B10 Indian Railways

7/30/2019 B10 Indian Railways

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INDIAN

RAILWAYS

A ServicesMarketing

AnalysisGroup 10 Section B, PGP 19, 2012-14

By:

Aditi 083

Akanksha 084

Akashdeep 085

Bhuwan 094

Rohan 136

Shikha 139


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INDIAN RAILWAYS A Services Marketing Analysis

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Q1. Find information about the industry as a whole (no of players; billings; contribution to

GDP; market size; Key trends; market leader/s; key stakeholders (customers, bankers, end

users etc))

Ans. Indias transport sector is large and diverse; it caters to the needs of 1.1 billion people. In

2012, the sector contributed about 9 percent to the nations GDP, with road transportation

contributing the lions share.

Good physical connectivity in the urban and rural areas is essential for economic growth. Since

the early 1990s, India's growing economy has witnessed a rise in demand for transport

infrastructure and services.

However, the sector has not been able to keep pace with rising demand and is proving to be a

drag on the economy. Major improvements in the sector are required to support the country's

continued economic growth and to reduce poverty.

Railways. Indian Railways is one of the largest railways under single management. It carries

some 17 million passengers and 2 million tonnes of freight a day in year 2007 and is one of the

worlds largest employers. The railways play a leading role in carrying passengers and cargo

across India's vast territory. However, most of its major corridors have capacity constraint

requiring capacity enhancement plans.

Indian Railways has a monopoly in the Railways Sector as it is still centralized and under the

control of the Government of India.

Roads. Roads are the dominant mode of transportation in India today. They carry almost 90

percent of the countrys passenger traffic and 65 percent of its freight. The density of Indias

highway network -- at 0.66 km of highway per square kilometer of landis similar to that of theUnited States (0.65) and much greater than China's (0.16) or Brazil's (0.20). However, most

highways in India are narrow and congested with poor surface quality, and 40 percent of Indias

villages do not have access to all-weather roads.


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Ports. India has 12 major and 187 minor and intermediate ports along its more than 7500 km

long coastline. These ports serve the countrys growing foreign trade in petroleum products, iron

ore, and coal, as well as the increasing movement of containers. Inland water transportation

remains largely undeveloped despite India's 14,000 kilometers of navigable rivers and canals.

Aviation. India has 125 airports, including 11 international airports. TIndian airports handled 96

million passengers and 1.5 million tonnes of cargo in year 2006-2007, an increase of 31.4% for

passenger and 10.6% for cargo traffic over previous year. The dramatic increase in air traffic for

both passengers and cargo in recent years has placed a heavy strain on the country's major

airports.

Passenger traffic is projected to cross 100 million and cargo to cross 3.3 million tonnes by year

2010.

The major players in the aviation sector are : Air India, Jet airways, Spice jet, Kingfisher etc.

Market share of key players in the Indian aviation sector

Name of the players Market

Share

Kingfisher Airlines and Kingfisher Red (previously AirDeccan)

28%

Jet Airways and Jet Lite (previously Air Sahara) 25%

Air India and Indian (previously Indian Airlines) 16%

IndiGo 14%

SpiceJet 12%

GoAir 3%

Paramount Airways 2%

MDLR Airlines 0.004%


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MARKET SHARE OF DIFFERENT MODES OF TRANSPORT IN INDIA


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Question 2. Choose one company and work out conceptual and contextual learning for the

company across each session as below:

A1.Identify and explain companys inbound marketing activities. Is the role of traditionalmarketing activities minimised?

Inbound marketing is generally defined

by three phases: Get found, Convert

and Analyze. A newer model

illustrates the concept in five stages:

1. Attract traffic2. Convert visitors to leads3. Convert leads to sales4. Turn customers into repeat

higher margin customers

5. Analyze for continuous improvement

Indian Railways uses minimal inbound marketing as the website www.indianrail.gov.in is one

of the most visited sites in India due to the kind of share IR holds in the market. According to

Alexa ranking, it ranks at 39 in India. Also, the booking site IRCTC is at 23rd

rank in India.

However, due to the immensely heavy traffic during rush hours and peak seasons, it has very low

positive reputation. The marketing for the two can be seen as below:

Traditional marketing is nomore a need for the websites as

due to the monopoly, there is

already unprecedented rise in the

site statistics

More high end servers are beinginstalled constantly to ease the

traffic and add to usability
http://www.indianrail.gov.in/http://www.indianrail.gov.in/


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A2. Identify companys efforts to cater to customer needs subtly using under promise and

over deliver?

