SBS Transit SWOT analysis Essay
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SBS Transit is one of the leading bus operators in this part of the world and started rail operations in 2003. It was formed in 1973 through the merger of three private bus companies and listed on the then Stock Exchange of Singapore (SES) in 1978 as Singapore Bus Service (1978) limited.
In November 1997, Singapore Bus Service (1978) Limited was renamed DelGro Corporation Limited (Now ComfortDelGro Corporation Limited) and the subsidiary Singapore Bus Services Limited, was separately listed on the SES. Singapore Bus Services Limited changed its name to SBS Transit Ltd in November 2001 to reflect its multi-model status as a bus and rail operator.
In 2003, SBS Transit started its light rail operations in Sengkang and also started operating its Mass Rapid Transit (MRT) system, the North East Line (NEL) in the same year. The Punggol Light Rapid Transit (LRT) is scheduled to operate in 2004.
SBS Transit aims to provide world-class public transport that is safe, comfortable, affordable, reliable and friendly. Today, SBS Transit operates about 200 services with more than 2,500 buses daily. The buses serve 15 interchanges, 18 bus terminals and more than 3,000 bus stops. SBS Transit also runs the Sengkang LRT system with six stations currently in operation and the NEL with 16 stations. SBS Transit carries 2.4 million passenger trips a day and relies entirely on fare revenue to finance its operations.
Our Vision: Moving People in a safe, reliable and affordable way.
Our Mission: To achieve excellence for our customers, employees, shareholders, and community. To this end, we are committed to delivering safe and reliable services at affordable prices, being an employer of choice, creating significant shareholder value and becoming a socially responsible corporate role model.
(SBS Annual Report, 2004)
– Be driven by our customer’s needs
– Strive for excellence in everything we do
– Act with integrity at all times
– Treat people with fairness and respect
– Maintain safety as a top priority
– Collaborate with our partners for win-win
– Give our shareholders a reasonable return
(SBS Annual Report, 2004)
In Singapore, the restrictions on automobile ownership and travel result in more than 50% of the 7 million passenger trips made daily are by public transport. The bus system is the major tool and carrying 3.1 million daily passengers in Singapore.
The market size of Singapore’s transportation industry is about 1230($m). It consists of two main companies which are SBS Transit and SMRT Corporation. For the year 2004, SBS Transit has reached 559($m) turnover, however, SMRT has the revenue about 667.3($m).
SBS Transit is doing strongly in the bus business. The share in the local bus industry is about 75% per year.
SBS Transit is in the leader place of the bus industry; however, in the year 2004, its bus revenue dropped 2.4% from $502.6 million to $490.5 million. The decrease was due to lower fare revenue as a result of the rationalization of bus routes which took place largely in December 2003 and the absorption of the 1% increase in GST with effect from 1 January 2004.
Since it is a new operator in the rail business, its average daily rider ship has climbed steadily from 155.942 in 2003 to 175.785 in 2004, an increase of 12.7%, we still has potential to grow in the rail business in the following years.
Macro Environmental Analysis
High regulated market
Singapore has an efficient and reliable public transport system. Public transport is regulated to ensure that:
* The public’s demands in terms of coverage are met
* Fares remain affordable
* Service is efficient and of a high quality
* The public has a wide range of transport choices.
A license from the Public Transport Council (PTC) is required for any bus service that charges fares. Bus fares and routes require the approval of the PTC. In addition, basic bus services are required to meet standards and specifications set by the PTC, which cover route planning and design, service efficiency, operational hours, affordability and service information. Operational audits on the level of compliance with these standards are carried out periodically.
Therefore, the SBS Transit’s development in this business is limited.
Government’s policies on transport and infrastructure development responsible for the surge of prices increases and the impact it has on downturn-affected Singaporeans. PAP government policies connected to recent price increases show that the distinction between public service and private enterprise is clearly lacking.
