MARKETING STRATEGIES OF

INDIAN TRANSPORT SECTOR

By,
Ankit Sharma
Arunava Saha
Arvind Singh
INDIAN TRANSPORT SECTOR
Indias transport sector is large and diverse; it caters to the
needs of 1.1 billion people. In 2011, the sector contributed
about 5.5 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

India - Urban Transportation Scene
2
nd
Largest urban system
60% GDP generated from urban areas
5161 towns and cities
7 megacities (4 million + population)
28 cities with population 1-4 million
13 cities in 0.8 to 1.0 million range, will cross 1 million by next census
40 cities in 0.5 to 1 million population range and balance state capitals
Motorization rates are high
In 6 Metro Cities, during 1981 to 2001
Population increased by 2 times
Motor vehicles increased by 8 times
In 2006, organised city bus service - in only 20 cities
3
Source: Ministry of Urban Development, GOI
Urban Transport Scenario
4
Forecast of Vehicle Populations in India
(Figures in Million Vehicles)
Total on road Vehicle Fuel Consumption
(Figures in Million Tons of Oil Equivalent)
From 1981 to 2001, population increased in six major
metropolises by 1.9 times but motor vehicles increased by
7.75 times.
Energy demand in transport sector projected to grow at 5-8% per annum
0
50
100
150
200
250
300
350
400
2005 2008 2015 2025 2035
49.1
63.9
121.3
246.1
372.7
58.0
73.0
115.0
221.0
371.0
2005 2008 2015 2025 2035
Source: Ministry of Urban Development, GOI
Two Wheelers
Cars
HCV Three Wheelers LCV
Indian
Transport
Sector
Railway
Roads
Ports
Aviation
Service Sector Management
Indian Railways

The largest railway in Asia

The fourth most heavily used system in the world

Carries 14 million passengers a day

Track route length more than 65,000 kilometers

2,07,719 units of freight cars, 45,350 passenger cars, 6909
stations and 14,06,400 staff. It operates 8984 passenger
trains everyday



Indian Roads

Length of 2 million kilometers

More than 20,000 kilometers of highways

Carry almost 60 percent of the countrys passenger traffic
and 40 percent of freight
Service Sector Management
Maritime Transport in India


India has 12 major and 185 minor ports

More than 16,000 kilometers of inland
waterways


Airports


India has more than 125 domestic
airports, including 11 international
airports

Two airlines (Air India and Indian
Airlines) and one helicopter service
(Pawan Hans) owned by government

Marketing Mix for Rail
Transport
Product

Passenger Traffic

Coaches (Seating, berths, leg room,
elbow room, double decks)
Reservation
Lighting
Catering
Water
Sanitation
Bed rolls
Medical aid
Services at the railway stations


Freight Traffic- (agricultural and industrial activities)

Types of wagons- BOX, BOY, BCA, TANK, BCX
Services- Domestic Container Service
Freight Forwarder scheme
Quick Transit Scheme
Speed Link Express Trains
Street Collection etc


Mail Traffic (Railway Mail Services)

On time services, quicker delivery, professionalism in
management, wider coverage in remote areas
Pricing (Deciding the fare and freight rate)

Principles of pricing:

Cost and Value of service
What the traffic will bear
Equal Mileage Rate Principle (fixed rate/km)
Differential charging
Zonal charging

Suggestions to improve pricing for Indian Railways to make it more
profitable

Place

Distribution of services to many remote areas

Online Facilities:
Passengers Current Status Enquiry
Fare Enquiry
Reservations
Train Between Important Stations
Upgraded Passenger Scheme/Chart
Weekly Availability at Stations

Tatkal Scheme
People

Training for employees: More than 2,00,000 staff is imparted training every
year, enabling its officers and staffs in acquiring knowledge and new set of
technical and managerial skills

Target customers: A wide coverage, all age groups, all incomes levels,
occupations office going, businessmen, short haul as well as long haul
journey passengers
Marketing Mix for
Road transport
Product

Road Transport Corporations, Inter State
Road Transport Organisations or travel
agencies/individuals engaged in road
transport business to carry passengers or
goods from one place to another

Roads as well as vehicles plying on these
roads need up gradation and regular
maintenance

Maintenance of roads includes drainage,
provision of road side amenities,
landscaping/horticulture etc need special
attention
Marketing Mix for
Road transport
Product

