Free Essay

Steeple Analysis Heritage Railway

In: Business and Management

Submitted By manuelpitzling
Words 1801
Pages 8
Heritage Railway Industry -­‐ Market analysis

Content 1. Introduction ..................................................................................................................................... 1 2. The Five Forces of Porter .................................................................................................................... 2 2.1 Threat of new entrants ................................................................................................................. 3 2.2 Power of suppliers ........................................................................................................................ 3 2.3 Industry competition ..................................................................................................................... 4 2.4 Power of buyers ............................................................................................................................ 4 2.5 Threat of substitutes ..................................................................................................................... 4 3. STEEPLE Analysis ................................................................................................................................. 5 3.1 Social / Culture .............................................................................................................................. 5 3.2 Technological Innovation .............................................................................................................. 6 3.3 Economic issues ............................................................................................................................ 6 3.4 Education / Training ...................................................................................................................... 7 3.5 Political .......................................................................................................................................... 7 3.6 Legal .............................................................................................................................................. 7 3.7 Environmental protection ............................................................................................................. 8

1. Introduction The '3Rs' business consisting of restoration, replication and re-­‐enactment has been of interest to many people around the world for quite some time. One particular sector is the heritage rail industry, in which old trains are restored and kept running by often non-­‐profit organisations based on volunteer work. South Devon Railway is one of these organisations located in South West England. As a marketing consultancy we are doing an analysis for SDR to show them their positioning in the market and their overall situation towards local and foreign competitors. The South Devon Railway is one of Devon’s and the West Country’s most loved tourist attractions and is the longest established steam railway in the southwest. Founded in 1872 as one of the main drivers of the industrial revolution in Great Britain, in the 19th century it was mainly used for transferring goods throughout the country. After a short period of closing, the track was reopened by the SDR as a historical, non-­‐profit attraction to preserve the steam railways for new generations. For our report we have chosen four different analyses, which will show us the current situation SDR is situated in. At the beginning we will do a Porter's Five Forces analysis in seeking to establish which forces SDR is dealing with in the heritage rail industry in England. Secondly a STEEPLE analysis helps us to understand the environment they are located in. With relation to different aspects like cultural, economic and environmental characteristics we can break down the different problems due to the field they are originated in and this allows us to generate potential actions. Next the segmentation of the market provides information, which segments are most important for heritage rail organisations and on which we should focus on, whilst separately looking at Business-­‐to-­‐Business and Business-­‐to-­‐ Customer. With our fourth analysis we identified the stakeholders and their interests in South Devon railway, as well as their impact on the success.

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2. The Five Forces of Porter

As a tool for industry analysis and business strategy development, Porter's five forces helps to determine the forces and threats of competition in the micro-­‐environment and allows the evaluation of the five different forces of competition. As a result we can derive the competitive intensity and overall industry profitability of the heritage rail market. These forces are: Industry competition, threat of new entrants, power of suppliers, power of buyers, and threat of substitutes.

Figure 1 – Script Marketing Paul Filmore

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2.1 Threat of new entrants Fact New emerging attractions (e.g. theme parks) appearing frequently Threat Those might seem to be more entertaining (especially for people in ages around 16-­‐30) Potential Action Use modern media to reach this age group Combine heritage railway with other attractions (e.g. “Three Attraction Ticket” for Otters and Butterflies, South Devon Railway and Totnes Rare Breeds Farm) Market research Try to gain a competitive advantage Importance High Medium

Competition due to new steam railways in Europe

There are loads of impressive heritage Railway tracks in Europe

High High

2.2 Power of suppliers Fact Need of special, rare material Further supply of volunteers may decline

Threat High cost for raw material Staff shortages because non -­‐profit company depends on volunteer work Potential Action Search for alternative materials Hold interest high with additional benefits and offers Offer nice work environment and assure them in having a good time Medium Importance High

Low

3

2.3 Industry competition

Fact Loads of competition of heritage railways in whole Europe

High competition in the tourist sector

Threat Recreational offer is redundant

Potential Action Do advertising everywhere as possible Establish in potential, unexploited area Offer attractive activities Advertising

Importance Medium

Medium to High

Loads of substitution activities within the tourist sector

Medium

High

2.4 Power of buyers Fact The interest in old technologies and historical preservation is decreasing Bad transport connections, complicated to reach (without car)

Potential visitors are kept from SDR due to the extra effort to get there Threat Newer attractions draw the attention of tourists at them Potential Action Importance Leaflets in every hotel, Medium holiday camp, pubs, tourists-­‐information centre, etc. Design an internet site High with all the information Introduce shuttle buses from near railway stations High

2.5 Threat of substitutes
Fact
Other transport

Threat Other cheaper and 4

Potential Action Create emotional

Importance High

possibilities (e.g. coach) Trains with higher technologies available

often faster possibilities are chosen instead People choose those due to less travel time

advertisement so that people use the old trains Try to reach people who want to enjoy a unique atmosphere during their journey

High

3. STEEPLE Analysis To understand the environment South Devon Railway is situated in, the STEEPLE analysis will provide information about different problems and possible solutions categorised by social, technological, economical, educational, political, legal and environmental aspects. It identifies some of the key issues that exist in the external environment, which the company has to consider. Additionally it is part of external analysis when conducting a strategic analysis or doing market research. We use it as valuable strategic instrument to understand the market development and potential and business position. Every business is affected by its environment and the variety of individuals dealing with it. Therefore, this analysis will help us to understand the different impacts on SDR.

