Harvard Case - Union Pearson Express: A Train Wreck in Slow Motion
"Union Pearson Express: A Train Wreck in Slow Motion" Harvard business case study is written by Eric Dolansky. It deals with the challenges in the field of Marketing. The case study is 11 page(s) long and it was first published on : Jan 31, 2017
At Fern Fort University, we recommend a comprehensive revitalization strategy for Union Pearson Express (UP Express), focusing on a multi-pronged approach to address the challenges of low ridership and improve the service's financial viability. This strategy will involve a combination of marketing, operational, and pricing adjustments, aimed at attracting new riders and enhancing the customer experience.
2. Background
Union Pearson Express (UP Express) is a high-speed rail service connecting downtown Toronto to Toronto Pearson International Airport. Launched in 2015, UP Express aimed to offer a convenient and efficient alternative to traditional airport transportation. However, the service has faced challenges in attracting a significant customer base, resulting in lower-than-expected ridership and financial losses.The case study highlights several factors contributing to UP Express's struggles, including:
- Limited Marketing and Brand Awareness: UP Express has struggled to effectively communicate its value proposition and differentiate itself from competing transportation options.
- Pricing Strategy: The initial pricing strategy, while competitive with taxis, was perceived as expensive compared to other public transportation options.
- Customer Experience: Passengers have expressed concerns about the service's reliability, cleanliness, and lack of amenities.
- Competition: UP Express faces competition from taxis, ride-sharing services, and other public transportation options.
3. Analysis of the Case Study
To analyze the case, we will use a framework that combines SWOT analysis to understand UP Express's internal strengths and weaknesses, and PESTEL analysis to assess the external opportunities and threats.
SWOT Analysis:
- Strengths:
- Direct connection to airport: Provides a direct link to Toronto Pearson International Airport, a major transportation hub.
- Speed and efficiency: Offers a faster and more efficient travel option compared to other transportation modes.
- Modern infrastructure: Features modern trains and stations with comfortable amenities.
- Weaknesses:
- Low ridership: Struggling to attract a significant customer base.
- Limited marketing and brand awareness: Lack of effective marketing campaigns to communicate value proposition.
- Pricing strategy: Initial pricing was perceived as high compared to other options.
- Customer experience: Concerns about reliability, cleanliness, and amenities.
- Opportunities:
- Growing tourism and business travel: Toronto is a major tourist destination and business hub, offering potential for increased ridership.
- Increased demand for convenient transportation: Passengers seek efficient and reliable transportation options.
- Potential for partnerships: Collaborations with airlines, hotels, and other businesses could attract new riders.
- Expansion of service: Exploring new routes and destinations to expand reach.
- Threats:
- Competition from taxis, ride-sharing services, and other public transportation: UP Express faces intense competition from various transportation options.
- Economic downturn: Economic downturns could impact travel demand and affect ridership.
- Technological advancements: Emergence of new technologies like autonomous vehicles could disrupt the transportation industry.
PESTEL Analysis:
- Political: Government policies and regulations regarding transportation infrastructure and public transportation.
- Economic: Economic growth, inflation, and consumer spending patterns.
- Social: Changing demographics, travel preferences, and consumer attitudes toward public transportation.
- Technological: Advancements in transportation technology, such as autonomous vehicles and ride-sharing platforms.
- Environmental: Concerns about sustainability and environmental impact of transportation.
- Legal: Laws and regulations governing transportation safety, accessibility, and environmental impact.
4. Recommendations
To revitalize UP Express, we recommend a multi-pronged approach:
1. Marketing and Branding:
- Redefine the Brand Positioning: Position UP Express as a premium, efficient, and reliable transportation option for both business and leisure travelers.
- Targeted Marketing Campaigns: Develop targeted marketing campaigns focusing on different customer segments, including business travelers, tourists, and families.
- Digital Marketing Strategy: Leverage digital marketing channels like social media, search engine optimization (SEO), and online advertising to reach target audiences.
- Partnerships and Promotions: Collaborate with airlines, hotels, and other businesses to offer bundled packages and promotions.
- Customer Feedback and Engagement: Actively gather customer feedback to improve the service and address concerns.
