Leveraging ITS Data for Transit Market Research: A Practitioner's Guidebook (2008)

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3The transit industry is now recognizing what many indus- tries and retailers have known for a long time: to increase sales, you must understand and satisfy your customers. Tran- sit is rapidly coming up to speed with collecting customer information and using market research to develop a customer orientation. This process requires an ongoing commitment to asking customers what they want, responding to their needs, and following up with monitoring and evaluation to ensure the agency is delivering on its promises (Cambridge Systematics 1999). At the same time that the transit market research paradigm is evolving toward a greater customer orientation, a shift is also taking place with the implementation of ITS technologies. These technologies, whose primary purposes have been to im- prove transit operations, enhance convenience, and facilitate the flow of information to customers, also have the capability of recovering vast amounts of data about customers and the transit services they consume, thereby providing a rich re- source for market researchers. Several ITS technologies hold the greatest promise for re- covering data that will benefit transit market research. They in- clude AVL systems, APCs, electronic fare payment systems (EFP), automatic vehicle monitoring (AVM), and Web systems (including Web tracking software or Web logs). In addition to data collection technologies, there are also several emerging support technologies. The key support technologies include data warehousing systems, which organize and integrate data recovered from various ITS technologies, and geographic information systems (GIS), which facilitate the analysis and display of spatial data. In the early years of its adoption in the transit industry, AVL technology was viewed as a means of providing real time vehi- cle status information in support of dispatching and operations management. However, the industry is beginning to realize the value of archived AVL data in the areas of performance moni- toring, scheduling, and service planning (Casey 2000, 2003; Furth et al. 2006). The treatment of quality-of-service issues in the 2nd Edition of the Transit Capacity and Quality of Service Manual (Kittelson & Associates 2003), for example, envisions the use of archived AVL data to monitor the quality of service delivered to transit riders. APC technology has a longer history in the transit indus- try. The integration of APC and AVL systems has now be- come commonplace, enhancing the locational referencing of passenger movement activity and thereby ensuring higher quality APC data. APC deployment is expanding rapidly, es- pecially in medium and smaller size agencies (Volpe National Transportation Systems Center 2005), and APC data has become a valuable source of information in market research, service planning, and scheduling. EFP technologies are evolving beyond the electronic regis- tering fareboxes now in widespread use in the transit industry. Magnetic stripe and smart cards are being used by a growing share of transit riders. Data from card systems are highly valu- able because they can identify customers and customer groups. These data offer the capability of following customers through the system and provide an opportunity to relate customers’ revealed travel behavior to the attitudes and preferences they express in traditional surveys. AVM technology recovers data on vehicles’ mechanical and electrical systems. While much of this information is relevant to maintenance activities, some information (covering lift de- ployments, door openings, and signal priority requests) has potential value for market research and customer service use. Transit agencies are increasingly tapping the capabilities of the Web to provide information and services to customers. In turn, Web-tracking software compiles data logs that can provide in- formation about customers to the agency on pages viewed, navigation paths through the website, the travel itineraries queried, the real time status of vehicles serving specific locations, and other dynamic information. Similar path-tracking software exists for automated telephone systems. The intent of this Guidebook is to show transit market re- searchers how ITS data can be tapped to learn more about C H A P T E R 1 Introduction

customers and how they use the transit system. Generally, ITS data can serve market research objectives in two ways. First, the data can be used to monitor service delivery and con- sumption, as an ongoing activity or in a more targeted fash- ion (for example following changes in service and fares or after a marketing campaign). In these applications, ITS data substitute for data that have been traditionally collected by manual means. Second, ITS data can be used to enable tradi- tional market research practices, and in these applications they complement rather that replace traditional data. The research team refers to the complementary role of ITS data as “leveraging,” in that it extends or adds value to information recovered by traditional practices. Definition and Benefits of Market Research in an ITS Environment Market research is the systematic gathering, recording, and analyzing of data with respect to a particular market, where market refers to a specific customer group in a specific geo- graphic area (American Marketing Association 2007). In the transit industry, this definition encompasses analysis of cus- tomer satisfaction, public opinions, market characteristics and trends; identification of potential markets; demand esti- mation; market segmentation; new product testing and development; advertising and promotions; and fares and pricing policies (Elmore-Yalch 1998a). Market research activities are often closely aligned with service planning in transit agencies, fare and service changes, and service per- formance monitoring linked to market research findings. The most common traditional techniques for addressing market research questions in the transit industry draw on analysis of data and information from surveys, field observa- tions, focus groups, and secondary data sources. Market research techniques used in the transit industry have been documented by Hatfield and Guseman (1978) and Retzlaff, Soucie and Biemborn (1985). The use of market research for transportation systems management has been addressed by Apogee Research (1990). Personal observation is a market research practice that is predominately used to monitor service delivery. Observation data are collected by dedicated data collection staff or con- tractors, who sometimes pose as “mystery riders.” Personal observation techniques include manual collection of service delivery data, such as schedule adherence, boardings, alight- ings, and passenger loads. Focus group techniques are used to gather information about customers’ opinions, viewpoints, and perceptions on specific topics. Structured discussions allow market re- searchers to explore issues within a controlled setting, with the goal of gaining a deeper understanding of customers’ attitudes and preferences. Focus group techniques are valu- able for exploring