Road Transport Corporations, Inter State
Road Transport Organisations or travel
agencies/individuals engaged in road
transport business to carry passengers or
goods from one place to another

Roads as well as vehicles plying on these
roads need up gradation and regular
maintenance

Maintenance of roads includes drainage,
provision of road side amenities,
landscaping/horticulture etc need special
attention
Price

For state road transport corporations, pricing structure cannot be
changed with a change/hike in the prices of the input

This affects their financial health and it reflects on the qualify of
services offered

Profit making private organizations can change prices according to
cost incurred, seasonal demand, emerging trends etc


Place

Better distribution/network of services than rail, in terms of reach
Road Transportation Indian Economy


Roads a great importance to Indian Economy
Better product mix is needed to divert all long distance traffic to
road traffic.
Government could invite the private sector for construction of
roads- Toll taxes being their income.
India is portrayed as a Tourist country, so to ease travel, roads
provide for maximum social advantage.
Road transportation a critical element in the transportation
infrastructure
Road construction & maintenance generate employment
opportunities.
Old buses or trucks should be replaced with new modern buses to
attract passenger traffic & also check on their safety.
Road transportation- needed for development of trade & commerce.


Marketing Mix for Air
transport
Product

Price

Promotion

People

Place
Product
On ground Services
- Duty free Shopping
- Reservation Counters
- Flight Information Display
- Baggage Screening
- Check In

In Flight Services
- Free Water
- Food
- Comfortable Seating
Arrangement


Price

Low Fare Pricing
Value for Money Pricing
Premium Pricing


Promotion

Frequent Flier Points
Inflight On demand Movies
Travel Reward Programmes


Place

Booking offices of Airways
Travel Agents Office

People
Air-hostess
On-Ground Staff
Pilots
Tour Operating Agents

Process
Computerized reservation system
Baggage Handling




Process (Service Map)
1. Ticket booking
2. Ticket Processing
3. Ticket Delivery
4. Customer reaching the airport
5. Boarding Pass
6. Security Check
7. Inside the aircraft, refreshments
is served before he reaches his
final destination.
8. A pre-paid cab is also arranged
for the customers add-on
journey from the airport.
Transport Marketing in Indian
perspective
In India transport business is found profitable- large population
Managerial proficiency is needed to transform potential transport uses to
actual users.
Marketing Mix should be reviewed keeping in mind the socio-economic
requirements.
A suitable product mix helps in satisfying the users, strengthens the
capacity of the organization to face competition & generate profits.
Technology needs to be brought into every sector of the transport industry.
Innovative marketing practices should be implemented.
Indian railways: suggestion
Indian Roadways : suggestion
Waterways : needs to be highlighted since India is mostly surrounded by
water. No. of lakes & rivers in our country.
Challenges
Indias roads are congested and of poor
quality
Rural areas have poor access
The railways are facing severe capacity
constraints
Urban centres are severely congested
Ports are congested and inefficient
Airport infrastructure is strained
Opportunities in Indian Infrastructure
Key Focus Area
Significant PPP model for
roads
Golden quadrilateral
Rural Roads
Privatisation of Ports &
Airports
Selective opening up of
railways for container traffic
Urban Mass
Transportation
Planning Commission Estimated Spends for
XI
th
Plan (2007-12)
(Figures in Percent)
Private sector expected to contribute to a large proportion of this
investment
Power
32%
100% = US$ 444.7 Billion
Transport
40%
Telecom
10%
Telecom
18%
81.1
19.1
9.0
65.9
11t h Pl an
US$ 175.0
B
Roads
Ports
Airports
Railways
Source: Planning Commission, GOI
24
Investments Required
Investments Required in Urban transport in XI Plan (2007-
12) - Total Investment around US$ 30
billion.
Source: Planning Commission, GOI
Exchange Rate: US $1 = INR 45.37132 (September 22, 2008)
US$ 7.2 billion
US$ 8.4 billion US$ 1.6
billion
0.1 - 0.5 million
cities
US$ 1.7 billion
US$ 5.7 billion
US$ 4.6 billion
1.0 4.0 million
cities
0.5 1.0 million
cities
4.0 million plus cities
Modern Buses
MRTS
Transport Planning
and
Capacity Building
US$ 77 million
25
Urban transport Key Issues
Current Problems:
Rapid urbanization & growing transport demand
Inadequate public transport and rapid motorization
Mix of slow and fast vehicles without segregation
Increasing level of congestion and pollution
Transport energy demand and carbon emissions rising
Uncoordinated management of urban land use/ transport

