CASE

Amtrak A Communications
Planning Challenger
MrRraru AzzARo
Roosevelt University

his case presents

details

of a positioning and communications sU4m

problem ?o. u rr.ry complex consumer service business: Amtrak' The key
iion facing Amtrak management and its advisors involved identi'ing the

b'il

dli'
communications positioning strategy and determining the best way to to65s
strategy in order to build the brand and the business'

Background: Business DescriPtion

Amtrak is the nations passenger railroad. Created by an act of Congress in lmX."
Amtrak today is still subsidized by the government and almost wholly owned b;'fu
U.S. Department of Transportation. Amtrak is a for-profit company, challenged m'
achieve commercial success while continuing to meet its public service missioo- Dr
law, Amtrak is required to provide a national network of passenger rail senice-

However, many of the mandated routes are not financially viable. As a result, Amt*
stands before Congress every year requesting budget subsidies'
Amtrak today operates a reasonably efcient version of the national route netwo*
mandated by Congress. On weekdays Amtrak runs more than 250 trains daily corwing more than 22,000 miles of track. In total it provides rail service to more than ll'r
cities and towns in 46 states nationwide. In general, Amtrak s service is made up O
long-distance routes connecting densely populated short-distance service corridort

thrughout the U.S. Long-distance trains generally operate daily' offering severel
choices of passenger service class, including first-class sleeping car service, custoE
class servic, and economy service. Corridor services tlpically run shorter distances
with multiple daily frequencies. The premier corridor service offered by Amtrak

today is th new Acela high-speed service on the Northeast rail corridor running geographically fromWashington, D.C., north to Boston. Acela is the model for develop
rneni of rail service in other U.S. federally-designated travel corridors.
IMuch of the material for this case is edited from information available on the Amtrak web
that follorr'site, www.amtrak.com. Other specific sources are indicated in the text or the notes

262

American

Standard

263

EXHIBIT C3.f : AMTRAK RIDERSHIP AND REVENUE GROWTH

Past 5 Years Percent Change in Ridership and Passenger Revenue

nications
enget

15
10

-'+-- Ridership --r--

Pass Revenue

Source: Figures provided bY Amtrak

State of the Business

nd communications

strateg.i-

niness: Amtrak. The key quess

im'olved identifying the best

; e best way to choose that

ion
an act of Congress in 1971,
lalmost wholly owned by the
,rofit compan challenged to
its public service mission. By
,rk of passenger rail service.
h- r.iable.

As a result, Amtrak

iridies.
of the national route network
e than 250 trains daily coverrail service to more than 500
nrakt service is made up of
rt-distance service corridors
perate dail offering several
sleeping car service, custom

pically run shorter distances

r seryice offered by Amtrak
rail corridor running ge=st
:ela is the model for develop-

For the past five years Amtrak has successfully grown its passenger business, building
revenue by an average of 7 .6o/o per year and building ridership by an average of 3.3o/o
per year (see Exhibit C3.1). For the next five years, Amtrak projects continued growth
in passenger revenue at about 4o/o pet year with modest growth in passenger ridership.
Much of Amtrak's success can be attributed to its focus on four core strategies:

1. Building public and private partnerships

2. Developing established and new corridor services
3. Revitalizing the Amtrak Brand
4. Delivering improved service quality

Building Public and Private Partnerships

Amtrak began efforts in 1999 to identify commercial and irwestment

repositioning Amtrak

brand identity.

Developing Established anil New Corridor Services

Even as Amtrak launched the Acela high-speed rail service in the Northeast, it was
working with other states and business partners to expand improved rail services to
other corridors across the country. Amtraks plan is to leverage expertise and knowledge gained in the Northeast to fast-adapt expansion to the promising corridors of
the future:

. The California Corridors, Los Angeles to San Diego and the San |oaquin Valley
. The Midwest Corridor, connecting Ohio, Michigan, Illinois, Wisconsin,

n'el corridors.
ou available on the Amtrak web
e tefi or the notes that follow.

partners for

strategic business alliances. Today it continues efforts to develop promotional, service

development, and investment partnerships. Amtrak envisions such partnerships to be
critical to the commercial success of long-distance train service and fundamental to

Nebraska and Minnesota through Chicago

The Pacific Northwest Corridor connecting Vancouver, Seattle, and Portland

'

