BACKGROUND
To foster long-lasting customer satisfaction and loyalty, transit agencies must understand and make decisions in accordance with customer needs and preferences. Since it can be infeasible for agencies to tailor actions at the scale of the individual, an alternative strategy is to conduct a market segmentation analysis on one or more data sources to identify sufficiently similar groups of transit riders to consider during a decision-making process.
Challenges arise in selecting the variables to consider in a segmentation analysis and the method to use. One potential approach is to use predetermined (a priori) segments, identify characteristics at the outset that might represent important differences among transit customers, and create segments based on these (for example, commuters versus noncommuters or suburban versus central-city riders). An alternative is to use market-defined (post hoc) methods, such as statistical clustering and classification methods, to identify groupings that may not be apparent from surface-level examination. These data-driven strategies are useful in that they can help decision-makers discover key differences within groups defined by one or more sociodemographic characteristics.
TCRP Report 36: A Handbook: Using Market Segmentation to Increase Transit Ridership, published in 1998, is the quintessential TCRP report on this topic. The purpose of this report was to introduce market segmentation, including several case studies on how to appropriately plan for and research the development of a suitable segmentation scheme and then implement findings into actionable strategies that fulfill the transit agency’s goals of increasing ridership, bringing in new customers, and boosting the satisfaction levels of different groups of users. In the 25 years since the publication of the 1998 handbook, scholars in the business, social, and mathematical sciences have published new research relevant to this topic. Moreover, passive data collection and big data sources have become more widely implemented and available for profiling transit customers, and the rise in remote work, which has accelerated in the wake of the COVID-19 pandemic, has challenged conventional thinking about typical rider segments. A targeted compendium of approaches to collecting data, extracting and describing segments, and tailoring product and service decisions to the needs and preferences of transit market segments
OBJECTIVE
The objective of this research is to help public transportation agencies effectively use market segmentation strategies to attract and keep transit riders. The results of this research project should be easily used by public transportation professionals, including marketing professionals, transit managers, planners, and others interested in implementing market segmentation strategies to attract and keep transit riders.
RESEARCH PLAN
The TCRP is seeking proposals on how best to achieve the research objective. Proposers are expected to present a research plan that can realistically be accomplished within the constraints of available funds and contract time. Proposals must present the proposers' current thinking in sufficient detail to demonstrate their understanding of the issues and the soundness of their approach to meeting the research objective.
The contractor shall identify innovative ways to conduct research (focus groups, stakeholder interviews, etc.), present the information (case studies, creation of frameworks, toolkits, fact sheets, etc.), and consider that the target audience will include transit systems of all sizes.
The research should at a minimum:
- Define and explain market segmentation as it applies to public transportation (e.g., who to segment, who uses this method)
- Introduce the benefits and limitations of market segmentation
- Include a literature review summarizing and referencing other recent reports published on market segmentation strategies since TCRP Report 36
- Explain and evaluate (providing specific examples from geographically diverse agencies of different sizes and modes) at a minimum:
- data used for segmentation (e.g., data sources, update frequency, database, variables used for clustering, data cleaning)
- segmentation approaches (e.g., factor analysis, clustering)
- use of segments (e.g., to develop different messaging or incentives)
- evaluation methods (e.g., methods to set up a control group and treatment group)
- evaluation metrics (e.g., click rate, compliance rate, ridership)
- outcome/findings (e.g., tools developed for visualizing market segments, final market segments)
- Map out the market segmentation process as it relates to different positions and departments within the transit organization, and how various social factors and changes impact the involvement of (potential) transit customers throughout this process (such as privacy concerns and perceptions of personalized marketing)
- Identify best practices that produce effective results, including practices that prioritize diversity, equity, and inclusion
- Make recommendations on implementing market segmentation in an agency, including incorporating the findings into an agency strategy
- Identify knowledge gaps and opportunities for future research
The research plan shall be divided into tasks that detail the work proposed in each task. The research plan shall describe appropriate deliverables (which also represent key project milestones), including at a minimum:
- Interim report and panel meeting: the interim report should include the analyses and results of completed tasks, an update of the remaining tasks, and a detailed outline of the final research product(s). The panel meeting will occur after the panel review of the interim report. The interim report and in-person panel meeting should occur after the expenditure of no more than 40 percent of the project budget.
- Draft report
- Final report
- Technical memorandum titled “Implementation of Research Findings and Products” (see Special Note L)
The research plan may include additional deliverables and additional panel meetings via teleconference. The research plan shall have a schedule for the project that includes three weeks for panel review of the interim report, three weeks for panel review of the draft final report, and three weeks for contractor revision of the draft final report.
SPECIAL NOTES
A. Proposals should demonstrate knowledge relevant to this project, experience dealing with market segmentation strategies, and familiarity with the mass transit environment.
B. Due to potential biases, the panel is concerned about using artificial intelligence (AI) to collect and analyze research. Therefore, it is important to be transparent about its use and application. In this case, AI is defined as artificial intelligence used to augment, analyze, collect, or summarize outcomes, data, and copy. Contractors must disclose what AI tools are being deployed in the execution of this scope of work, when they are being used, and what outcomes have been generated by AI. This disclosure must be inserted in documentation and deliverables and should be discussed during the research process.
C. The Information and Instructions for Preparing Proposals for the Transportation Research Board’s Cooperative Research Programs were revised in May 2023. Please take note of the new and revised text which is highlighted in yellow.
