Marketing and Operations of Canadian National Rail

Subject: Marketing
Pages: 5
Words: 1421
Reading time:
6 min
Study level: Master

Marketing

Market Segmentation

Internationally, Canada can be identified as one of the global business-oriented companies that heavily rely on railway transportations to enhance its economical, and commercial performance. This factor can be explained by the country’s size, landscape, and the nature of some of its most profitable businesses, such as coal extraction and wood production. These businesses depend heavily on the railway transportation and its ability to deliver the large weights of goods across country at a speedy rate. Consecutively, it is no surprise that as of 2020 the size of the railway market amounts to $17 billion (“IBISWorld – Industry Market Research, Reports, and Statistics”, 2021). Yet, as one of the leading firms in the market, Canadian National Rail is faced with the necessity of market segmentation, to enhance the efficiency of its promotional activities.

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In its operations, the company combines the elements of multiple types of market segmentation. Demographical, behavioral and geographical types of the process are applicable to the firm’s activities, with only psychographic segmentation somewhat falling behind. To specify, the company maintains a system of financial discounts and special offers for students and elderly passengers, encouraging their financially vulnerable demographics. Similarly, loyalty programs are targeted at the repeated regular consumers, whose behaivoral patterns and, frequently, occupations compel them to use the railway services frequently. Finally, the altering of promotions and ticket distribution methods depending on needs of different cities within Canada is a sign of geographical market segmentation.

Marketing Mix

The marketing mix in railways services, as in general with service industries, exceeds the standard model of the Promotion, Product, Price and Place. Instead, it bases itself on the 7Ps approach, adding the variables of People, Process and Physical Evidence into the picture. Transportation services occupy the specific overlap between product-based businesses and service-based businesses, as although the customers are paying for a functional service experience, the capital investments required are production-heavy. Consecutively, the Canadian National Railway’s Product, defined by what is being sold, relies equally on the technical characteristics of the trains and the services provided by the transportation staff.

The Promotion element as exhibited by the company includes the standard multi-channel advertisement, with additional emphasis on social media campaigns to maximize the level of customer interaction. Online advertising prevalence also allows the firm to further its multi-dimensional Pricing strategy which heavily incorporates discounted rates for the target market groups with lower sources of income, such as students. Place, known also as distribution, concerns the organizations and infrastructure that ensure the availability of the product. In the case of Canadian National Railway the train stations fit into this category, with company relocating substantial resources to their maintenance and renovation when necessary.

As with any other service-based industry, Canadian National Railway prioritizes the high levels of skills, professional attitude and authentic engagement when hiring and motivating their employees. In transportation, the behavior and professionalism of the employees delivering the service, namely machinists and conductors, are a crucial part in the customer’s satisfaction. Thus, the company implements the strict hiring practices and monitored requirements to ensure and maximize the efficiency of their service. The Process element and the People element tend to overlap frequently, as Process concerns the delivery of services and is also rooted in professionalism. The Physical Evidence element converts the service essence into a more tangible and approachable finalized result.

Canadian National Railway has successfully invested into each of the 7Ps and utilizes the outputs to strengthen its position at the transportation market. Their Product element involves the infrastructural ease of the routes, their compatibility with switching to other transport methods, punctuality and the product information provision to passengers. The Price element covers the pricing of the ticket, the existing special rates, and discounted promotions on certain routes. The Place and Distribution mechanisms include the train stations and online ticket sales, with other factors such as accepted payment methods also influencing the outcome. Promotion includes the contents and diversification of promotional campaigns, the channels trough which they are delivered, the overall brand image and partnerships with other firms. The People element includes the appropriate manner of dress for staff members, their polite and service-oriented attitude, familiarity with accurate timetable and route information and, potentially, foreign language skills. The service Process involves the actions of departing, arriving and driving throughout the routes, as well as distributing food and drinks in the wagons if applicable. Finally, the physical evidence covers the comfort of transport and train stations, their cleanliness, the audio equipment and the clear direction guidelines implemented at the stations.

