The National Academies

TCRP B-56 [Pending]

Using Market Segmentation to Increase Transit Ridership: An Updated Handbook

  Project Data
Funds: $300,000
Contract Time: 18 months
Staff Responsibility: Mariela Garcia-Colberg


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 would allow for the dissemination of information about success stories, potential pitfalls surrounding forward-thinking market segmentation practices, and how agencies might benefit from adopting certain practices under various scenarios.


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. 


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”

STATUS: Proposals have been received in response to the RFP. The project panel will meet to select a contractor to perform the work.

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