2. Operational Improvements:
- Enhance Customer Experience: Focus on improving the overall customer experience by addressing concerns about reliability, cleanliness, and amenities.
- Increase Service Frequency: Consider increasing service frequency to improve convenience and attract more riders.
- Technology Integration: Implement technology solutions, such as mobile ticketing and real-time information systems, to enhance customer convenience.
3. Pricing Strategy:
- Value-Based Pricing: Implement a value-based pricing strategy that reflects the benefits of using UP Express, such as speed, convenience, and comfort.
- Promotional Fares: Offer promotional fares and discounts to attract new riders and encourage repeat business.
- Flexible Pricing Options: Introduce flexible pricing options, such as peak and off-peak pricing, to cater to different customer needs.
4. Innovation and Expansion:
- Explore New Routes and Destinations: Consider expanding service to other key destinations, such as downtown Toronto neighborhoods or regional airports.
- Integration with Other Transportation Modes: Develop seamless connections with other transportation modes, such as subways and buses, to offer a comprehensive travel experience.
- Technology-Driven Innovations: Explore the use of technology, such as autonomous vehicles or advanced ticketing systems, to enhance efficiency and customer experience.
5. Basis of Recommendations
These recommendations are based on a comprehensive analysis of UP Express's strengths, weaknesses, opportunities, and threats, along with a consideration of the external environment and industry trends. The recommendations are aligned with the following principles:
- Core Competencies: Leveraging UP Express's existing strengths, such as its direct connection to the airport and its modern infrastructure.
- Customer Focus: Addressing customer concerns and improving the overall customer experience.
- Competitive Advantage: Differentiating UP Express from competitors by emphasizing its unique value proposition.
- Financial Viability: Implementing strategies that improve profitability and attract new riders.
6. Conclusion
UP Express has the potential to become a successful and profitable transportation service. By implementing a comprehensive revitalization strategy that focuses on marketing, operations, pricing, and innovation, UP Express can attract new riders, enhance the customer experience, and improve its financial performance.
7. Discussion
While the recommended strategy offers a strong foundation for revitalizing UP Express, it's essential to consider potential risks and assumptions:
- Risk: The success of the marketing and branding strategy depends on effective execution and achieving a strong brand message.
- Assumption: The market for premium airport transportation is large enough to support UP Express's growth.
- Risk: Operational improvements, such as increased service frequency, may require significant investment.
- Assumption: Technological advancements in the transportation industry will not significantly disrupt UP Express's business model.
8. Next Steps
To implement the recommended strategy, UP Express should take the following steps:
- Phase 1 (Short-Term):
- Develop a comprehensive marketing plan and launch targeted campaigns.
- Implement operational improvements to enhance customer experience.
- Review and adjust pricing strategy to attract new riders.
- Phase 2 (Medium-Term):
- Explore new routes and destinations to expand service.
- Integrate with other transportation modes to offer seamless travel.
- Invest in technology-driven innovations to enhance efficiency and customer experience.
- Phase 3 (Long-Term):
- Continuously monitor market trends and adapt the strategy accordingly.
- Build a strong brand reputation and foster customer loyalty.
- Explore partnerships and collaborations to expand reach and market share.
By taking these steps, UP Express can transform itself from a struggling service to a thriving transportation option, connecting travelers efficiently and conveniently between downtown Toronto and Toronto Pearson International Airport.
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Case Description
In February 2016, the president of the Union Pearson Express was being pressured to lower the fare price. The rail link between Union Station in downtown Toronto and the Toronto Pearson International Airport had only been running for eight months, but ridership was well below targets. On average, the train ran at only 10 per cent of capacity, and current revenue only covered 35 per cent of operating costs. The president and her team had set the one-way fare price at CA$27.50 to reflect the high-value positioning of the train. However, this price had received a great deal of criticism. The president had attempted to combat the criticism both in the press and with marketing actions, blaming entrenched consumer behaviours regarding travel. She also offered discounts and promotions to boost ridership, which ultimately failed. Now she had to decide whether to lower fares and how to market the Union Pearson Express.
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