The Southeast Corridor between Washington, D.C., and Charlotte, North

Carolina

264

The IMC Handbook-Cases

EXHIBIT C3.2: AMTRAK LOGo DEVEIOPMENT

Orieinal Loeo

ETTI

Irr

New Losos
Consumer Segment

fttrn({

Yx,*-r*.o,. cekr

Business Travelers

Young Family Traveler

Footloose/Fancy Free

Older Family Vacatiorn

5enior Experientials

. The Gulf Coast Corridor between Atlanta and New Orleans

. The Empire Corridor in the state of New york
. The Keystone Corridor in Pennsylvania

market segments of

life-style and travel p

This segmentation sd
tivation. The needs ol

Revitalizing the Amtrak Brand and Delivering

Imp r ov e d S erv i ce Quality
Amtrak recognizes that its brand encompasses the total experience of train travel
from purchasing the ticket to entering the station to the meals and amenities avaable during the trip. Proprietary Amtrak research yielded results leading to redefined
services, amenities, and offerings; defined service standards to apply throughout tbe

network system; and trained employees delivering the new standards.

In 1999 Amtrak introduced a new brand identity along with its service standads
guarantee and the all-new Acela high-speed services to demonstrate its commitment
to change (see Exhibit c3.2). The new Amtrak taps into today's consumer values and
successfully reflects Amtralis changing corporate strategies and services.

Cost Management
Most recentl Amtrak has added a fifth core strategy, that of cost managemenl
This strategy is key to Amtrak's chances for success and applies across all of the organization. From train operations to station services to marketing management, all
Amtrak employees must seek out and adapt to cost management opportunities. I
marketing management, for example, such opportunities will range from buying
efficiencies to budget cuts. The Amtrak National Communications plan must reflect this reality.

sus leisure purposes.

younger or older chil

manyways.
Despite their obri
consideration in com

sumers. They consida

or time wasted depea

or bad. A trip on Am
than air travel. Oppor

of an enriching trflr

interested traveling cr

Demographicalt

than the U.S. travel r

leading. Amtrak beli
services as a whole- I
differ significantly ftr

Marketing (

The marketing budS

mer. Budgets are firel

Traveling Consumers
Amtrak's passengers can be broadly defined as "train interested" travelers. This is a
broad sub-group representing about 45o/o of the total traveling population in the LT.Saccording to the Yankelovich 2001 Leisure Monitor2. "Tiain interested" travelers maor may not have taken a train trip recentl but they have all expressed an interest in
doing so within the next two years.

In more specific terms, according to proprietary Amtrak

Source: Amtrak Market

research3, there are fire

2YankelovichPartners, Inc.,2001, TheYankeloyich200lLeisureMONITOR,p.

114.
3 Amtrak 1998 Market
Based Network Study.

Amtrak marketing e
porting the many pm

Seasonality for A
is the big travel seaso
day seasons such as'l
rest of the industry,

riods and doesnt ty

Amtrak plans system
the "shoulder" periq

American Standard

EXHIBIT C3.3: AMTRAK CHALLENGES BY

NATIONAL TRAVEL MARKET SEGMENT

IIPMENT

fuismer Segment

r ceAt

perience of train trarodlf,

eals and amenities arfl''
nlts leading to redeud
to apply throughora fu
ndards.

its service stand*@

Estrate its commimrem

y's consumer values

mrdfl

nd services.

of cost

managerrFjrlrmrl

{ies across all of the m*etiag managemenl d[J

ilrent opportunitier Imr

rill range from bu-rryr
r,ications plan rnu.sa ro-

red" avelers. This

fu r

Amtrak Challenges

Travel time
Dciness Travelers
$Erng Family Travelers Travel time, cost, nearby stations
Travel time, station locations, and flexibility
futloose/Fancy Free
iEkr Family Vacationers Cost and convenient station locations
Travel time, convenient stations, and comfort
krior Experientials

krte:

ri

9o/o
8o/o

Despite their obvious differences, most of these segments have one important
,mosideration in common: travel time. Travel time can be both good and bad for conG{ners. They consider it part of the travel experience, and that can be time well spent
also be good
,ur time wasted depending on the experience. Tiavel time for Amtrak can
qr bad. A trip on Amtrak is all about time because train travel generally takes longer
.fihzn air travel. Opportunisticall though, time spent traveling on Amtrak can be part
,6[ an enriching travel experience, and this is part of the appeal among trainmterested traveling consumers.
Demographicall across all of Amtrak, consumers are older and better educated
an the U.S. travel market in general (see Exhibit C3'4), but this is somewhat mis-

i*adirrg. Amtrak believes that it is not appropriate to consider all products and
wrices as a whole. Instead, the travel experience and the consumer's expectations
differ significantly for long-distance leisure versus short-distance regional travel.