Causes of Problems
Poor quality and insufficient capacity of roads
Explosive numbers Indias urban population has grown 4.6 times,
vehicle numbers have increased 158 times
Insufficient road space available to public transport
26
Transport in the Republic of India is an important part of the
nation's economy.
National Urban Transport Policy (NUTP) 2006
27
India launched its first transportation policy in 2006, which focuses
on moving people and not vehicles.
Promote ITS, cleaner fuel & vehicle technologies for cities
Projects to demonstrate best practices in sustainable
transport
Build capacity to plan for sustainable urban transport
Ensure coordinated planning for urban transport
Ensure integrated land use & transport planning
People focused & equitable allocation of road space
Investments in public transport & Non Motorized modes
Strategies for parking space and freight traffic movements
Establish Regulatory mechanisms for a level playing field
Innovative financing methods to raise resources
National
Urban
Transport
Policy (2006)
Source: NUTP and JnNURM- Government of India Initiatives to Strengthen Public Transport, S.K. Lohia, OSD (MRTS), MoUD, GOI
JnNURM
A mission for integrated development of urban infrastructure
services with the assistance of the Centre, state and local
bodies
Set up with US$ 20 billion outlay to cover 60 cities with a million-plus
population in next seven years
Objective:
Provide basic services to urban poor (housing, water supply, sanitation,
slum improvement, community toilets); and
Enhance overall urban infrastructure
Federal Government also launched a new scheme JnNURM
(Jawaharlal Nehru National Urban Renewal Mission) to finance
urban transportation initiatives.
28
Urban Transport - Metro Rail Projects
Delhi is successfully operating its
Metro Lines with daily ridership of 1
Million passengers / per day.
86 km is under operations.
Another 100 km is under
construction.
Metro rail projects promoted under
joint ownership with the concerned
state governments in Delhi,
Bangalore, Kolkata & Chennai
20% Viability Gap Funding for Urban
transport projects on PPP Mumbai
29
Urban ministry is supporting metro rail projects also in bigger cities
to serve high demand corridors.
Source: NUTP and JnNURM- Government of India Initiatives to Strengthen Public Transport, S.K. Lohia, OSD (MRTS), MoUD, GOI
City Kms
App. Cost
(US$ Million)
Delhi 121.26 4085
Mumbai 62.89 3915
Bangalore 42.30 1736
Kolkata 14.67 1037
Chennai 46.50 3106
Hyderabad 71.00 2638
Cochin 25.30 0617
City-wise Metro Systems Kms &
Investment
Major Trust on BRT System in India
Current Status 17 Cities are
considering, planning or implementing
busway/BRT projects.
10 of the 17 are being funded through
JnNURM
BRTS Projects for 422 Kms
sanctioned for 9 mission cities
at a total cost of US$ 1,016
million (@ US$ 2.4 million per km)
Note: * Delhi is implementing BRTS with its own funds.
30
Buses contribute as the most important mode of Public transport
across all cities.
City
Kms
planned
App. Cost
(US$
Million)
Pune 101.77 204.00
Pimpri
Chinchwad
42.22 --
Indore 11.45 20.00
Bhopal 21.71 --
Ahmedabad 88.50 196.00
Jaipur 39.45 44.00
Vijaywada 15.50 --
Vizag 42.80 --
Rajkot 29.00 --
Surat 29.90 --
Delhi* 121.00 --
City-wise BRT Systems Kms
Economic stimulus package
15,260 modern buses sanctioned under economic stimulus package at a
cost of US$ 1,020 Million
Waive state & local taxes on public transport (upto 16%)
61 mission cities Covered; about 4000 buses are on road as on 31
st

December 2009
34 new cities to get organised city bus service

Urban Bus Specifications
Low floor (400mm), semi low floor (650mm) and standard buses
(900mm) as against prevailing 1100mm floor height (truck chassis)
ITS features
LED sign boards
Audio visual passenger information
Multiplexing, On board diagnostics
Cameras, integrated controller
GPS, GPRS, Smart card ticketing machines
31
Buses for City Transport
Source: Ministry of Urban Development, GoI (January 2010)
World Bank Support
National Highway Development Project.
Rural Roads Program.
States Road Project.
Mumbai Urban Transport Project.
Sustainable U Project.

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