MARKETING IDENTITY
THE ENTRY OF A FOREIGN COMPANY (‘THE NEW BRAND’) INTO THE MARKET IN THE SLOVAK REPUBLIC
Natália Stalmašeková – Jana Štofková
Abstract The entry of any company into the market always brings certain risks and unpredictable events, even if it is a well-known brand with an established reputation. The company must be able to assess entry barriers into its new market and be able to overcome them effectively. At first sight, the Slovak rail passenger transport market could seem a disadvantageous area for new entrants. Železničná spoločnosť Slovensko, with the state as 100% shareholder, had a monopoly on this market and on top of that, this company provided unpaid transport for chosen segments of passengers. Another drawback is the poor condition of the track network, which affects the speed of transportation. However, a successful company should be able to use these conditions for its own benefit and bring change and innovation to such an industry. The Czech company RegioJet inc, has decided to enter this sector and try to entice Slovak passengers with its services, which have not yet been offered by anybody else.
Key words: Marketing research. Rail passenger transport. RegioJet Inc.
Introduction
The end of 2014 brought big changes for the Slovak rail passenger transport market. On November 17th, the state began to cover the full cost of tickets for selected passenger groups, which caused a significant increase in passenger numbers from these groups. On December 14th, the Czech private company RegioJet began a service on the Bratislava – Žilina – Košice line. Until that date, Železničná spoločnosť Slovensko was the single carrier in rail passenger transport on this route. The Bratislava - Žilina - Košice route is a key one for rail passenger services in Slovakia, as it connects the eastern with the western part of Slovakia. RegioJet entered the market with a guarantee of lower prices and higher quality than was offered by Železničná spoločnosť Slovensko. It also began the track service with concerns about how the state endowment would influence the decisions of passengers and whether it could successfully compete with the Slovak company. For the passengers, the entry of RegioJet meant awaking from the ‘apathy’, which they experienced when traveling with ZSSK, because without the competition the state company was not pushed to improve the quality of travelling and decrease the prices. With its entry, RegioJet promised modern, yellow trains, which offered high standard travelling for low prices. In the survey, we were looking to see if the well-known Czech brand established itself in the Slovak market successfully.
1 Methodology and goals
The goal of the paper is to analyse, on the basis of primary research, the success of entry of the Czech company RegioJet into the Slovak market of rail passenger transport on the Bratislava – Žilina – Košice route. The paper provides an overview of the RegioJet services and comparison of ticket prices, which both companies offer. In conclusion, we summarise the survey results.
276 CONSUMER AND BRANDING
THE ENTRY OF A FOREIGN COMPANY (‘THE NEW BRAND’) 2 The origin and history of RegioJet Inc. company INTO THE MARKET IN THE SLOVAK REPUBLIC RegioJet Inc. company is a sister company of Student gency holding, Inc. Student Agency, s.r.o company was first founded in 1 by the owner of RegioJet. Its Natália Stalmašeková – Jana Štofková business focus was the provision of au pair services in Europe and the USA, of language programmes, educational programmes abroad, work programmes, and bus Abstract The entry of any company into the market always brings certain risks and unpredictable events, even transport. It was gradually e tended to the business of ticket sales and domestic bus if it is a well-known brand with an established reputation. The company must be able to assess entry transport. The company kept growing, gaining new employees and reinforcing its barriers into its new market and be able to overcome them effectively. At first sight, the Slovak rail position among customers.1 RegioJet Inc. Company was founded in 200 in rno and passenger transport market could seem a disadvantageous area for new entrants. Železničná entered into the rail passenger transport market of the Czech Republic. In 2010 spoločnosť Slovensko, with the state as 100% shareholder, had a monopoly on this market and on top RegioJet dispatched its first train on the Decin and Krupka route. In 2010, the of that, this company provided unpaid transport for chosen segments of passengers. Another drawback is the poor condition of the track network, which affects the speed of transportation. Commercial Register of the Slovak Republic registered RegioJet Inc. Company, with However, a successful company should be able to use these conditions for its own benefit and bring its residency in Bratislava.2 In 2011 the Czech carrier started to dispatch intercity change and innovation to such an industry. The Czech company RegioJet inc, has decided to enter this trains on the Praha – Ostrava – adca – Žilina route. In November 2014 RegioJet sector and try to entice Slovak passengers with its services, which have not yet been offered by extended the Prague – Žilina route to Košice, and in December it entered the main anybody else. Slovak Bratislava – Žilina – Košice route. Besides organizing rail transport in Slovakia, RegioJet organizes bus transport on the Banska Bystrica – Nitra – Bratislava Key words: Marketing research. Rail passenger transport. RegioJet Inc. and Bratislava – Vienna routes.