Ans. Indian railways sometimes promise a little lesser than what they ultimately deliver to their

customers. This is a very subtle way of creating customer delight which is being practiced

largely in many industries, railways being one of them. When a customer receives more than

what he/she had expected it naturally affects the customers perception about the product. It stays

on their minds and higher perceived value is achieved. It is also considered as one of the ways of

creating brand value.

One of the ways in which Indian railways offer more than promised is by upgradation of tickets.

One of the passengers who has a booking in the lower class gets upgradated to a higher class in

case of a vacancy in the latter. This is done on first come first serve basis and also without any

monetary exchange i.e. it is made available to a passenger completely free of cost. When a

passenger is moved from a lower class compartment to a higher class compartment, a seat is

made vacant in the lower class compartment. This vacant seat is provided to any of the

passengers who boarded the train Inspite of being on the waiting list.

Another service offered by the railways without a promise of any sort is refund of cash incase

money is debited from our cards during online booking which might have failed for any reason.

The railway aborts the transaction automatically without the customer having to file anycomplaints about it. The money is refunded within a span of 3 days. This service does not form a

policy of the Indian railways thus they are not accountable to the customers for transaction

failures due to reasons other than technical problems with the railway system. The railways still

provide this service in order to satisfy and delight their customers to stay in their good books ,

create brand equity and brand loyalty.


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A3. Identify 7Ps for the chosen company and how it compares across competitors,

elaborate on how challenging it is for the company to formulate the 7Ps given the extent of

its intangibility, inseparability, variability and heterogeneity.


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A4.Identify the customer segments and how the service is accordingly differentiated to the

benefit of the company and customers.

Railways customers can be segmented into broad market or business groups:

Commuters- For Commuter traffic, it is unlikely that there will be any need for furthersubdivision of the market, although in the case of a few of the regions railways (notably that

of Indonesia),premium or first class commuter services are provided with the aim of

capturing higher income business travellers, who might otherwise use private automobiles.

Medium-Long Distance Passengers -For Medium-Long Distance Passenger traffic,segments based ondemographic/income characteristics may be appropriate. Again, some of

the regions railways have focussed on business travellers while some (e.g. the Indian

railways) havevery successfully targeted group tour travellers and in conjunction with tour

and hospitalityagencies have developed specialized services to cater for the needs of this

segment. Manyof the regions railways have an obligation to provide welfare significant

services, such as economy class services catering to the needs of low and lower middle

income passengers and linking villages with key provincial centres, key provincial centres

with other key provincial centres, and key provincial centres with the capital.

Freight Customers-For Freight customers, the subdivision into market segments is likely tobe based ona combination of commodity type and handling mode (bulk, break-bulk and

container). Almostall of the regions railways now identify container traffic as a segment in

its own right. Other segments are mainly commodity-based. For example, in addition to

containers, the Thai andMalaysian railways identify about 14-15 commodity based segments

and the IndianRailways 10 or 11 commodity based segments. Each freight segment generally

has its own requirements in terms of loading/transport cycle, wagon type, handling method

and tariff(price). The commodity segments actually identified will be of particular

significance to therailway seeking to segment its markets.

Parcels and Express Freight Customers-While there appears to be no obvious basis for thesegmentation of parcels and express freight traffic, it is likely that this market may be

subdivided on the basis oftimesensitivity (e.g. overnight delivery, second day).


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Commercial Property Lessors-The Commercial Property Leasing market will desirably besegmented in terms of end use, e.g. Warehousing, Retail Trade , Office accomodation, Hotel

accomodation, etc., and possibly also in terms of lease tenure (short, medium and long term)

Others (e.g. advertisers using railway property)On the basis of income,classification of consumer segment into 2 categories :

1. The Lower Class (


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A5.Identify the buying behaviour of your customer segments. Chart out the buying

process of customers from Identification of need to consumption of service to post purchase

stage.

Consumer buying behaviour can be divided into three stages:

Pre-purchase stage- Pre-purchase stage involves recognition of need, information search,and evaluation of alternatives. First the need for travel in recognized by the consumer. Then

destination is decided which they want to travel. Sometimes, destination and need to travel

are recognized simultaneously. After deciding the destination, he searches for different

modes of travelling. He decides whether he wants to travel with bus, railway or airways. All

the modes of travelling are evaluated depending on time of journey, fair, purpose of

travelling, availability of seats etc. Based on evaluation, mode of travelling is selected.

Service encounter stage- Service encounter stage is the stage where customer gets theexperience of service. If customer decides to travel with railway, he needs to make a

reservation. Reservation can be done through online websites or booking counters. This

decision is based on the past experience of the customer. If there were difficulties in past in

making online reservation, he will make reservation from booking counter and vice versa.