*tarketi ng Communications
The marketing budget for Amtrak is planned each year in the late spring/early sumnnrr. Budgets are finalized when the business plan is confirmed each year in October'
Amtrak marketing expenditures are allocated annually throughout its system sup-

r0TIDft.p-.rl*-

11%
10o/o

@enyways.

nterested" travelers mmn

qressed an interegmr
fom

22%

merket segments of particular interest to Amtrak. Each segment, defined according to

ffi-rtyl. and travel pufpose, holds some challenge for Amtrak (see Exhibit C3.3).
1[his segmentation scheme works well in that it captures key differences in travel mourrtion. The needs of consumers differ significantly when traveling for business verss leisure purposes. Needs also differ when traveling alone as adults or traveling with
runger oi ol.r children. As would be expected, these differences are significant in

S,orting the many products and services of Amtrak.

ae

% U.S. Travelers

Amtrak Market Based Network Study

gpopulation in the Ll

research-l, there

265

Seasonal for Amtrak is similar to that of the travel industry in general. Summer

the big travel season. Other than the summer season, peaks occur during key holi,dis seasons such as Thanksgiving through New Year's and spring break. As with the
mst of the industry, Amtrak generally experiences high demand during these peak pe-

t typically need to advertise or promote to build ridership. Instead,

fall and spring promotions designed to build ridership in
plans
system-wide
-tmak
year
mfoe "shoulder" periods between peak and off-peak times. The fall program each

uiods and doesn

266

The IMC Handbook-Cases

customer satisfaction g
ice standards on all Am

EXHIBIT C3.4: AMTRAK NATIONAT TRAVEL

MARKET
DEMOGRAPHIC PROFILES

The
U.S. Market %

Amtrak %

Index

AmtrakPromi

At the same time, Amtr

consistent service sta

Gender
Male

50

48

Female

96

50

52

104

Trip Purpose

services offered. This

defined the set of stau

step in implementaoa

Business

33

26

Non-business

79

57

65

Both

114

10

90

tion guarantee, "The Al

Age

and managers. The ns

to keep employees on t

8_34

40

29

35-54

72

47

Other AmtrakPret

55-64

100

10

47
20

200

200

Beyond these more rec

range ofproducts and

65+

Average Age
Education
Less Than HS
H5 Graduate

40 yrs

44 yrs

Amtrak offers coad

leisure trains througtx
distance travel on Aml
car privileges.) Some o

'100

24

20

83

Some College

27

24

89

College Graduate

30

33

110

Graduate School

16

20

125

41

43

105

overnight ber**ee

34

33

97

. The Coast Starlig

25

24

96

$sgr

$s7K

'

HH Income
Less

than $45K

$4sK-$7sK

$z5r+
Average lncome

Los Angeles and !

. The Sunset T irni

Source: Amtrak Brand Tracking and Equity Study

between Florida

'
is usually some variation of the Amtrak Explore America zonal fares. This fall program is usually targeted more to an older adult audience. The spring program is also
generally some kind of special fares promotion targeted more to younger adults and
traveling families. In recent years, Amtrak has worked to develop and leverage some
highly visible partnerships behind its fare promotions (for example, Major League
Baseball in the spring).

Product and Service Highlights

In recent years, the two biggest positive news factors for Amtrak have been the introduction of Acela high-speed rail in the Northeast and its system-wide service training and the service guarantee called "The Amtrak Promise'"

AcelaHtgh-SpeedRqil
Inaugurated in November 2000, Acela was heralded by Amtrak as the fastest train in
its history. But Acela is not just about speed. Acela is high-service rail with its superior
ride quality, world-class service and amenities, and enhanced speed all backed by a

The Silver Sen"ie

Washin$on, D-C
The Auto Train

Several sPectacul

The CitY of ){or

Southwest Chief

Service schedules for

kind travel exPerierr
There are several es

passengers can board

dinner in the dining

morning arriving fte
on The California Z

Chicago to Neit'O*
For consumers r
Vacations and Amtr
can book Pre-Packa

ciuding the train. c

Amtrak r Rail is

Amtrak

customer satisfaction guarantee. Acela is the pride of Amtrak and its model for servlce standards on all Amtrak trains.

