Why Amtrak Refuses to Know Its Market Position and to Learn from New Coke and Other Market Failures
By M.E. Singer
Amtrak Marketing In The Vacuum Of A Cul De Sac
Thankfully, the advocates and customers of Amtrak passenger trains can rely upon the commitment of U.S. Senator Charles Schumer (D-NY) to quickly size-up and critically admonish Amtrak’s recent marketing lunges at innovating increased revenue opportunities. So desperately seeking to increase revenues, without rationally understanding their product within their market position, is like watching Amtrak Marketing enact Don Quote attacking the windmills. The virtual lack of any definition and explanation of what is proposed with airline-style seats, on what trains and corridors, and time of introduction evidences how Amtrak Marketing is still going by the book–the abbreviated version of Marketing by Cliff Notes™ Although Amtrak senior leadership is undergoing another passing of the baton, where is the stewardship of the Board of Directors to provide their requisite check-and-balance before allowing such a concept to be floated in the media? Just as Senator Schumer so quickly called out how the imposition of airline-style seating would be the antithesis of Amtrak’s position in the market, the fallibility of the airline-seat proposal should have triggered within the Board, or FRA, the urge to dissect this tendency of the repetition compulsion for Amtrak to fail in its Marketing ventures.
From the 1950s into the mid-1960s, the Santa Fe Railway continued to advertise its fleet of “Chiefs” on the evening CBS News TV broadcast in Chicago. Not simply relying on flim, the Santa fe also displayed on the set actual coach seats from the “El Capitan” (Chicago-Los Angeles, extra-fare, all hi-level coach train). Clearly, the Santa Fe understood the unique assets in its market position and how to promote its brand. Contrary to that clear vision of the Santa Fe, Amtrak continues to ignore the French marketing expression, cherchez le creneau–“to look for the hole;” meaning, what gap in the transportation industry could Amtrak position within? Believing that initially the Northeast Corridor is being targeted for the airline-style seats, Amtrak has failed to define the market how and with what product(s) its “Northeast Regionals,” will compete. Their is no product positioning nor any attributes of the “Northeast Regionals” identified to define its product(s); therefore its position remains nebulous in the market.
Assuming the contemplated airline-style seats are intended for the “Northeast Regionals,” Amtrak has yet to identify what positioning gaps exist that Amtrak could “own” on that route. Unlike the Santa Fe, Amtrak has not embraced its unique product that differentiates its competitive position in the Northeast Corridor market-“the largest, most comfortable coach seats offering the most legroom©.” Consequently, the inability of Amtrak to define the gap in the market to stakeout its ownership has created a competitive opportunity for the “Limoliner,” a limited business class seating, multiple bus frequency scheduled between midtown Boston-New York offering meals, WiFi, and seat selection. Amtrak has already forfeited to simply observe the gutting of its low-end budget market by failing to counter for years growing inroads by the curbside and other bus firms (e.g., Megabus, Bolt, Peter Pan, Greyhound, Chinatown-Fung Wah, Lucky Star, et al). Compounding Amtrak’s failure to understand and successfully pivot on its unique product advantage of the coach seat; as well as Amtrak’s inability to protect that market position from inroads by both luxury and budget bus firms, Amtrak Marketing has also unsuccessfully differentiated its Northeast Corridor service in the mind of the customer by not pivoting off its other unique strength–the multiple market en route segments that are not served by air or bus competitors, e.g., Stamford-New London.
How Amtrak Marketing Must Appreciate The Death Throes of Line Extension
In reaction to the initial proposal for airline-style seating, given the understanding how a typical Amfleet coach will be sub-divided into a separate section for budget passengers, marketing proponents understand how onerous the task is for one product to be associated with multiple levels of branding. The concept of a “step-down line extension” is typically at the cost of weakening the higher brand. Indeed, this is what the CATO Institute report stated in its 18 July 2017 response to the proposed airline seating, (aside from its typical anti-Amtrak diatribe) how Amtrak would be “drawing most of its economy customers away from its own regularly priced trains, not from the bus companies. Thus, economy seating would minimally lower costs but significantly reduce revenues.”
Into this unknown market segment that Amtrak has not achieved in before, i.e., no slumbercoaches, no coffee shop/grills, etc., Marketing must tread lightly here. Valuable lessons can be learned from prior marketing fiascos that endeavored to revamp and re-define their market position, including:
New Coke: Considered “the biggest marketing blunder of all time.” Why? Coke tried to fix something not broken.