D. Proposals must be submitted as a single PDF file with a maximum file size of 10 MB. The PDF must be formatted for standard 8 ½” X 11” paper, and the entire proposal must not exceed 60 pages (according to the page count displayed in the PDF). Proposals that do not meet these requirements will be rejected. For other requirements, refer to chapter V of the instructions.
E. The Information and Instructions for Preparing Proposals for the Transportation Research Board’s Cooperative Research Programs have been modified to include a revised policy and instructions for disclosing Investigator Conflict of Interest. For more information, refer to chapter IV of the instructions. A detailed definition and examples can be found in the CRP Conflict of Interest Policy for Contractors. The proposer recommended by the project panel will be required to submit an Investigator Conflict of Interest and Disclosure Form as a prerequisite for contract negotiations.
F. Proposals will be rejected if any of the proposed research team members work for organizations represented on the project panel. The panel roster for this project can be found here. Proposers may not contact panel members directly; this roster is provided solely for the purpose of avoiding potential conflicts of interest.
G. Proprietary Products - If any proprietary products are to be used or tested in the project, please refer to Item 6 in the Information and Instructions for Preparing Proposals.
H. Proposals are evaluated by the TCRP staff and project panels consisting of individuals collectively knowledgeable in the problem area. The project panel will recommend their first choice proposal considering the following factors: (1) the proposer's demonstrated understanding of the problem; (2) the merit of the proposed research approach and experiment design; (3) the experience, qualifications, and objectivity of the research team in the same or closely related problem area; (4) the plan for ensuring application of results; (5) how the proposer approaches inclusion and diversity in the composition of their team and research approach, including participation by certified Disadvantaged Business Enterprises; and, if relevant, (6) the adequacy of the facilities. A recommendation by the project panel is not a guarantee of a contract. The National Academy of Sciences (NAS - the contracting authority for the National Academies of Sciences, Engineering, and Medicine) will conduct an internal due diligence review and risk assessment of the panel’s recommended proposal before contract negotiations continue.
Note: The proposer's approach to inclusion and diversity as well as participation by Disadvantaged Business Enterprises should be incorporated in Item 11 of the proposal.
I. Copyrights - All data, written materials, computer software, graphic and photographic images, and other information prepared under the contract and the copyrights therein shall be owned by the National Academy of Sciences. The contractor and subcontractors will be able to publish this material for non-commercial purposes, for internal use, or to further academic research or studies with permission from TRB Cooperative Research Programs. The contractor and subcontractors will not be allowed to sell the project material without prior approval by the National Academy of Sciences. By signing a contract with the National Academy of Sciences, contractors accept legal responsibility for any copyright infringement that may exist in work done for TRB. Contractors are therefore responsible for obtaining all necessary permissions for use of copyrighted material in TRB's Cooperative Research Programs publications. For guidance on TRB's policies on using copyrighted material please consult Section 5.4, "Use of Copyrighted Material," in the Procedural Manual for Contractors.
J. The text of the final deliverable is expected to be publication-ready when it is submitted. It is strongly recommended that the research team include the expertise of a technical editor as early in the project timeline as possible. See Appendix F of the Procedural Manual for Contractors Conducting Research in the Transportation Research Board’s Cooperative Research Program for technical editing standards expected in final deliverables.
K. Proposals should include a task-by-task breakdown of labor hours for each staff member as shown in Figure 4 in the Information and Instructions for Preparing Proposals. Proposals also should include a breakdown of all costs (e.g., wages, indirect costs, travel, materials, and total) for each task using Figures 5 and 6 in the brochure. Please note that TRB Cooperative Research Program subawards (selected proposers are considered subawards to the National Academy of Sciences, the parent organization of TRB) must comply with 2 CFR 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. These requirements include a provision that proposers without a "federally" Negotiated Indirect Costs Rate Agreement (NICRA) shall be subject to a maximum allowable indirect rate of 10% of Modified Total Direct Costs. Modified Total Direct Costs include all salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $25,000 of each lower tier subaward and subcontract. Modified Total Direct Costs exclude equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs and the portion of each lower tier subaward and subcontract in excess of $25,000.
L. The required technical memorandum titled “Implementation of Research Findings and Products” should (a) provide recommendations on how to best put the research findings/products into practice; (b) identify possible institutions that might take leadership in applying the research findings/products; (c) identify issues affecting potential implementation of the findings/products and recommend possible actions to address these issues; and (d) recommend methods of identifying and measuring the impacts associated with implementation of the findings/products. Implementation of these recommendations is not part of the research project and, if warranted, details of these actions will be developed and implemented in future efforts.
M. If the team proposes a Principal Investigator who is not an employee of the Prime Contractor, or if the Prime Contractor is proposed to conduct less than 50% of the total effort (by time or budget), then section five of the proposal should include: (1) a justification of why this approach is appropriate, and (2) a description of how the Prime Contractor will ensure adequate communication and coordination with their Subcontractors throughout the project.
N. All budget information should be suitable for printing on 8½″ x 11″ paper. If a budget page cannot fit on a single 8½″ x 11″ page, it should be split over multiple pages. Proposers must use the Excel templates provided in the Information and Instructions for Preparing Proposals for the Transportation Research Board’s Cooperative Research Programs
O. The National Academies have an ethical and legal obligation to provide proper attribution whenever material from other sources is included in its reports, online postings, and other publications and products. TRB will review all Cooperative Research Programs draft final deliverables using the software iThenticate for potential plagiarism. If plagiarized text appears in the draft final deliverable, the research team will be required to make revisions and the opportunity to submit future proposals may be affected.
