its customer types or
segments.
Iarnród Éireann’s plan identifies the strengths,
weaknesses, opportunities and threats of each
segment (SWOT analysis). A SWOT analysis
identifies the most important areas of concern
within each market segment and points the
way forward for future marketing strategies.
Iarnród Éireann’s SWOT analysis considered
the services on offer, their acceptance in the
marketplace, service improvement required,
as well as external c o n c e rn s s u c h a s
competitor activity.
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Customer Strengths, Weaknesses, Opportunities and Threats by Market Segment
Segment
Weakness
Strength
• extensive network • lack of flexibility
• choice of ticket type
Leisure
•
•
Business
•
•
•
•
•
Student
•
Commuters
rail breaks
high off-peak
capacity
stress free
environment
punctuality
on-board service
contract tickets
catering
economic fare
structure
regular services
• regular services
• comfort
• reliability
Opportunity
• growth in holiday
•
•
•
• fixed route
(not door-to-door) •
• lack of schedule
control
• lack of seating at
•
peak times
• punctuality - short •
delays
The Marketing Plan
- the 4 Ps
From SWOTs, general customer research,
questionnaires and ticketing/sales analysis,
Iarnród Éireann has developed an operational
plan that caters to each market segment and
identifies the appropriate marketing methods
to be used. The marketing plan is flexible and
capable of change to allow for changes in
target markets and within the business
environment as a whole.
The Product
Product improvement including new
locomotives, upgraded stations, improved
track and signalling, and an increase in the
number of timetable services in early
mornings and on Sunday afternoons, has
impacted on all market segments.
Threat
• competitive pricing
market
• increasing cargrowth in
ownership
consumer spending
most tolerant
de-centralisation
• competitive
EU regional
air fares
development
• need to maximise
business mileage
• benefits in kind
(BIK)
de-centralisation
• competitive bus
of 3rd level
fares
institutions
• long-term
population trends
development of
• price sensitivity
satellite towns
outside main cities
service) is being investigated and contract
tickets are being promoted which offer an
incentive to regular business travellers.
Parking facilities at stations and a more
fully integrated public transport linkage
between trains and buses have been
negotiated and agreed. Shopping specials
(to Dublin and Belfast) and additional
Friday evening services to cater for student
travellers will help to increase off-peak
travel (shopping specials) and reduce
overcrowding (additional student-targeted
scheduling).
Price
According to Iarnród Éireann’s own research,
eight out of ten Intercity passengers are
satisfied with the value for money they
receive, a finding which is consistent across
the different market segments.
Service upgrades such as City Gold (an
executive business service) and direct
trains to Limerick have served to satisfy
regional and specific target needs. Future
plans include the establishment of a
minimum level of guaranteed service on
all Intercity routes in areas such as
catering, comfort and train frequency.
Fare increases since 1990 have not kept
pace with inflation; pricing strategy during
this time was deliberately set at a level that
would generate volume. This strategy
proved extremely effective. It won back
customers, especially students who were
offered heavily discounted fares.
Iarnród Éireann operates a policy of using
differentiated pricing to level out demand.
However, customer perceptions do not reflect
this; weekend and mid-week fares are
perceived as being very much the same. The
company has to take effective action to
change these misperceptions in order to be
seen to be controlling overcrowding and also
to increase its revenue earning capacity at
peak times.
Promotion
Developments in the economic, social and
regulatory environments mean that Iarnród
Éireann operates in an increasingly
demanding and competitive arena. If the
company is to succeed it must face up to the
various challenges that customers and policy
makers set for it and continue to strive to be
uncompromisingly market and consumer
orientated.
Cross-Border
Developments
Limerick Station - recent winners of Iarnród Eireann’s best station award.
■
Radio and outdoor advertising targets a
younger and more mobile target group.
Advertising of specific routes and fare
structures will be communicated through
local independent radio and selected
outdoor sites.
■
Direct Mail is playing an increasingly
important role in Iarnród Éireann’s
promotional strategy. B y u s in g
computerised databases, the company
can target specific market segments
with little or no wastage. This has
already proved to be highly successful
in the promotion of the Executive Train,
Educational Tours and City Gold. Iarnród
Éireann has been nominated for an Irish
Direct Mail Association (IDMA) Award
for its City Gold promotional drive.
Passenger information
An upgraded passenger information system
has been in place since 1996. This includes
re-designed timetables, a talking timetable,
digital display boards for station information
and more frequent on-train announcements.
An Internet site has been developed to
include timetable travel information and
RTÉ’s Aertel service carries full details of
Iarnród Éireann’s services.