topics that customers may be unfamiliar with; evaluating existing services; exploring creative ideas; and narrowing options for subsequent analysis through traditional surveys. Customer surveys provide the principal means of recover- ing systematic information from transit users and the general population. Surveys take a variety of forms, including on- board rider surveys, on-street intercepts, mail and telephone surveys, online surveys, and household travel diaries. On- board surveys are used for recovering information about the users of the system and their trip information; mail and tele- phone surveys are best suited for regional assessment and tracking of attitudes and behaviors associated with both rid- ers and non-riders; on-street intercepts are good for short surveys, especially those that require presentation materials; online surveys are useful for recovering specific information from customers with Internet access. The staff and resources required to maintain a compre- hensive market research program are not inconsequential. Market research is costly, and this function competes with others for scarce resources. In the transit industry it has thus been necessary to regularly demonstrate the value that mar- ket research adds to the organization (Elmore-Yalch 1998a, 1998b; Fielding 1987; Kittelson & Associates 2003; Morpace International 1999; Potts 2002). The increasing availability of ITS data in the transit industry can contribute to the business case for market research by enabling a more comprehensive integration of market research with other functions that con- tribute to the industry’s customer service mission. Effective transit market research does not take place in iso- lation. The design and execution of a comprehensive market research program depend on effective interaction with transit operations, planning, finance, human resources, and senior management. Any market research endeavor must anticipate how the research output will combine with the agency’s func- tions, strategies, and goals to form an integrated marketing plan. Finally, monitoring and evaluation of implemented marketing plans provide important feedback information for current and future market research. Successful market research is aware of its important position within a larger agencywide marketing framework. Fielding (1987) emphasizes that market research should be performed as an integrated function within a larger transit marketing system. Ideally, market research should inform the development of marketing plans, and the monitored effects of implemented marketing plans should feed back into the sys- tem and inform the next round of research. Despite the prom- ise of an integrated marketing system, Fielding concludes that the critical monitoring function rarely happens, breaking down the cycle and isolating market research from service delivery. He points to the difficulty and cost of collecting reli- able data as the key impediment to the monitoring function. 4

Figure 1-1 updates Fielding’s integrated framework and locates market research within the larger marketing system when ITS data are available. By providing continuous, low-cost data, ITS fills the service monitoring gap identified by Fielding and completes the integrated marketing cycle. In the updated framework, ITS data both inform the market research program and monitor the consequences of implemented marketing plans. Market research benefits from service delivery data as an input in the design and analysis of market research projects. The arrow from ITS data to market research in Figure 1-1 represents ITS data that have direct applications in facilitat- ing, or leveraging, traditional market research techniques. In this context, ITS data can provide information to market researchers that helps to identify (or locate) the customer populations who are to be studied. ITS data can also con- tribute information needed for sampling customer popula- tions and inferring findings from a sample to the general population. In some applications, ITS data can serve to main- tain the currency of the knowledge about customers gained through traditional practices. Lastly, it can make information and insights gained from traditional practices more robust by connecting the dimensions of customer satisfaction explored through traditional practices to parallel service delivery meas- ures documented by ITS data. Marketing action plans typically include elements of ser- vice development and delivery (coordinated within opera- tions and planning), promotion, and customer service. Each component benefits from the continuous monitoring func- tion of ITS technologies, represented in Figure 1-1 by the po- sition of ITS data as the intermediary between marketing ac- tion plan components and the monitoring and evaluation function. Within service delivery, for instance, AVL data can contribute to evaluating reliability. APC data can document how many riders are using the system. Farebox and card sys- tem data can document methods of payment and begin to identify customer segments. Event data can document phe- nomena that affect the quality of riders’ experiences on the system. Data from the Web and automated phone systems can document how customers are obtaining information and what they are communicating back to the agency about their experiences on the system. Generally, because ITS data are collected continuously and comprehensively, quasi- experimental before and after studies can be done to evaluate the effectiveness of a marketing program. In this context ITS data validate traditional market research practices by assess- ing the impact of marketing action plans and informing the next cycle of market research studies. Before the emergence ITS data, the monitoring and eval- uation function of the integrated marketing system, as prac- ticed at many transit agencies, was often resource-starved and haphazardly undertaken. In this more constrained con- text, marketing was often equated with promotion and cus- tomer service. Important as these functions are, they do not represent marketing as it is practiced in other industries (Cronin and Hightower 2004). Being “customer-oriented” certainly means listening when customers lodge complaints. It also means providing information that customers want and need to use the system, as well as promoting the benefits of transit as a travel option and providing products and services to facilitate choices. Fundamentally, however, a customer-oriented marketing program has to be capable of understanding customer behavior. Understanding customer behavior begins with an ability to monitor the consumption of products and determine how consumption is related to product attributes. The understanding becomes deeper 5 MARKET RESEARCH Area analysis; attitudes; market segmentation; customer satisfaction; origins-destinations; fare policy SERVICE DELIVERY Analysis; planning; scheduling; operations; revenue CUSTOMER SERVICE Information; special sales; customer relations MANAGEMENT GOALS & OBJECTIVES FOR MARKETING MARKETING ACTION PLANS PROMOTING TRANSIT Advertising; public relations ITS DATA MONITORING AND EVALUATION Figure 1-1. Market research in an integrated marketing system with ITS data.