Competition Examination

The Canadian National Railway has several established competitors in the Canadian industry of transportation, such as Canadian Pacific Railway, Ferrocaril Mexico, Norfolk Southern, CSX and Amtrak. The Canadian Pacific Railway company can be identified as the primarily competitor of CNR, due to both firms heavily focusing on marketing their services to a wide range of markets. The Canadian Pacific Railway is a transcontinental transportation company based in Calary, and, just as the Canadian National Railway, it specializes on freight transportation services, logistics, rail and intermodal transportation services. Its clients include coal, automotive and food production industry firms, as well as wind energy components retailers and even hospitals. Hence, an obvious source of the potential competitive advantage over the CNR that CPR could secure lies in an improved infrastructural capacity for commercial transportations. By ensuring their wagons are capable of transporting greater volumes of cargo, CPR could increase the incentive of their industry-oriented clientele to chose their services over the other transportation companies.

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So far, the CPR’s competition with CNR has been somewhat successful, with the two firms balancing out each other’s positive and negative performances across the measurement variables. Namely, although CNR’s employee count is higher at 24,3816, it has a 6% decrease rate within the last analytical period, hinting at the potential labor redundancy issue. In the same vein, CPR’s employs only 12,398 members of stuff, but the number has been steadily increasing over the last analysis period by a total of 4%, indicating the company’s need for more personnel (“Canadian National Railway competitors”, 2021). Similarly, CPR’s rate of social media engagement is currently at 97.06%, compared to the 74.19% rate of this variable for CNR (“Canadian National Railway competitors”, 2021). Bringing it back to the potential competition tactics CPR can use against CNR one may assume, that as of now CPR is outperforming the national railways company in its social media marketing.

Operations

Operational Management

From an operational management standpoint, the railway company is generally reliant on cross-departmental communication and multioutlet performance strategy. The firm consists of the head office, located at Montreal, and representatives delegated across the train stations it operates on. The employees of both types alike engage in disruption management and performance quality checks, ensuring the transportation services offered by the firm are kept up to the due standard.

The process of creation of services CNR provides involves an already mentioned overlap between the product-centered industry and the service-centered industry. To secure competitive advantage the firm ensures its wagons are up to the newest level of technological advancement in the field. The company invests in production and purchase of the latest model of railway wagons, which positively impacts their speed and durability. Additionally, the firm then increases the levels of consumer comfort in the wagons through the provision of furnishing, storage sections and food and drink distribution services. For its corporate clients, the company invests in the durable wagons of high volume, equipped by the appropriate security systems. Furthermore, the state of the rails and the assortment of routes available also constitute parts of the CNR product offering.

Suppliers, Inputs, Process, Outputs, Customers: A Diagram.

SUPPLIERS INPUT PROCESS OUTPUTS CUSTOMERS
Wagon manufacturers; driver schools (supply an input of the machinists’ expertise) Wagons, trains, the machinists driver skills and familiarity with routes Routes are designed with convenience and popularity in mind, train stations are maintained, tickets are distributed online and offline, promotions are introducted CNR’s wide range of transportation services for individual and corporate customers alike Individual passengers; corporate customers hiring the firm for transporting raw materials and goods

Process Flow Diagram

Process Flow Diagram

The diagram presented above represents the process flow in case of the train delay issue, and the potential responses delivered by the CNR or other railway companies. The railway infrastructure is one of the most complex in the modern industry. Hence it is not surprising, that every transportation firm is familiar with an action script in case a disruption occurs in its operations across routes.

References

Canadian National Railway competitors. (2021). Web.

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Do, Q., & Vu, T. (2020). Understanding consumer satisfaction with railway transportation service: An application of 7Ps marketing mix. Management Science Letters, 1341-1350. Web.

Flowchart of the Train Delay Process. (2021). Web.

IBISWorld – Industry Market Research, Reports, and Statistics. (2021). Web.

Kamburjan, E., Hähnle, R., & Schön, S. (2018). Formal modeling and analysis of railway operations with active objects. Science Of Computer Programming, 166, 167-193. Web.