2.1 Services offered by Regiojet Inc. Introduction RegioJet intercity trains offer transportation in first and second class carriages. The end of 2014 brought big changes for the Slovak rail passenger transport market. Passengers can choose from the three types of tariffs: standard, relax and business. On November 17th, the state began to cover the full cost of tickets for selected On the Bratislava – Žilina – Košice route, the company sends off three pairs of trains passenger groups, which caused a significant increase in passenger numbers from daily. The price of ticket depends on the type of tariff, time of departure and type of these groups. On December 14th, the Czech private company RegioJet began a service discount for various classification of passenger. on the Bratislava – Žilina – Košice line. Until that date, Železničná spoločnosť Table 1: Price of tickets on the Bratislava – Žilina – Košice route at a specific time (for example Slovensko was the single carrier in rail passenger transport on this route. The Friday 5:33 pm.) Bratislava - Žilina - Košice route is a key one for rail passenger services in Slovakia, as Tariff Adult Student it connects the eastern with the western part of Slovakia. RegioJet entered the Standard 1 , 0 , 0 market with a guarantee of lower prices and higher quality than was offered by Relax 1 Železničná spoločnosť Slovensko. It also began the track service with concerns about Business 2 ,40 11,70 how the state endowment would influence the decisions of passengers and whether Source: STALMAŠEKOVÁ, N.: Analysis of the competitive environment in the rail passenger transport on it could successfully compete with the Slovak company. For the passengers, the entry the Bratislava – Žilina – Košice route. [Master thesis]. Bratislava : University of Economics in Bratislava, of RegioJet meant awaking from the ‘apathy’, which they experienced when traveling 201 , p. . with ZSSK, because without the competition the state company was not pushed to Table 2: Price of tickets on the Bratislava – Žilina – Košice route at a specific time (for example improve the quality of travelling and decrease the prices. With its entry, RegioJet Friday 05:33) promised modern, yellow trains, which offered high standard travelling for low Tariff Adult Student prices. In the survey, we were looking to see if the well-known Czech brand Standard 4, 0 established itself in the Slovak market successfully. Relax 14, 0 7,40 Business 2 ,40 11,70 Source: STALMAŠEKOVÁ, N.: Analysis of the competitive environment in the rail passenger transport on 1 Methodology and goals the Bratislava – Žilina – Košice route. [Master thesis]. Bratislava : University of Economics in Bratislava, 201 , p. . The goal of the paper is to analyse, on the basis of primary research, the success of entry of the Czech company RegioJet into the Slovak market of rail passenger transport on the Bratislava – Žilina – Košice route. The paper provides an overview 1 História spoločnosti Student Agency. online . 201 -11-20 . valiable at: of the RegioJet services and comparison of ticket prices, which both companies offer.
277 MARKETING IDENTITY
2.2 SWOT analysis of the RegioJet Company
Using the SWOT analysis, the company can create an overview of the challenges and opportunities of the industry in which it operates and effectively assess its strengths and weaknesses. RegioJet's success with consumers will depend on the success of overcoming challenges from the external environment and eliminating weaknesses. The company in Slovak market will continue to grow if it can take advantage of opportunities in the industry, by using its strengths.4 Figure 1 shows the strengths and weaknesses of RegioJet, opportunities in the e ternal rail transport environment in Slovakia and market risks.
•Good name of the brand. •Quality of services. •Price of services. Strengths •Comfort of transportation. •Return policy. •Ticket price.
•Failure rate of trainsets. •Absence of back-up trainsets. •Absence of dining carrier. Weaknesses •Weak WIFI signal in the train. •Frequent malfunction of toilets, heating and air- conditioning.
•Entry to the new routes. •More lines on the route BA – KE. Opportunities •Adding carriers to existing carriers. •Overcrowding of car traffic.
•100% discount for certain passengers. •Track closures – frequent delays. Threats •ZSSK passenger trains don't wait for RegioJet IC trains. •Losing the good will of customers due to company failures.
Figure 1: SWOT analysis of company RegioJet Source: Own processing
For more information, see: O O , J. et al. Business Management. ratislava Dolis, 201 . 4 O O , . yu itie znalostn ho mana mentu na podporu konkurencieschopnosti. In ŠTOFKOVÁ, ., JANKALOVÁ, M., MO O O , M.: ana ent a sie o podni anie o edo ostne ekonomike. Žilina Žilinská univerzita, 201 , p. 7-24.