Short-term measures using taxpayers’ money to temporarily relieve the need to adjust to cost of living increases is not a solution to keeping the cost of living down. Instead the PAP government should evaluate whether government policy is the culprit in these price increases. For example, SBS Transit Ltd in its defense of bus fare increases pointed out that SBS’s main cost factors, among other things, were:
(1) The need to replace up to 200 buses every year costing about 80 million due to statutory life span of a bus being 15 years;
(2) Newly allotted depot sites were often smaller than the original sites. Thus when existing leases run out, the company is forced to build multi-story depots and spending sums up to 100 million in capital investment followed by high depreciation that would affect the bottom line;
(3) The cost of maintaining air-conditioned bus interchanges stand to become a factor in the need to increase bus fare in the future;
(4) Increases in payments for ERP charges to the government also stand to do the same.
Worse economic conditions throughout the world affect the cost of all inputs and the ability of customers to buy certain goods and services. Economic conditions can strongly affect the SBS Transit’s ability to obtain capital and some factors of operation. The government often tries to minimize changes in economic conditions using the monetary and fiscal policies to avert and reduce the affect of inflation and recession. These policies have an impact on the way that the organizations operate.
In the year 2003, because of the SARS, there is an economic disaster has occurred and many businesses and transportation agencies has been gotten into the major crisis. The hardest and most directly hit are tourism and transport-related industries like buses, taxi, hotel, restaurant, and travel agent and retail services.
The Single-deck Low-floor Citybus comes with many new customer comfort, safety and environmentally friendly features. The bus has four unique features that scored firsts on Singapore roads:
It is the first public bus in Singapore to have a Euro-2 engine. This engine complies with the latest stringent Euro-2 emission standards set in Europe, making it the “greenest” public bus and producing cleaner exhaust and less noise in Singapore.
Zero-step from entrance to exit
This bus is stepless from the entrance right through to the exit door. The low-floor and stepless aisle makes boarding and alighting safer and easier but is also more convenient and user-friendly for children and the elderly.
Front disc breaks
Unlike other public buses that operate on front and rear drum brakes, this bus, like a car, has disc brakes on its front wheels. The braking effect is hence more uniform and stable.
Electronic air clearness
Electronic air cleaners purify the saloon air to provide passengers with a healthy ride.
SBS Transit accords top priority to safety and our buses are equipped with comprehensive safety features to enhance the safety of passengers.
Bus Stopping Sign — Lights up when passengers press the bell to alight.
Tachograph — Detects jerky driving or abrupt braking and helps keep track of our bus captains’ driving habits.
Door Stay-Close System — Prevents doors from opening once the bus is moving at a speed of more than 5 km/h.
Infra-Red Photosensors — Installed at the exit door on the inside of the bus, these sensors enable accurate sensing of objects and better coverage of alighting passengers. The doors of the bus will not close if the sensors detect an object at the door.
CFC-Free Refrigerant — All SBS air-con buses use CFC-free refrigerant so as not to contribute to ozone depletion.
Engine Compartment Fire Sensor — This sensor immediately warns the bus captain of a fire in the engine compartment, via a warning light located at the bus captain’s dashboard.
Travel by bus is become more and more popular in Singapore. And Singapore government is trying to improve the establishment in the travel industry sites to attract more foreigners come to Singapore for traveling. So there must be more and more people from oversea or Singaporean taking a tour around Singapore in the future. When a group of foreigners come to Singapore for enjoying a tour around Singapore, airplane or trains would not available any more. Because Singapore is very small, there are no more places for plane or train. It is impossible for them to use an airplane or train. They also can hire taxis, but the fare would be more expensive and it is difficult for them to communicate when members are in different taxi. So they have no choice and have to charter a bus for traveling. And SBS Transit Company also provides a service for chartering a bus.
Most of SBS Transit’s buyers are employee level, students or oldster. For those people, their personal or household income is not very high. It is unavailable for them to buy a car or take taxi everyday. So they have to choose a cheaper public transport to reduce their expenditure on transport.
There is an advanced transportations system in Singapore; People can choose taxi, MRT instead of taking buses.
MRT is along major high density travel corridors in Singapore, also, it is faster than bus for it does not need to consider traffic lights, and no traffic jam even at rush hours, Therefore, commuters may choose MRT if they are near to a MRT station.
Taxi is all over Singapore, so, it is very convenient, commuters can take a Taxi anywhere at anytime, and it takes them to their destination directly. But people usually choose Taxi when they are in a hurry, because of the fare is much higher than buses and MRT.