NARI(ET

The

hd(

s
xoc

1',?[

72.

1ffi

2m
2m

t,lf,

m
8S

Other Amtrak Products and Services

Beyond these more recent developments, it is worth noting that Amtrak offers
range of products and services for traveling consumers.
Amtrak offers coach class, custom class and first-class service

.
.

5I

'
.
.

rcs. ThLs h;c,r-.

6progrram fu iirsu
ilm$er adult @
md }*-eragr ;c*rn*

I.laior l."sg.r*

rcbem rfumr*
Bsn-ie u-p-

te fuste u-,r-

im

itisq.r--r

I a ha&si

* r

full

on long-distance

leisure trains throughout the country. (It is important to note that first-class longdistance travel on Amtrak includes on-board sleeping accommodations and dining
car privileges.) Some of the more outstanding and historic Amtrak routes are:

r05

Amtrak Promise

At the same time, Amtrak began the monumental task of defining and implementing
.pnsistent service standards system-wide across the broad range of products and
services offered. This effort started with a core team of managers and employees who
defired the set of standards and determined the plan for implementation. The first
step in implementation was the "Service Success" training program for all employees
and managers. The nerl step was a service rewards and incentives program designed
to keep employees on the service track. Finall Amtrak offered its customer satisfaction guarantee, "The Amtrak Promise," on all trains, at all times.

,i2

le"

267

The Silver Service operating daily along the East Coast between New York,
Washington, D.C., and all points in Florida
The Auto Train carrying passengers and their cars direct, non-stop, and
overnight between Washington, D.C. and Orlando, Florida
The Coast Starlight operating daily along the West Coast with service between
Los Angeles and Seattle

The Sunset Limited, the nation's only coast-to-coast passenger train, operating
between Florida and California
Several spectacular routes running daily out of Chicago: The California Zephyr,
The City of New Orleans, The Capitol Limited, The Empire Builder, and The
Southwest Chief

Service schedules for many of these long-distance routes afford travelers a one-of-a-

kind travel experience unique to train travel: the first-class, overnight excursion.
There are several examples throughout the Amtrak route network where first-class
passengers can board a train in the late afternoon or evening in one cit enjoy a fine
dinner in the dining ca retire to a private sleeping compartment, and wake the next
morning arriving fresh and rested in a new cify. Examples include Chicago to Denver
on The California Zephyr, Washington, D.C., to Chicago on The Capitol Limited, and
Chicago to New Orleans on The City of New Orleans.
For consumers who prefer one-stop vacation shopping, Amtrak offers Amtrak
vacations and Amtrak Air Rail. with one phone call to Amtrak vacations, consumers
can book pre-packaged complete vacations or assemble their own vacation plans including the train, car rentals, hotel accommodations, and tour options of interest.
Amtrak Air Rail is a one-of-a-kind partnership between Amtrak and United Airlines

268

The IMC Handbook-Cases

allowing consumers to travel one-way by train and one-way by plane virtuallr so.
where in the U.S.
Overall, much is new and exciting about the new Amtrak. Amtrak is activeh emgaged in redefining and re-establishing its brand equity and succeeding in its effoer.
But the network is expansive; Amtrak has 25,000 employees working in more tlt
500 cities and towns across 46 states. Ad, Amtrak's business objectives are seemir:dr
at odds, its public service mission often draining profits from commercial succesu;
This is the continuing challenge of Amtrak s National Communications efforts.
',rnr

Questions
1. Which Amtrak product or product group represents the greatest potentiatr:for
building Amtrak's business? State facts to support your recommendation.
2. Which target audience segment represents the greatest growth poten':al tim'
Amtrak (consider those mentioned in the case and others not mentioned "
well)? State the facts that support your recommendation.
3. Thinking about your audience and product focus recommended in 1 aru 1
above, what benefit and support would you recommend for Amtrak's marksing communications focus? Explain how your recommended benefit and rryport fits with the product and the audience segment. Be specific.

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