278 CONSUMER AND BRANDING
Results of the survey he survey was conducted on a sample of 4 respondents, and one part was focused on the RegioJet company. Respondents were asked to express their opinions on their experience and views about travelling with this company. The survey also provides answers to questions about what affects consumer's deciding whether to use the services of this company. Graph No. 1 shows respondents which have already used the services of RegioJet. 1% of respondents stated that they had already travelled with this company.
49% 51% Yes No
Graph 1: Do you travel by RegioJet trains (on the Bratislava – Žilina – Košice or Košice – Žilina – Prague route)? Source: Own processing
Graph No. 2 states reasons which cause these respondents not to choose to travel with RegioJet. We can see that 2.2% of respondents do not travel with this company because the trains do not stop at their preferred station and only 1 .1% of respondents state that they are discouraged by the price of the ticket. The departure timetable does not suit . % of respondents and 1 . % of respondents stated different reasons for not travelling with this company. Collected answers indicate that the deciding factor for choosing the specific company could be not only the ticket price but also the number of stations served on the route.
Time of the departure 19.8% 9.9%
Train does not stop in 18.1% station I prefer 52.2% Price of ticket
Other reason
Graph 2: Why do you not travel with RegioJet? Source: Own processing
Graph No. shows the satisfaction of customers with the various attributes of travelling with this company on the given scale. The scale comprised five statements: very satisfied, mostly satisfied, neither satisfied nor dissatisfied, mostly dissatisfied, and dissatisfied. Respondents e pressed their opinions about:
279 MARKETING IDENTITY
• price of beverages and food; • quality of beverages and food; • staff on the board; • comfort of travelling; • punctuality of arrival and departure; • price of ticket.
Graph No. states that respondents were satisfied overall with the services that the company offers. Respondents were least satisfied with the punctuality of arrivals and departures of trains because only 4.4% of respondents stated that they were very satisfied and 2. % of respondents stated that they were mostly satisfied. Over 0% of respondents were very satisfied with other attributes and 0% were mostly satisfied. round % of respondents were dissatisfied with every attribute and nobody was dissatisfied with staff on board. Respondents were most satisfied with the comfort of travelling. . % of respondents were very satisfied and 2 . % of respondents were mostly satisfied, which means that .4% of respondents were satisfied with the comfort on board. The graph states that respondents were generally satisfied with services of RegioJet.
Price of beverages and food
Quality of beverages and food
Staff on board
Comfort of travelling
Punctuality of arrival and departure
Price of ticket
0,00% 20,00% 40,00% 60,00% 80,00% 100,00% 120,00%
Very satisfied Mostly satisfied Neither satisfied nor dissatisfied Mostly dissatisfied Dissatisfied
Graph 3: Express your satisfaction with the services of RegioJet Source: Own processing
The next question asked respondents what they are dissatisfied with when they travelled with RegioJet. On the basis of analysis of the answers, we prepared Graph No.4, which contains most the following observations: • Satisfied with everything; • Tickets are sold out several days ahead; • Frequent delays; • Limited choice of on board menu; • Air-conditioning out of service; • Toilets out of service; • Departure of train only three times a day; • Staff on the trains are very busy; • Missing restaurant coach; • Weak or missing I I signal;
280 CONSUMER AND BRANDING
• Few stations on the route; • Price of ticket.
Graph No. 4 states that most respondents – 17. % – were satisfied with everything. One stated observation was that the train was sold out several days before departure 1 .2% and there were frequent delays 10.7 % . Equally, 7.1% of respondents were dissatisfied with air-conditioning problems, toilets facilities, and limited choice of on board menu, since it is not unusual for the menu items to be unavailable half-way through the route. .2% of respondents were dissatisfied with the departure of the trains (only three times a day , missing restaurant coach, and busy staff – especially when is the train full of passengers. A low percentage of respondents were dissatisfied with weak I I signal, infrequent station stops on the route and price of ticket.