Nowadays, the market of buses services is mainly occupied by SBS Transit Company, SMRT Buses Ltd and Bus-Plus Service Pte Ltd.
SMRT Buses Ltd (Trans-Island Bus Services Ltd) now has more than 800 buses on 65 routes with areas of operations mainly in the northern part of Singapore.
Bus-plus service Ltd provides customers an exclusive and luxurious way of traveling and operates a fleet of more than 50 luxurious minibuses of various capacities.
Strength of competitors
Actually, there is no obvious distinctness between these bus companies, because the public transportation systems are mainly controlled by Singapore government. The government intervene the Buses services industry.
However, when we compare SBS Transit with its competitors, we can find these,
Competitors provide some special service to make up gap of MRT and public buses service, such as Bus-Plus Service, and .Bus Shuttle Service
Commuters can reserve a seat every month in the Bus-plus Service, and enjoy this fast, luxurious minibus; also, they can save time by this fewer stops
buses. For people work in CBD, they can choose Bus Shuttle Service, it serve from some main residence district to CBD, and it provide a faster journey in the heavier direction during the morning and evening peak periods.
Weakness of competitors
Competitors’ Buss’s route services and number of buses are less than SBS. SBS operate 192 route services with a scheduled fleet of about 2400 buses, whereas TIBS only has 65 routes services and 800 buses.
On the other hand, competitors do not have some services for travelers. It is inconvenient for foreigners travel to Singapore, for example, if they want to visit some parks, or see overall sights of Singapore, they cannot find such services from TIBS. For SBS, it has Parks 408, City Buzz and Chinatown Direct bus services. Traveler can take parks 408 to Labrador Park on Saturdays, Sundays, and public holidays from 9am to 7pm directly and conveniently. Others, like 400 401 403 take travelers to some main parks of Singapore, they only need to pay $1 for a trip. Furthermore, City Buzz makes travelers see the sights of Singapore by loop the city in a cool comfort, air conditional double deck buses.
However, TIBS do not have those unique services to satisfy travelers transit needs.
According to market research, customers perceived that its price is fair, and service is OK, So, customers perceptual positioning about SMRT is ” fair price, satisfied service”, we can draw its positioning map like this:
We posit competitors perceptual position map based on two parameters – Price and Routes
TIBS and SBS have same price which is controlled by government, consumers perceive it is fair, so the price positing is quite low of these two buses services. Bus-Plus is posited at a higher price position, because they are luxurious minibus with comfortable seats, also, music and magazines are provided on the bus.
TIBS and Bus-Plus have fewer routes than SBS, TIBS has only 65 routes. Bus-Plus operates only three scheduled services from designated residential areas to the city (Service 541, 547, 825), whereas SBS operate 192 route services.
The division of a market into different homogeneous groups of consumers is known as market segmentation. SBS public transportation company’s customer segmentation can be presented by the different ez-link card which the different customers hold.
SBS provides promotion to each consumer’s segmentation, passengers carrying valid concession cards are entitled to concessionary travel. In the whole public transportation market, according to demographic and behavioral segmentation, customer can be segmented as children, student, full time national serviceman, senior citizen, shareholder and single trip customer.
Demographic segmentation is based on variables such as passengers’ age, education, occupation, income, and family status.
Psychographic segmentation is based on variables such as values, attitudes, and lifestyle.
Behavioral segmentation is based on variables such as the personal usage rate of public transportation and patterns, price sensitivity, brand loyalty, and benefits sought.
Customer segmentation Demographic Psychographic Behavior
Children Age: about 0-2years;
Height lower than 0.9 m. Fare free ☆ Consistent of their parents psychograph , enjoy Safe, interesting and comfortable environment, need the special seat for children Take vehicle with parents
Fare free up to 0.9m children accompanied with fare-paying passengers
Student Age: 2 -17 years; primary, secondary students;
No income ☆ Economy fares
☆ Take transport usually at peak hours and hope Bus or MRT have fixed time arrive and on time
☆ Safely High usage rate.
