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Essay: Irish Rail’s InterCity Service strategy

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  • Subject area(s): Business essays
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  • Published: 24 September 2022*
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  • Words: 1,441 (approx)
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Market segmentation:

I conducted 18 interviews with people from various demographics. My interviewees ranged in age from 12 to 79 (Appendix 2). To segment the market, the ‘simple segmentation’ method was used as it best suited my factors. I chose two differentiating motivators based on the results gathered from the interviews. I noted that the purpose for the utilization of the services differed among interviewees, as did the importance of the price and quality of the service. Therefore, the two differentiating factors are; ‘importance of price’ and ‘importance of quality’ of the service. From this, I identified five groups of customers and mapped them on a perceptual map (Appendix 3). The primary differentiating basis of each segment was those of needs-based and life-stage based (Dimitriu, 2019).

  • Business Travellers: This segment consists of working professionals who either travel InterCity to get to their place of work or who need to travel for meetings and other professional engagements. This segment makes up 35% of total rail passengers and continues to increase in size as Ireland’s employment rate grows with over 2.2 million people currently in the workforce (CSO Ireland, 2019). My research identifies that these customers prioritize the importance of comfort, reliability and accessibility over price. Demand from this segment is highly inelastic in regard to price, with some of my interviewees emphasizing the need for a ‘business class’ carriage, and appearing relatively insensitive to any price differential. Irish Rail currently attempt to appeal to this segment suggesting that, “with free Wi-Fi, electrical sockets and spacious tables they place the working world at your fingertips” (Irishrail.ie, 2019).
  • Cheap Crammers: This segment consists of college and secondary school students and is quite large considering Ireland has the youngest population in Europe, with over 33% of our population under 25 (IDA Ireland, 2018). These consumers are extremely price conscious, with demand for train tickets being highly elastic in regard to price. Based on my interview results, these customers place low importance on factors such as comfort, good customer service and even reliability. Instead, the price of the service was the main deciding factor for purchase. However, in this ‘conscious consumer’ world, my interviewees also mentioned environmental factors that influenced their decisions. The younger generations are motivated to avoid the overwhelmingly negative effects of increased carbon emissions on the environment and are therefore making decisions to minimize this impact.
  • Kid Conscious: This segment is made up of families who focus on the importance of accessibility, the length of the journey and require good value for money in regard to the quality of the services. With kids needing access to toilet facilities, food and drink and room to move around, Irish Rail’s InterCity services can often fit their needs. This segment looks for family tickets and offers which Irish Rail already provides.
  • Sight-Seers: This segment is comprised of tourists without a car and simply looking for a quick and easy way to see the sights and visit different places around Ireland, at a reasonable price. These are hard to attract as many come into the country at airports and ports and Irish Rail’s ICN has few easy links to either of these. However, there are possibilities for growing this sector with more targeted offerings such as packages and if Irish Rail’s marketing can reach tourists before they travel to Ireland.
  • Old Timers: This is a very unusual segment as the customers consist of retirees who travel for free on all public transport. As a result, price is not a factor in their decision making. The government subsidizes these trips with public service obligation funding. With Irish Rail being a high fixed cost business, it makes sense for them to maximize their customers on all services, and to try to sell other services (such as food and drink) to the captive customers on the train. Based off my interviews, this segment values comfort, reliability and accessibility of the service above all else.

SWOT AND PORTFOLIO SUMMARY: Irish Rail’s InterCity Service.

McDonald and Wilson (2016), believe that most “Strengths, Weaknesses, Opportunities and Threats (SWOT)” analyses “are as useless as an ashtray on a motorbike” and therefore suggest a new method of evaluating the strengths and weaknesses of a company, in addition to interpreting the future opportunities and threats that it may face. Accurately and effectively conducting a meaningful SWOT is a challenging task and therefore, I have followed McDonald and Wilson’s method in order to achieve a consumer-focused assessment.

Market attractiveness

A weighted attractiveness score was reached for each of the market segments with ‘Business Travelers’ emerging as the most attractive segment with a score of 7.5, and ‘Students’ rating as the least attractive segment with a score of 3.9. Therefore, I focus on these two segments for further evaluation considering how Irish Rail can gain traction in the market for students and how they might maintain and grow their business travellers’ segment.

Critical success factors

Portfolio summary / DPM

  • Cheap Crammers: Irish Rail hold a relative business strength score of -0.4 against its closest competitor, Bus Éireann. This is only due to the price differential between the two services, with Bus Éireann being significantly cheaper. According to my calculations, the student segment is the least attractive. However, it is a large segment for Irish Rail and one that this strategic plan will focus on improving.
  • Kid Conscious: The family segment has a relative business strength score of -0.1 relative to its closest competitor, the car. This is mainly due to the convenience, reliability and accessibility of a car over the train for a family with kids. This segment is attractive however, with an MAF score of 5.7. I believe that it can be maintained easily through the family ticket offers already in place.
  • Sight-Seers: Irish Rail hold a +0.2 relative business strength score in comparison to that of the bus for tourists. Many tourists rely on public transport when in Ireland and therefore, while this segment is attractive, it is not reliable and is likely to be affected by Brexit. I believe that it should be maintained but not invested heavily in until Irish Rail can understand the impact of Brexit on the segment.
  • Old Timers: The retiree segment hold the strongest relative business score against competitors out of all of the segments with a +0.5. This is due to the availability of extra services such as food, drinks, air conditioning and toilet facilities. With many retirees reluctant to drive across the country by themselves, the comfort of the train is preferred over the crowding of the bus.

OBJECTIVES AND STRATEGIES: Irish Rail InterCity Services

The objectives and strategies decided upon for Irish Rail’s InterCity Services were chosen following the SMART (specific, measurable, achievable, realistic, timebound) criteria. I considered the Product/Service, Price, Promotion, Place and people aspects of Irish Rail’s marketing mix options for the selected segments of ICN. I considered the Ansoff Matrix (Appendix 4) in order to understand the diversification risk of my suggested strategies for future growth. I believe that Irish Rail should hold and maintain the smaller and less profitable segments such as ‘old timers’ and ‘families’. However, Irish Rail should increase their services provided to ‘business travellers’, ‘cheap crammers’ and ‘tourists’ in order to continue to observe growth in these segments. While, in the absence of expansion of the rail network, ‘place’ will remain static (although the use of connecting shuttles might be seen as expanding market coverage), there are opportunities to improve ‘product’ and ‘price’, and to match these new offerings with appropriate promotion. Promotion is a crucial factor to ensure the profitability of the new strategic changes.

Segment: Business Travelers

Objectives: Product/Service development in the current market (Ansoff Matrix)

Strategies:

  • Product: Improve comfort of the service from by creating more business class carriages catering, at a relatively small premium, for those who are travelling or commuting for work. This is less about providing luxury or about obtaining high premium prices but more about encouraging business travellers onto the ICN.
  • Improve the attractiveness of the service by addressing the Wifi and mobile phone coverage blackspots that exist on most intercity routes. Dropped calls and connections are major bug bears for business travellers and diminish Irish Rail’s competitive advantage and differential offerings.
  • An innovative possibility is to establish whether meeting booths – allowing for private meetings on trains on the major routes (maybe Cork to Dublin and Dublin- Belfast) would prove attractive to companies whose staff regularly travel by train.
  • Improve reliability of the service experienced by business customers by increasing parking spaces provided at rail stations and improving the parking payment options. Several of my interviewees raised complaints about parking accessibility. This will increase the reliability score from 7 to 8.

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