After making reservation, he needs to travel railway station. Customer experience starts assoon as he enters the railway station. Customer experience depends on the Cleanliness of

station condition of Compartment, Catering services, delay, etc.

Post encounter stage- Post encounter stage includes evaluation of service performance andcomparing it with the expectation. After travelling customer compares the experience with

his expectation and is either satisfied or dissatisfied. He shares his experience with friends

and family member that affect their decision to travel with railway in future. His future

decision will be based on his experience in both pre purchase stage as well as service

encounter stage. Word of mouth marketing comes out after having experience of the service

which is considered as very effective marketing.


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A6. How are customer expectations formed? How can your company control customer

expectations?Explain with relevant illustrations.

(i)Customer expectations are what people think should happen and how they think they should

be treated when asking for or receiving customer service.

Expectations are formed by:

- what people hear and see

- what they read and what the organization tells them

- what happens during the customer experience

- what has happened to them in other customer service experiences.

Generally customer expectations rise and organizations try to match that rise through continuous

improvement in customer service.

(ii) Customer requirement and customer expectation

- Booking from abroad is a bit difficult affair if you are totally new to the whole scheme of

things. Through Internet you can directly book most of the trains

-All A' and B' category stations to be made model stations.

- Help of architects to be taken in all division to make stations building more beautiful,

comfortable and with modern look.

- Modern facility such as ATM, cyber cafes etc. to be provided at all major stations.

- A pilot for giving the publicity rights for an entire division to a single agency, through open

tender.

-Four popular trains to be provided with world class passenger amenities and interiors .


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A7. Identify any situation where the company has achieved a service recovery or has

instituted a service recovery program successfully

In 1986, the Ministry of Railways established the Centre for Railway Information Systems

(CRIS) as an umbrella for all computer activities on Indian Railways. CRIS is responsible for

designing, developing and implementing all major computer systems for the Railways. With its

own R&D effort, CRIS has become a frontrunner in its field.

One of CRISs key technical achievements is a sophisticated reservation and ticketing

application called Country-Wide Network for Enhanced Reservation and Ticketing

(CONCERT), which runs on the OpenVMS Alpha Server platform. According to Mr. S. K.

Nanda, Director, Passenger Reservation System, Centre for Railway Information Systems at

Indian Railways, OpenVMS is an extremely rugged and reliable operating system. Its built-in

auditing feature provides us with excellent security.

The primary challenge for CRIS is to provide an efficient passenger service by ensuring

maximum uptime for its reservation/ticketing and inquiry application. The Railway must prepare

charts that map passengers with their seats, and must post these charts outside each coach.

CONCERT software enables the preparation of skeleton charts in advance for each train for the

next three journey days.

Indian Railways current CONCERT application represents a steady progression of using the

latest technologies available. In the mid-1980s, Indian Railways first computerized its reserved

ticketing operation on VAX systems running VMS. This was done from five regional

passenger reservation centres, each of which was a stand-alone site with its own local database.

During the mid- to late 1990s, CRIS introduced CONCERT, which linked the five passenger

reservation centres so that reserved tickets from any station of Indian Railways could be issued

to any other station from a single window. Mr. Nanda cites the importance of Reliable

Transaction Router middleware in improving passenger service. CONCERT from CRIS has

been able to improve the services to the passenger by offering single-window service to the

passengers. RTR gives the user location transparency for the distributed database system. Thus,

the reservation from one station to any other station can be given from a single window covering

the round trip, which means passengers only have to stand in one queue.


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A8. Identify the service around tangible product offerings of the chosen company if

applicable

Tangibles:

1. Railway has modern looking equipment & infrastructure at stations and trains.

2. Railways Physical Facilities like Lighting, seating and Toilets are OK.

3. Staffs of Railways are neat in Appearance.

4. Time Tables, Display Boards etc are visually appealing.


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A9. Identify the soft measures and hard measures that can help identify the service

performance at each stage of customer touch points.

The projects covered the soft areas under which organisational and managerial aspects and also

the hard technology areas such as rolling stock acquisition.

Some of the soft areas covered were:-

1. Defining a new relationship between the state and railways.

2. Introducing marketing as a function at different levels in the organisation.

3.Introducing a financial information system that could help in introducing the cost and profit

centres.

4. Developing a project management system which could incorporate the past experience and

knowledge gained by the railway in executing largeprojects such as the Konkan railway.

5. Designing of motivational packages for the operations staff who are subject to considerable

stress and a hostile operating environment.