Use Students concession card (BCP TCP HCP card )which Cheaper than common card
And the fare of each transport is fixed
Full-time national servicemen Age : more than 21 years
National servicemen in battalion
Income fixed ☆ Economy fares;
☆ Comfortable and clear environment ;
☆ Save time ; High usage rate, use personal vehicle less during period of serve
Choose Full-time national servicemen monthly card (BCP TCP HCP card )
Senior citizen Age : 60 years and above
Singapore citizens and permanent residents
No or less income
☆ Economy fares;
☆ Safety and comfortable environment;
☆ Avoid the peak hours;
☆ Special service for them and more considered by others Price sensitivity and usage rate both highly
Use senior citizen concession card. 9:00 am close of operation throughout operating hours, outside these periods, need pay the full adult fares by cash or ez-link
Adult Age: adult;
Have different income level, some person don’t have ability to buy personal automobile and somebody use public transportation expediently
☆ Have high time pressure;
☆ More use at peak hours ;
☆ Economy fares demand;
☆ Comfortable and quiet environment demand , especially after work;
High usage rate , less price sensitivity , but have loyal to MRT or BUS
Use Common ez-link card ,enjoy common fares but cap the maximum fare for a journey at 1.9
(valid only on SBS transit services ) Age: more than 21
Income: get from SBS’s profit. ☆ Safety transport;
☆ Comfortable environment;
☆ More concession for them
Shareholders are loyal to SBS brand ,then the usage rate always more than others
Choose Shareholder Monthly card
customer all age customer
Income level vary ☆ Easy to take trip
☆ Can check the different fares through choose destination Just need single trip such as some traveler or some ez-link user forgot take card
Choose Single card for single trip
BCP: Bus concession only in one month
TCP: Train concession only in one month
HCP: Both bus and train concession in one month
Rather than offer the same marketing mix to vastly different customers, market segmentation makes it possible for firms to tailor the marketing mix for specific target market, thus better satisfying customer needs. Not all elements of the marketing mix are necessarily changed from one segment to the next. In SBS transport service only the promotional campaigns differently.
As a public transportation company, the target market is the common customer, and the customer decisions usually belong to habitual behavior, especially the local customer. Otherwise, the variety buying behavior is also existed.
Customer behavior does not pass through the usual belief-attitude behavior sequence. So repetition creates brand familiarity is more important.
Variety buying behavior
When new service comes out, customer would have other alternative choice, so that they might go through purchase decision process. In addition, first time users also need decision process.
——- Problem recognition
Students No income and usually in fixed route.
Use common cessation card or monthly card.
Full-time servicemen High usage rate.
Use which type product HCP, BCP or TCP card.
Shareholders High usage rate and loyal SBS brand.
Compare common card or monthly card.
First time users Don’t know the route, fare. Take which line or which vehicle
——- Information search
1) Personal sources
Passengers can search the information from their families and friends, especially the students, travelers.
2) Commercial sources
The advertisement of SBS service is the primary commercial sources, passengers can get them on the body of bus or train, and transport stations.
3) Public sources
On the SBS website passengers can research all the information about the service, promotion, route and so on. They also can get information through Hot-line.
4) Experiential sources
Every passengers take public transportation can taste the service of SBS, that is the direct information sources.
Generally, the consumer receives the most information from the commercial sources, but the most effective sources tend to be personal, that means personal sources legitimize or evaluate products for the buyer.
——- Evaluation of alternatives
Consumer arrives at attitudes toward different service such as other companies promotion, some time also need evaluate with own service such as monthly card , HCP or BCP. In this case, alternative are not complicated.
——- Purchase decision
1) Purchase decision influenced by others. Usually, passengers will choice the service which is chosen mostly.
2) Purchase intention is also influenced by unexpected situational factors. For example, ez-link holder leave his card, then he have to buy the single trip card.
——- Post purchase behavior
When the consumers satisfy the service of SBS, and the fares can be accepted, in the future, they also choose it. On the other side, if they don’t like the service they will never choose it and the influence not just one consumer, the repute of company would influenced too.
As the market of bus service is almost fulfilled, SBS Transit Company is trying to enhance some special service, such as Parks, Chinatown Direct, Fast Forward and City Buzz.
So far, SBS Transit Company has provided 4 routes – Parks400, Parks401, Parks403 and Parks408. Parks408 is the only direct bus service to Labrador Park, it saving visitors an average of 20 mins worth of walking time.
