Sunday, April 11, 2010

Market Segmentation

Successful transit agencies are in the process of discovering market segmentation. They are providing different types of transit, with different qualities, at different price points. Most transit agencies have taken advantage of their forays into rail transit to provide premium transit--fast, frequent, and reliable.

Recall that most transit agencies begin as 'caretaker' agencies, receiving the nubbins of private transit companies to ensure the 'critical' bus service was still provided. One of the by-products of this merger was a single system-wide fare.

This presents an operational obstacle. Without the ability to change prices, and charge what the market will bear, competition for additional bus service becomes political, specifically the 'politics of need', where the vulnerable, weak, and otherwise unable to drive are provided special service. Hence, the development of ridership as a technical metric for evaluating how 'good' a bus line is.

But the difference is service provided by premium transit must be considerable--fractional improvements are insufficient. It must be better not only than the AVERAGE service provided, but superior to the BEST service provided. The essential threat to high quality bus service such as BRT is that it will be seen as 'just another bus'. Federal guidelines for BRT include conspicuous branding and 'substantial' stations largely to prevent that.

While marketing is important for the success of transit agencies, it cannot change reality--a pig with lipstick on it is still a pig. Charging more for transit will require providing better transit, and providing good transit costs money.

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