Text 2 0 . Railway Systems in the Market Economy
Nowadays railway systems play an important transport role. To do so they must be punctual, provide high-density services, and be in harmony with the environment. In order to cope with the requirements of the market economy railways introduce new methods of management, commercial activities and tariff policy. Simultaneously, they build new high speed tracks and reconstruct the old ones. Railways renovate their fleet and put it into operation. Rail managers develop logistic chains and new types of combined transport.
Awareness of environmental issues, daily highway and airport congestion suggest railways a new role within transportation systems.
In the competitive transport market, railways should use their advantages. They include high speeds, urban rail services, combined transport, and container transportation.
The share of railways in the national transport sector depends mainly on realisation of the market requirements. It can also be affected by the degree of state intervention, tariffs and subsidies.
In the past Russian railways were highly centralized and were the part of the planned economic system. As the market economy with free markets and free price system replaced the planned one, old practice became invalid. Taking much of the previous experience, the Ministry of Railway Transport launched a skilled gradual programme of adaptation to the market economy.
In the light of today’s market Russian railways satisfy demand for transportation and enhance efficiency and quality of their services. They also integrate into the Eurasian transport infrastructure.
In order to meet requirements of the market environment railways must show more efficiency and flexibility of their services. They are to cut costs, introduce new technologies, and modernise rolling stock.
Questions for discussion:
1. What do railways introduce to meet requirements of the market economy?
2. What is the function of rail managers?
3. Is railway network a competitive means of communication?
4. What factors suggest railways a new role within transportation systems?
5. What are the main advantages of the railways today?
6. What does the share of railways in the national transport sector depend on?
7. How were Russian railways organised in the frame of the planned economy?
8. The market economy is guided by free price system, isn’t it?
9. Who is responsible for adjustment of Russian railway network to the market environment?
10. What steps must be taken for the adaptation of Russian railways to the market conditions?
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Text 2 1 . Railway Marketing
Marketing is in many ways the central activity in business management. Marketing in a railway environment is a method and process for planning, mobilising and applying the resources to satisfy customer demands and to get profits. Marketing Mix includes Product, Price, Promotion, Place, People, Processes and Physical Evidence.
The core products of railway organisations are transportation services. For a railway passenger service, the characteristics of the product are the transit time, cleanliness and the riding comfort of the rolling stock. For a railway freight service, the characteristics of the product are the operational reliability of the service; the security for consignments and the availability of door-to-door delivery.
As to the price, for a railway passenger service, the fare is usually graduated by distance. In addition, fare rates vary with the standard of service. Different discounts may be provided as well. In a railway freight service, the tariff is usually expressed as a rate per tonne-km.
The promotional techniques are becoming more widely used. Sales representation is still the main form in railway business.
“Place” in the case of railways includes not only passenger stations and freight terminals, but corporate headquarters, centralised railway reservations offices, etc.
People are the most important resource of a railway organisation. Railway management systems can’t be successful if the customers do not feel that railway staff eagerly respond to their needs.
Railway processes must be compatible with the needs of the railway customers. If a customer requires regular loading on fast freight trains, then a railway’s policy of operating slower trains will be incompatible with these needs. That’s why the railway must be prepared to change its process accordingly.
Physical Evidence refers to the layout and presentation of the railway facilities. For example, the design of passenger stations must be comfortable for all categories of travellers.
A Marketing Plan is one of the most significant outputs of the marketing process. It should identify marketing objectives and strategies, specify sales, pricing and promotional strategies, review past sales and profit performance.
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Marketing strategies include actions taken to modify elements of the marketing mix in order to achieve marketing objectives. Marketing Objectives as well as Marketing Strategies must be market segment related, practical, realistic, and responsive to the actual needs of customers.
Questions for discussion:
1. What is railway marketing?
2. How many components are there in the marketing mix?
3. What are the main railway products?
4. How is the price for a railway passenger service calculated?
5. Why are people the most important resource of a railway organisation?
6. Why should railway processes be changeable?
7. What does physical evidence refer to?
8. A marketing plan identifies marketing objectives, doesn’t it?
9. What are marketing strategies?
10. What are the demands to the marketing objectives?
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