Edsel: “The Edsel was a classic case of the wrong car for the wrong market at the wrong time. It was also a prime example of the limitations of market research…”
Aerotrain: Short-haul or long-haul service, Aerotrain was unacceptable. “The ride was uncomfortable, particularly at high speeds.” The engines could not get up hills, grades, and passes without helpers. So much for the lightweight, low gravity, cheaper to operate concepts to save the passenger train from GM, Talgo-ACF, Pullman, and Budd.
Market-Oriented Revenue Building Solutions
Before Amtrak destroys the uniqueness of its product that it will not be able to restore, Amtrak must recognize its own failings not to seize the ever-present opportunities to initiate revenue-building concepts that for too long have simply been ignored; its persistent unwillingness to benchmark to successful concepts–just in the railroad industry, including:
Specific seat assignments by car would abide by the recent OIG report criticizing Amtrak’s boarding process by eliminating the unpredictability, stress, and given the sense of conductors unable to manage the passenger flow, the impression of hostility by the crew. To further respect the passenger as customer, platforms should be clearly marked where each class and car number is located and stops. Just like in Europe; even with first and business cars marked with explicit color and number/logo. Trains throughout Europe carrying far more passengers in longer, more frequent schedules have experienced no problem with the reservation concept. Such reservations can also be procured same day from the automatic ticket machines. Even VIA Rail denotes car and seat diagrams for reservations. A recent article noted how the “Dutch rail company NS is working on an expansion for its Travel Planner-app that will tell train passengers where to find empty seats in crowded trains.” Until their end in 1971, the major railroads continued to require reservations on their passenger trains; accomplished this before computers. So, what continues to stymie Amtrak from taking this common sense approach?
Upgrade Food/Beverage Services On-Board
Why does Amtrak continue with such a begrudging attitude towards on-board food service for coach and business classes on the “Northeast Regionals” (and other corridor services)? It is simply a waste of a car-and LSA-to be operated in the ex-Penn Central fashion–stock-outs, booths cluttered with boxes or conductors gear; most importantly, the denial of significantly increased revenues because the Cafe LSA is not trained as a bartender; insufficient liquor kit, condiments, and tools for creating cocktails. Does anybody at Amtrak, particularly in catering, or, if their is even a Customer Experience Department, know the history of how the former New Haven Railroad’s bar cars were so profitable? What is the excuse; the reluctance not to maximize revenues?
First Class; Improved Business Class:
As already indicated, one key aspect of the market position of the “Northeast Regionals,” persistently ignored in promoting, is its competitive advantage in serving multiple market segments. As many of these markets are not served by the Acela, it is difficult to believe their is no market for first class for the many business travelers relying on this route. At the same time, Amtrak needs to revamp its Business Class, which is currently nothing more than a coach car behind the motor, and inconveniently several cars from the cafe.
Although VIA Rail unabashedly promotes its ability to operate charter/special trains along its corridors, it appears to be a secret that Amtrak is reluctant to promote. As a potential source of newfound revenues, why is this ignored?
In respect to the eye-opening research conducted by Mr. Andrew Selden and explained in the publication of RailPAC, why is the response from Amtrak stone silence; not acted upon? Mr. Selden has amply illustrated how the major traffic along the Northeast Corridor is principally commuter between New Haven-NYC and Philadelphia-NYC. It is this commuter-type traffic that crowds the Amtrak trains. Given this analysis, the answer also appears reasonable–for Amtrak to acknowledge this market as it is, and designate one class specific trains, perhaps utilizing the lower comfort level Horizon cars, to operate exclusively between these two commuter zones. Consequently, this would dramatically free up space along the entire Northeast Corridor.
T Class (Tourist):
If after all of the above revenue-producing concepts are implemented, only than should Amtrak contemplate appealing to the budget-minded elderly and college student traveler. To gain their patronage without depreciating Amtrak’s “image,” just as is done during Thanksgiving, perhaps Amtrak can lease a bi-level commuter car from an east coast commuter line; to provide the strip-down environment now sought by Amtrak as its panacea for not understanding and serving its market with an acceptable, unique product to compete-and profitably.
Frankly, I would think these issues and solutions would be forthcoming if the multiple management and leaderships levels of Amtrak got out of their offices for a regular pattern of MBWA–“Management By Walking Around.” The lack of on-site, on-board management is a contributing factor to the inconsistent customer experience provided by OBS. As well, the employee with the right idea has nobody on the spot to communicate with his idea.
In the end, Amtrak must recognize that “the perception is the reality” in the minds of their customers.