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Market segmentation analysis

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Transportion 19: 177-196, [email protected] 1992 Kluwer Academic Publishers. Printed in the Netherlands.Market segmentation analysis of potential inter-city railtravelersERIC I. PASl & JOEL C. HUBER21 Department of Civil and Environmental Engineering, and 2 Fuqua School of Business,Duke University, Durham, N.C. 27706, USAKey words: market segmentation, intercity rail demand, travel forecasting, stated preferenceAbstract. This paper reports on one aspect of a study conducted to support the analysis ofthe perfonnance of a proposed intercity rail passenger service in the Piedmont region of NorthCarolina. In particular, this paper describes a market segmentation study of potential rail trav-elers on the basis of the responses of 333 participants in a computer-based, mall-intercept,market research survey.The paper overviews the design and implementation of the computer-based survey of poten-tial rail travelers and discusses the approach used in the identification and interpretation of themarket segments. The five identified traveler groups are characterized and the implications ofthe market segmentation results are discussed. These five segments are: (1) functional traveler,(2) day tripper, (3) train lover, (4) leisure-hedonic traveler, and (5) family traveler.The five groups identified in the market segmentation analysis provide a rich descriptionof the potential rail market in the study corridor. The composition and characteristics of thesegroups indicate that the intercity rail travel market may have a complex structure that wouldbe masked by the traditional business/non-business dichotomy. The characterization of theintercity rail travel market by the five identified segments provides rail service managers withvery useful information for service planning and marketing.Introduction and backgroundThe 'Carolinian ' passenger train service operated in the Charlotte-Greensboro-Raleigh corridor of the Piedmont region of North Carolina during the periodOctober 1984 to September 1985. This service, which was operated by Amtrakand sponsored jointly by Amtrak and the State of North Carolina, providedthrough service to the Northeastern United States, as well as local servicewithin North Carolina.Following the termination of the 'Carolinian' service in the fall of 1985,officials of the State of North Carolina sought to restore rail passenger servicethrough the Piedmont of North Carolina. The research described in this paperis drawn from a study designed to support the analysis of the operation of inter-city rail passenger service in the Piedmont region of North Carolina. At thetime the study was designed, the Public Transportation Division (PTD) ofthe North Carolina Department of Transportation (NC DOT) was considering78the possibility of operating a local train service in the Charlotte-Raleigh-Rocky Mount corridor. As a result, the study focussed on the ridership inthis corridor, which is hereafter referred to as the study corridor.The overall goal of the study was to examine the demand for intercity railpassenger service in the study corridor. Specifically, the major objectives ofthis study were as follows. First, to develop a demand forecasting tool thatcould be used to estimate the ridership and revenue for alternative rail servicesthat might be provided in the study corridor. Second, to characterize themarket for intercity passenger rail service in the corridor of interest. This paperfocusses on the latter of these objectives, while Pas et. al. (1991) provide adetailed account of the complete study.An important concept in marketing research is that a consumer marketcan be divided into identifiable groups sharing similar tastes, preferencesand/or behaviours with respect to a particular product or service. Thesesegments are based on similarity among the members of a given group anddifferences between the members of different groups. This approach to under-standing the market, termed market segmentation, has been used extensivelyin market research over a long period of time (see, for example, Engelet. al. 1972; Dickson & Ginter 1987; Hauser & Simmie 1981; Yankelovich1964). Market segmentation has also been used in a variety of transportationstudies in the past 15 years, one of the first applications being a public transitstudy by Lovelock (1975).The basic idea of market segmentation analysis is that there are groups ofconsumers that are similar to one another, yet different from other consumers.Further, if one can identify such groups (or market segments) one will havea better understanding of the structure of the market for some product orservice and therefore be able to do a better job of designing, operating, andmarketing the product or service.As part of the effort to understand the market for intercity passenger railservice in the study corridor, the study team conducted a market segmenta-tion analysis of potential travelers on the planned rail service. The purposeof this paper is to describe this aspect of the overall study, including theapproach used and the results obtained, as well as an examination of theimplications of the results.The remainder of this paper is organized as follows. In the second section,we present the design of the study from which the results reported in this paperare drawn, and we describe the methodology used in deriving and inter-preting the market segments. In the third section we present, interpret, anddiscuss the results of the market segmentation analysis. The final sectionsummarizes the paper and presents our conclusions..79Study design and methodologyA computer-based survey of potential rail travelers was conducted at shoppingmalls in the four largest cities in the study corridor in order to develop anunderstanding of the needs and preferences of potential riders in this corridor.This computer-based survey had two specific objectives: first, to obtainestimates of the sensitivity of potential travelers to changes in rail traveltime, travel cost, service frequency, food service, and seating type. Thisinformation was needed for the incremental demand forecasting model thatwas to be developed. The second objective of the survey was to provideinsight into the characteristics of potential rail travelers in the study corridor.In particular, we sought information that would be helpful


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