Chinatown Direct brings the passengers from the heartlands to the heart of Chinatown via the Expressway. There is no transfer, no hassle on the 3 routes – CT8, CT18 and CT28.
Fast Forward bus services provide a faster travel between places where there is a high demand by calling at fewer stops. Along the non-stop express sectors, the services may operate a different route to avoid traffic congestion.
City Buzz offers commuters a unique travel experience to see the sights of Singapore in cool comfort on board the air-con double deck buses. It is buzzing at key city stops every 10-15 minutes. There are three City Buzz services to choose from C1, C2 and C3.
Actually, the ticket fare of SBS Transit bus service is set by government. It is out of the company’s control, they cannot set the ticket’s price on their own. In some cases, SBS Transit Company has to adjust some routes’ fare. They should hand in some documents and apply to government first. By setting the price, they also need to consider the factors.
At present, the adult ez-link fare is up by 1 to 3 cents for buses, adult cash fare and single trip ticket fare is up by 10 cents. The average increase in fare is 1.8%
Compare the bus ticket fare with the taxi fare; it is much cheaper than taxi fare. Such as, the maximum ticket fare is $1.90 means the bus transfers is unlimited. But the taxi flag-down fare is $2.40, and the fare of every 225 meters thereafter or less up to 10 km or every 200 meters after10 km is $0.10. Therefore, in terms of price, SBS Transit has the advantage.
So far, there are 15 interchanges, 18 bus terminals and more than 3000 bus stops in Singapore.
SBS Transit Company is selling their service directly to their customers. There is not any agency or retailer between. And also people are very easy to take bus, just go to a bus stop with a few minutes. The bus stop is all over Singapore, people can get it very early and convenient.
SBS Transit Company is offering a lot of promotions in the different bus services. For example,
1) June Holiday Promotion – During the June Holiday, in order to attract more people to take their buses, the company provided “3 in 1 Extravaganza” promotion.
2) By riding on service 160 and 170 buses, passengers can earn transit points to get lucky draw chances and win up to $30,000 worth of prizes.
3) From 11 June to 9 August, board Parks408 at HarbourFront Interchange and receive a free can of OFF insect repellent as well as $1 off the casemate tour at Labrador Park.
4) At present, SBS Transit Company also provides a promotion – “Join Zheng He’s Journey with City Buzz”. Passengers can enjoy a 20% discount off entry ticket by presenting your City Buzz Pass or City Buzz Guide.
Strengths Consider Possible actions
SBS Transit is the market share leader in the bus service industry; they have occupied 75% of the market share. To find out the customer sub-segments, enhance in that area, and take the significant market share. Provide the special routes bus services, such as the Parks, Chinatown Direct, and City Buzz.
SBS Transit provides a lot of promotion in their bus services. To find out the shops or events those are interrelated with customers. Associate with some events, concerns, or shops and provide promotion to customers together.
Weakness Consider Possible actions
The speed of buses is slower than taxi and MRT. Identifying ways to improve the speed of buses. Apply the accommodation road to avoid the traffic jam.
Opportunities Consider Possible actions
Trend for traveling by bus. Government is trying to improve the establishment and attract more tourists. Identify how to increase the demand in the market, and increase the sales of SBS Transit. Improve the bus charting services, do more advertisements or work with the travel agents.
Technology is changing faster and faster. Bus safe features are continuing improve. The cost of improving the bus features. Improving the bus group by group, instead of updating all buses at the same time, to slow the flow of finance.
Threats Consider Possible actions
Economic worse condition Identify ways to stimulate the cost of SBS Transit. Providing more promotion to attract tourists. Communicate with the government to cut down the price.
Visitation of providence, such as SARS. Identify the way to keep the bus is clean, and let passengers know the bus is safety. Develop some effective communication with the customers.
Cleaning the bus on time, including the air in the bus.
In this assignment, we have analyzed the company’s statement, the market, and the environment. From the market and competitors analysis, it shows SBS Transit is the leader in the market of bus service; they have occupied 75% of the market share. But they still are trying to improve themselves, such as providing the special buses Parks, City Buzz. And now SBS Transit has entered into the MRT and has successfully provided the North-East line. After the SWOT analysis, it shows that SBS Transit still can improve their services, and consolidate their position.