Advertising
In recent years, Iarnród Éireann has changed
its advertising strategy and switched to
regional and local advertising to support
route-based marketing strategies. Whilst this
policy was successful, research is now
pointing to the fact that a lack of corporate
branding may have caused some public
confusion. Iarnród Éireann suffers from an
‘identity crisis’ - people don’t know whether
they are ‘CIÉ’, ‘Irish Rail’, or ‘Iarnród
Éireann’. The company is Iarnród Éireann
and is trading as Iarnród Éireann. No doubt
this fact will become established in the
public’s mind in the fullness of time.
Further promotional plans include:
■
A TV documentary on rail travel
■
Liaison with sport and event managers
to design and deliver an all-in ticket for
events and rail travel
■
Increased targeting of tourists, families
and day trippers to increase off-peak
travel including Railbreak Holidays and
School Tours
Iarnród Éireann uses a number of media to
advertise its products:
■
Seat availability
Seat availability, especially at peak times,
is of serious concern to all customers and
is an issue, which Iarnród Éireann must
confront. Short to medium-term solutions
are currently being explored. However,
significant capital investment and a longlead time are needed to bring about a
longer-term solution to this problem.
■
Car hire and parking
The provision of car-hire facilities at main
stations (allowing for a door-to-door travel
increasing awareness of the ill-effects of
fossil fuelled (road-based) transport.
Luxury travel.
Television is the ideal medium for image
building and for delivering and
reinforcing a corporate message. After an
absence of three years, Iarnród Éireann is
now back on TV with a new thirtysecond commercial which targets
existing users and non-rail users alike. A
shortened version of this advertisement
will be used to deliver tactical and farebased messages.
■
Press advertising has been selected to
promote more immediate hard-sell
campaigns such as promotional specials
and holiday offers.
Iarnród Éireann is also considering
implementing an incentive scheme which
would act as an incentive to customers to
travel at off-peak times.
■
Seven Business Development Executives
strategically placed around the country, to
target business customers and deliver
sales presentations to societies and clubs
Joint promotions with the Mirror
Newspaper Group are underway to
deliver a cross-border promotion
(offering two tickets for the price of
one) to Mirror Group readers.
Another option being considered is the
Rail Sale concept, which is based on the
idea of a single fare promotion on specific
trains where capacity warrants a reduction
on the Day Saver Fare. If the promotion is
delivered there will be a fixed fare rate to
anywhere in the country. This type of
promotion is designed to encourage
spontaneous rail use, particularly among
traditional no-rail or occasional-rail users.
O n e o f th e mo s t s ig n ific a n t re c e n t
developments for Iarnród Éireann has
been the delivery of the cross-border rail
s e rv ic e th a t lin k s N o rth e rn Ire la n d
Railways (NIR) and Iarnród Éireann (IE).
This £120m project, which received support
from the European Regional Development
Fund (ERDF), facilitates a High Speed Rail
Link (known as Routes Magistrale in other
EU countries) between Belfast and Dublin
with a journey time of around two hours.
Place
An extensive network of stations (in over 80
regional locations) has always been used to
distribute Iarnród Éireann’s product and
services. In addition over 200 Travel Agents
add to this network. The new Internet site and
Aertel facility have also increased the
company’s distribution and communication
channels.
Stations are undergoing upgrades and
signage, passenger facilities etc are being
revamped across the network. The success
of the newly created in-station Travel
Centres have led to more plans to
introduce more streamlined point-of-sale
procedures such as a dedicated City Gold
Window at Heuston Station and automatic
ticket vending machines in larger stations.
The Future
Emerging trends in the demographic profile
of the national population present both
opportunities and threats for the future of
Iarnród Éireann. It is forecast that the over 65
age group will expand at the fastest rate with
the under 15 age group declining as a
proportion of the total population.
Th e mo v e me n t to w a rd s mo re o p e n
competition and further deregulation by the
EU is expected to continue at national level.
There is no reason to expect any lessening
o f e n v iro n me n ta l c o n c e rn s a n d th e
TASKS AND ACTIVITIES
Explain why it is important for a
company such as Iarnród Éireann to
research their customer base. Why do they
need to find out information such as where
and why customers travel, how often they
travel and what they expect from rail travel?
1
2
Define market segment, differentiated
marketing and SWOT analysis.
From your study of Iarnród Éireann
SWOT analysis, formulate your own
SWOT for a local bus, private coach or
courier company.
3
Think up some additional promotional
or publicity strategies that would appeal
to either a Student or Business rail traveller.
4
Draw up a sample questionnaire that
5 could be used to establish customer
satisfaction levels among train users.
While every effort has been made to ensure the accuracy of
information contained in this case study, no liability shall attach
to either The Irish Times Ltd or Woodgrange Consultants Ltd for
any errors or omissions in this case study.
Business 2000
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