3.1 Social / Culture
Issue
Target audience Description Local people, Tourists, Students, Families, School groups, Retired people Mostly children with their parents or schools and retired people, tendentially more boys than girls Mainly from south-­‐ west England Holiday Education / Special interest Mostly during summer (April till October), special events on Christmas and new year’s eve Implication & Impact Wide range of visitors attracted by their interest in old trains and technologies, a fun day out or educational visits People in the ages of 18-­‐30 are missing Potential Action Broad range of marketing via internet, TV and radio to attract even more visitors. Try to become disabled-­‐ friendly Try to attract the middle age customer by introducing new events, which are designed especially for them (e.g. parties) Only few customers Cooperate with travel from the rest of Britain agencies, offer travel-­‐ and other countries packs Fluctuating number of Special offers non-­‐ visitors crowded periods Depends on national and international holiday-­‐periods and weather conditions No real possibility to influence this

Age & Gender

Origin

Reason for visit

Visiting times

5

3.2 Technological Innovation
Issue
Old equipment Description Only few modern technologies, usage of old machines Website provides information, no TV and only once Radio advertising, leaflets in hotels, tourist information centres and pubs Implication & Impact Loss of efficiency in comparison to modern techniques Low advertising results in missing out on potential visitors Potential Action Invest in new machines Increase advertising

Advertising & providing information

Information technologies Website

TV Operating supplies Coal has to be imported from Poland

Seems not to be updated regularly. Attractiveness of the website could be higher High costs for advertising makes advertising impossible High costs and effort

Update on a regular basis, renew design

Persuade a TV channel to do a documentary on SDR None, because of missing availability

3.3 Economic issues
Issue
Fares Description Prices are affordable, special offers for groups, etc. 40 full time employees and 400 volunteers No competition in the steam train business in this area, but many other attractions (e.g. paddle steamer) Only accessible by car Implication & Impact Attracts all social classes and ages Low cost for staff enables to keep SDR running Needs to compete with other attractions Potential Action Pricing model should remain Continue recruiting volunteers Offer combined tickets with other attractions (e.g. combi-­‐ticket SDR and paddle steamer)

Staff & wages

Competition

Accessibility

Taxation Shareholders

Business cycle

Difficult to reach, hard for tourists to get there No taxes for non-­‐ All earnings have to be profit companies re-­‐invested, no profits Hold shares of SDR, Are interested in the but don't receive any organisation and in old dividends trains, get discount on food and beverages Their high season is They make most of mainly during summer their money during and some special this high season. The events (e.g. Christmas, distribution of the 6

Offer shuttle bus from nearby train stations and towns No dividends for shareholders Try to attract more shareholders with benefits and free tickets The number of visitors during the low season should be increased by special events

new year’s eve)

revenue over the year is skewed.

3.4 Education / Training
Issue
Requirements training Description & No special skills required, training provided for volunteers Full time employees need different skills like railway skills, engineering, building Internships in the different areas are possible, but without payment Implication & Impact Everybody is able to join Potential Action Keep this system

Education of staff

Educated staff needed Continuously train additional to staff and offer safety volunteers trainings regularly Interns have to have a big interest in this area as they are not earning any money Offer non-­‐monetary inducements to address new interns

Internships

3.5 Political
Issue
Regulations concerning environment Subventions Description Environmental prescriptions, which have to be obeyed None Implication & Impact The compliance of these regulations has to be ensured All money needed has to be earned All income has to be reinvested Potential Action Routinely controls and inspections Try to get subventions and other additional funding Try to find additional investors

Laws about non-­‐profit company income and profit

No profits allowed

3.6 Legal
Issue
Employment regulations Description Regulation of holiday entitlement and working hours per week Noise protection, High operating temperatures Implication & Impact Potential Action Regulations have to be Remind staff to satisfied conform to these regulations Safety equipment has to be provided, safety instructions Regular safety workshops

Safety & health regulations

7

3.7 Environmental protection
Issue
Environmental issues Description Air pollution, CO2 emissions Beautiful landscape should be preserved Implication & Impact The business has to be run environment-­‐ friendly This attracts additional visitors, who enjoy a train trip in unspoiled countryside The trains and everything around have to be authentic Potential Action Use high class coal, add unrecognisable filters Nature conservation projects

Landscape preservation

Traditional aspect

Visitors enjoy the old trains and technologies

Try to be as authentic as possible, use old materials and techniques

8

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