6.Introduction of total quality management initially at the production units and then to be

extended into the service sector.

7.Improving productivity and quality in maintenance management.

The Indian railways lapsed into a status quo in these hard areas.

1. The design of locomotives, coaches and wagons remained virtually unchanged for 30/40years.

2. The increasing demands on the railway system in India remained unsatisfactory owing to theinability of the management to take timely decisions on technology changes. It was not until

a couple of years ago, that the railways decided to induct modern technology for its

locomotives and coaches.

3. However, in the all important areas of signalling and telecommunications which presents themost effective method of improving capacity, the railways have yet to take up a system

upgradation program. There were sporadic efforts to introduce elements of improved

signalling. These have, by and large, been too thinly spread out to have an impact.


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4. The tracks are getting busier and dependence on manual operations of these systems isresulting in enormous stress on the operating staff such as Station Masters, Cabin men

and Drivers.

5. The system capacity remains stagnant and when such systems are operated continuouslyat peak capacity, the chances of human error increase with tragic results. It is now beingrealised that the capacity demands on the railway has assumed proportions which cannot

be dealt with unless appropriate technologies are inducted and made operational in a

sustainable way.

6. In the area of information technology, the railways were pioneers in introducingcomputers. The computerised passenger reservation system stands out as an example of

the widespread and sustainable use of computers and communications to provide better

customer service.

7.

The inability to provide a similar freight operation system stands out in stark contrast.After the initial steps to computerize the accounting and personnel activity, there has

been a slow down. Projects to introduce efficiency through computerization and

communications are few.


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A10. Identify the pricing strategy for one of the pdt/service offerings in as much detail as

you can with suggestions and recommendations or why you think the pricing strategy is the

best strategy

In the Railway Budget 2012 the Government has decided to raise the ticket fares across all

classes and all types of trains. Here is brief overview and explanation of the fare structure of

Indian Railways after Budget 2012:

2 paise per km rise in ticket fares for suburban and ordinary Second Class train tickets

3 paise per km rise in ticket fares for Mail, Express Second Class tickets

5 per paise per km rise in ticket fares for Sleeper Class tickets 10 paise per km rise in ticket fares for AC Chair Car, AC-3 Tier and First Class tickets.

15 paise per km rise in ticket fares AC-2 Tier tickets

30 paise per km rise in ticket fares for AC 1st class ticket

Not only has the cost of train tickets have been increased, the cost of a standard platform ticket

been increased to Rs. 5 from the earlier Rs. 3.

So according to the new Budget 2012, here is an approximate class-wise increase in the cost of

ticket fares for a 1500KM train journey:

AC 1st Class TicketRs. 450 more

AC 2-TierRs. 225 more

AC 3-Tier / AC Chair CarRs. 150 more

Sleeper ClassRs. 75 more

The pricing strategy that is adopted by the Government is based on the type of train, and the

number of kilometers to be travelled.


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RECOMMENDATIONS:

A way of generating funds is to change the pricing policy. Politics, not the market, dictates the

pricing structure in India currently. Politicians force it to subsidize some of its potentially most

profitable businesses, like the Bombay suburban routes, which carry 6 million people a day.

About 70 million passengers a year do not contribute to revenue because they travel without

tickets. Another issue relevant here is the low demand route. The expert group has brought out

this issue clearly and its applicability in the Indian context is spot on. The government can

consider differential pricing. This differential pricing should be based not just on the low demand

routes, herein low prices are charged but also in the off-seasons and nonpeak hours in an

otherwise high demand route. Extending this point further the government could go for

congestion pricing in routes where there is very high demand for this service and the supply is

limited by charging higher prices in these areas.

The ability of IR to accelerate growth rate of their revenues from freight and passenger traffic is

central to the success of any effort to restructure the organization. No organization can hope to

survive for an extended period of time by being dependent solely on external sources of finance.

Currently the ratio of freight to passenger rates in the revenues of IR is approximately70:30.

Hence a restructuring would be required in both the sectors for the restructuring exercise to be

worthwhile.

Based on the above stated reasons and the facts that the steadily increasing disposable income ofthe middle and upper classes has made them less price sensitive than earlier the committee made

the following recommendations..

Creative pricing techniques designed to maximize utilization of available capacity, likeoff-season discounts, standby discounts etc to be used to augment revenues.

Streamlining the ticketing procedure by exploiting opportunities on the net. A serious relook has to be taken at concessional fares.

Improving freight services in terms of waiting times, certainty of delivery schedules,

convenience of loading unloading etc.