when knowledge of product-relevant values, attitudes, and preferences of customers within and across markets is gained, and that knowledge is used to guide product devel- opment and delivery. The understanding becomes complete when evidence shows that products have penetrated markets to their maximum potential. Without the feedback information obtained from moni- toring and evaluation, it is hard to know whether marketing action plans have been successful or whether market research has had any consequence. In such an environment, the legit- imacy of market research cannot be firmly established. Under these conditions, there is a strong tendency for marketing to become isolated within the agency (Elmore-Yalch 1998b). Divorced from the important service delivery function, mar- keting then loses its strategic connection to the agency’s prin- cipal product. The promise of ITS data lies in its potential to ultimately raise the stature of transit marketing and market research pro- grams to a level that is comparable to what exists in other in- dustries. Its direct contribution to market research practices and its contribution to monitoring and evaluating service de- livery reinforce elements of the integrated marketing system that have been underdeveloped or missing altogether in many transit agencies. The transit industry’s transition to greater utilization of ITS data for market research has not been seamless nor with- out challenges. Properties have encountered system design, data management, and human resource issues in their efforts to fold ITS data into their market research and other func- tions (FTA 2005; ITS Joint Program Office 1999a, 1999b, 2000, and 2001; TCRP 2001). Thanks largely to the growing ex- change of information and experiences—both formally and informally organized—lessons are being learned at each stage of the ITS life cycle and the magnitude of many of the chal- lenges encountered earlier is diminishing. What the Guidebook Covers This Guidebook will show transit market researchers how ITS data can be used to support their efforts to gain a better understanding of customers and their travel on the system. In some applications, ITS offers a superior and cost-effective substitute to data that market research staff have traditionally collected manually to monitor customer activity. In other more advanced market research applications that seek to gain an understanding of customers’ attitudes, preferences, and behavior, ITS data can be used to leverage the practices that have traditionally been used to recover information. Chapter 2 of the Guidebook begins with a summary of the market research practices that are commonly employed in the transit industry. The chapter continues with a descrip- tion of data that are recovered by the technologies of inter- est in this study. The chapter concludes with a discussion of both the advantages and the limitations that should be recognized in efforts to relate data and information from traditional market research applications and data from ITS technologies. Chapter 3 of the Guidebook presents an inventory of possible uses of ITS data in market research applications. The applications are separated into two general categories. The first, defined as service delivery monitoring, presents applica- tions in which ITS data are used to complement traditional practices. The second category covers leveraging opportuni- ties, where ITS data are used in direct conjunction with traditional market research applications. Successful experiences linking ITS data with market research practices in the transit industry are commonly grounded in four key dimensions. First, an enterprise data system must be in place that is capable of processing, integrating, and storing ITS data, allowing for easy accessibility. Second, analysis and reporting tools that draw on ITS data must be available to mar- ket researchers. Third, the data management and market re- search enterprises must be adequately staffed with people pos- sessing the skills needed to perform in an advanced data environment. Fourth, because ITS data are used agency-wide, coordination across agency functions has become more im- portant. Both staffing and coordination needs can be hard to achieve without management support. These subjects are covered in Chapter 4. The transit industry’s progress toward the goal of gaining a better understanding of its customers and markets depends on its ability to learn from its experiences. Chapter 5 sum- marizes issues that have been commonly encountered in the industry’s transition to using ITS data for market research. The nearly 20-year experience of the transit industry with advanced technologies has yielded many lessons that proper- ties newly moving into the ITS arena or upgrading existing systems would benefit from knowing. A substantial amount of the information reported in this Guidebook was obtained from case studies of three properties—the CTA, City of Madison Metro Transit, and TriMet. These case studies are appended to the Guidebook (Ap- pendices A, B, and C, respectively). The case studies provide worthy reading independent of the main text in that they pres- ent coherent stories that illustrate how each property achieved success in drawing ITS data into its market research practices. 6