Price of ticket. 2.80%
Not enough stations on the route. 2.80%
Weak or missing WIFI signal. 5.30%
Missing restaurant coach. 6.20%
Staff on the trains are very busy. 6.20%
Departure of train only 3 times a day. 6.20%
Toilets out of service. 7.10%
Air – conditioning out of service. 7.10%
Limited choice of on board menu. 7.10%
Frequent delays. 10.70%
Tickets are sold out several days ahead. 15.20%
Satisfied with everything. 17.80%
0,00% 5,00% 10,00% 15,00% 20,00%
Graph 4: When travelling with RegioJet, I am dissatisfied with… Source: Own processing
Conclusion
When entering the market, RegioJet promised to bring a revolution. If the discount for students and seniors were not established, it could really have done so, because RegioJet could offer cheaper ticket prices than Železničná spoločnosť Slovensko. However in reality, RegioJet had no other choice than to run price wars with its competitor. The company brought to Slovakia passenger services (established under its brand also in the Czech Republic and a ticket price that could not be matched by Železničná spoločnosť Slovensko. Expectations were high and the daily operation of
281 MARKETING IDENTITY the trains was watched by the strict view of the public and the media. Despite many positives that the company has brought, it could not avoid some negatives. In March 201 one of RegioJet s trains derailed at Hlavna stanica in Bratislava. The event resulted in the withdrawal of the restaurant coach and also in the reduction of the number of carriers from nine to six. The result of this reduction was a dramatic selling out of tickets during the most popular days when Slovak people were moving from east to west. On Sunday and Monday to Bratislava, and Thursday and Friday to Košice, the trains were virtually sold out a week before departure. During holidays, tickets were already sold out three weeks before the departure of the train. In late March 201 , RegioJet once again caused a storm, when on Sunday evening at ytča it nearly collided with an express train, 1 of Železničná spoločnosť Slovensko. Traffic on the Bratislava - Žilina - Košice route was paralyzed for three hours. In the survey, respondents expressed dissatisfaction especially with frequent delays, limited on board meals and drinks offers, which was the only source of food for them, as from March 201 to January 201 , the company did not have a restaurant coach on their trainsets. They were also bothered with recurring problems with heating and air-conditioning.
RegioJet brought to the Slovak market all the things that are significant for this brand – yellow trains, low prices and a variety of services. The company managed to entice passengers and fill its trains. According to the survey, the passengers are mostly satisfied with its services and in spite of some reservations, they keep coming back. In 201 on the ratislava - Žilina – Košice route, the company transported more than 00 000 passengers, and, if it can keep its promises about increasing the capacity of their trains, maintain quality of service and keep prices low, the number could be much higher in 201 .
Ac no ledge ent: is article as created as part o an application for the pro ect: VEGA 1/0693/16, VEGA 1/0733/15, VEGA 1/0696/16.
References: História spoločnosti Student Agency. [online]. [201 -11-20 . Avaliable at:
la egio etu i iel na čer en online . 201 -02-17 . Available at: 282 CONSUMER AND BRANDING the trains was watched by the strict view of the public and the media. Despite many O O , J. et al. Business Management. Bratislava Dolis, 201 . positives that the company has brought, it could not avoid some negatives. In March ŠTOFKOVÁ, K.: yu itie znalostn ho mana mentu na podporu konkurencieschopnosti. 201 one of RegioJet s trains derailed at Hlavna stanica in Bratislava. The event In ŠTOFKOVÁ, ., JANKALOVÁ, M., MO O , M.: ana ent a sie o podni anie o resulted in the withdrawal of the restaurant coach and also in the reduction of the edo ostne e ono i e. Žilina Žilinská univerzita, 201 , p. 7-24. number of carriers from nine to six. The result of this reduction was a dramatic la egio etu i iel na čer en [online]. [201 -02-17 . Avaliable at: selling out of tickets during the most popular days when Slovak people were moving RegioJet brought to the Slovak market all the things that are significant for this brand prof. Ing. Jana tofková, hD. – yellow trains, low prices and a variety of services. The company managed to entice University of Žilina passengers and fill its trains. According to the survey, the passengers are mostly Faculty of Operation and Economics of Transport and Communications satisfied with its services and in spite of some reservations, they keep coming back. Univerzitná 21 1 In 201 on the ratislava - Žilina – Košice route, the company transported more than 010 2 Žilina 00 000 passengers, and, if it can keep its promises about increasing the capacity of S O R U IC their trains, maintain quality of service and keep prices low, the number could be ana.stofkova fpedas.uniza.sk much higher in 201 . Ac no ledge ent: is article as created as part o an application for the pro ect: VEGA 1/0693/16, VEGA 1/0733/15, VEGA 1/0696/16. References: História spoločnosti Student Agency. [online]. [201 -11-20 . Avaliable at: la egio etu i iel na čer en online . 201 -02-17 . Available at: 283