To compete in the non-bulk segment, apart from pricing the services competitively,integration with other modes of transport i.e. road and sea shall be essential.

IR has to offer a total logistics package, i.e. it has to develop the capability to picking upsmall roads, aggregating them initially then disaggregating and delivering them.


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A11. Identify use of new media by the company to promote and communicate service/ pdt

offerings to their respective TG. Do you think the company can attain better marketing

ROI by calibrating investment judiciously across online and offline ad and marketing

spend?

IRCTC is better known for changing the face of railway ticketing in India. It pioneered Internet-

based rail ticket booking through its website, as well as from the mobile phones

via GPRS or SMS. Ticket cancellations or modifications can also be done online. In addition

to E-tickets, IRCTC also offers I-tickets that are basically like regular tickets except that they are

booked online and delivered by post. The Tickets PNR Status is also made available here

recently.

Seeking to make it easier to book e-tickets, IRCTC has decided to launch a scheme calledRolling Deposit Scheme (RDS) a hassle-free e-ticket booking scheme allowing passengers to

reserve seats against advance money kept with the corporation.

Indian Railways actively employs in-train marketing in the form of journals describing the latest

feats of Railways. Their print campaign, though, is sporadic in nature. In digital space, Railways

is present largely due to its irctc web portal. Online advertisement is absent. Its penetration in

other forms of media- viz, TV, Radio, etc is also negligent, except in form of in-movie

references.

However, considering its monopoly position, Railways has the power to sustain its sales despite

inadequate marketing initiatives. Marketing in digital space and other new media may therefore

not be fruitful.


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A12. Identify key investments in the company which have helped improve service quality.

Elaborate each investment conceptually and with approximate quantitative details

wherever possible.

a. Addition of High End Servers to reduce IRCTC website hassles Installation of the high capacity Iridium servers. Also, the number of server is also to be

increased from 52 to 70.

Increase in internet bandwidth from 344 to 450mbps. Implementation of single user registration with one email ID with email verification has been

launched.

b. Security Systems Digitization

The Indian Railways will soon raise a commando outfit on the lines of National SecurityGuards (NSG) to counter terrorist activities at railway stations and its properties. In 2009, the

then Union Minister of State for Railways, R. Velu told reporters that commandoes would be


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given rigorous training on the lines of NSG and these men would be picked up from the

railway battalions.

The trained men would be posted at the most vulnerable and sensitive places identified by thedepartment.

c. Customer Friendly modifications

According to reliable sources, Indian Railways plans to fit GPS devices on each train andwhich will track Google Maps for general usage. For each train the cost of the GPS device

would come to around Rs 70,000 to Rs 100,000 for each train. The tracking instruments are

expected to provide precision of 10 meters and delay of 2 minutes. These devices will be

fitted in nearly 100 trains.

ISRO has given the clearance for using the frequency from KU band for using the satellite forInternet, said a senior Railway Ministry official, adding it will be for the first time that

Internet will be operational in moving trains through satellite.

Indian railways is set to come up with a system to allow differently abled people to book railtickets online at concessional fares that they are entitled to.


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A 13. Identify gap/s in the companys operations and marketing and suggest how your

company can overcome the same using Gaps model of service quality

GAP-1: Not knowing what customer expect .i.e. what are the expectation of customer of

Indian Railways. Due to inadequate marketing research, Indian Railways continues to have

the same service offerings since its inception with sporadic changes. This gap in customer

expectations leads to serious fall in customer satisfaction. Thus, extensive marketing research

needs to be undertaken to accurately assess customer expectations.

GAP-2: Not selecting the right service design and standards. Indian Railway has improved its

service design over the years with introduction of new offerings such as E-wallet and

improvements in online portal. However, the standard of these service offerings is still

abysmal in comparison to those offered by other transportation system.GAP-3: Not delivering to service designs and standards. This can be due to deficiency of

human resource policy of Indian railways. There is a huge gap in supply and demand of

services in case of Indian Railways. There are various capacity constraints in terms of

infrastructure like shortage of coaches, overcrowded trains, low space capacity and old and

outdated seats. Demand is large and shortage of time, labour and facilities make the problem

worse. To overcome the problem of excess demand and limited capacity, we need to identify

demand patterns for different capacity constraints.

GAP-4 : Not matching performance to promises. This can be due to lack of integrating

services marketing communication and ineffective management of customer expectation by

Indian Railways. In this way the gap between expected quality and perceived quality can be

calculated by Indian Railways. Disparities in train schedules and decreasing quality of service

need to be countered.

B10 Indian Railways

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