First Union Rail Marketing Communications Plan
John Grossman Jordan Calgaro Theresa Tolan Ericka Kelly
First Union Rail Table of Contents
Executive Summary............................................................................................................................................ 2 Communication Market Analysis..................................................................................................................... 3 Problem Statement............................................................................................................................................. 4 Company Background and Positioning........................................................................................................... 5 SWOT Analysis................................................................................................................................................... 6 Target Market Profile........................................................................................................................................ 11 Product Positioning.......................................................................................................................................... 12 Audience Profile................................................................................................................................................ 13 Objectives, Strategies & Tactics...................................................................................................................... 15 Budget.................................................................................................................................................................18 Timetable............................................................................................................................................................19 Creative Example.............................................................................................................................................. 20 Evaluation..........................................................................................................................................................21 Company Information & Sources.................................................................................................................. 22
1
First Union Rail Executive Summary
The proposed marketing strategy for First Union Rail will provide the company with the
tools to take the next step and become the industry leader in railcar leasing and services. Through the analysis of current efforts, a plan has developed through which First Union Rail can utilize services such as direct marketing, international sales and trade show marketing to increase their total market share within the railcar industry. The marketing efforts presented are best formulated to reach their target markets in railroads and large corporations, allowing for increased sales and profits into the future as well.
First Union Rail’s parent company, Wells Fargo & Company, provides the company with
the tools to compete at a high level in the railcar industry. The financial backing provided by the established bank gives First Union Rail much more to work with when it comes to not just products, but marketing and sales efforts as well. The marketing plan presented will utilize this backing of funds in order to separate First Union Rail from the pack. Utilizing acquisitions of smaller companies and rail fleets around the continent, First Union Rail has strongly positioned themselves in the top five leasing companies in the industry.
In order for First Union Rail to move up in the rankings, efforts to increase prominence,
sales and revenues must be undertaken. These strategies are designed to reach the thousands of large corporations and railroads that can utilize such services that First Union Rail can offer them. These strategies will help build lasting relationships with current and future clients, as well as increasing market share overall within the leasing industry. To reach these goals, First Union Rail will undergo marketing objectives that include international expansion, buyer-focused relationship management and targeting advertising approaches. Through these appeals, the impact and reach of First Union Rail’s message and services will help increase their company’s success well into the future.
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First Union Rail Communication Market Analysis
Competitors: General Electric Railcar, GATX, CIT Rail, Macquarrie Rail, Mitsui Rail, Trinity
Leasing, Chicago Freight Car, Greenbreier Leasing, Midwest Railcar, and Union Tank Car
Market leaders: #1 General Electric Railcar, #2 GATX, #3 CIT Rail, #4 First Union Rail
All competitors of First Union Rail take part in the same type of activities and marketing.
Rather than being fierce competitors, most of these companies work together in mutually beneficial ways. The industry has high barriers of entry, reducing competition and allowing the majority of established companies to succeed at what they do. The only company that is vastly different than the rest is Union Tank Car, which offers only tank and hopper cars compared to the vast selection provided by the rest.
The communications strategies used by these companies traditionally are focused on in-
person sales. These sales take place at industry events such as trade shows and conferences, allowing for a sales representative to present a large number of options specifically tailored to each client’s needs. Secondary marketing takes place in trade magazines and journals, but still re-directs the reader to an actual representative. Relationships are the key to success in this industry, and in-person allows for the best means of accomplishing this. Companies are still struggling to get online and into new channels such as social media.
Customers: 33%-40% are shippers or receivers (companies)
33%-40% are large railroads
Remainder are small railroads, other arrangements, or small players in the industry
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First Union Rail Problem Statement
In order to increase sales and market positioning, First Union Rail must find new clients
and expand the relationships they hold with their current partners. To do this, First Union Rail must expand their footprint in the market, especially into Europe and Asia where railcar traffic is expanding. However, this objective will require a vast financial undertaking and marketing strategy in order to enter the industry successfully. International markets account for a large portion of the world’s railcar traffic and use, so an entry into such a vast industry would increase revenues and sales for First Union Rail. In addition to the overseas gains, First Union Rail will establish themselves as the industry leader in railcar leasing. This new position will better allow them to reach out to new clients here in North America as well, directly increasing their market share compared to their competitors.
The increase in market share hinges on First Union Rail’s ability to both create and maintain
business relationships now and into the future. Prolonged customers are First Union Rail’s highest source of revenue, so the nurturing and care of these relationships is absolutely key if they wish to have continued success. The maintenance and cultivation of these relationships falls on the marketing and sales team within the organization. Customizable solutions for each customer that can be presented in-person by reputable sales representatives will allow for clients to feel unique and important in First Union Rail’s sales strategies. Customer satisfaction leads to not only just return purchases, but also word of mouth revenues through similar companies. Purchasing managers who have dealt with First Union Rail can carry their success over with them if they happen to leave for a new company. Building these strong relationships will continue to lead First Union Rail on a successful path through the rail leasing industry.
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First Union Rail Company Background and Positioning
First Union Rail is the fourth largest railcar leasing company in operation in North America.
They are headquartered in Rosemont, Illinois and were founded in 1995. At the time of foundation, they were under control of First Union, a banking company centered on the east coast. In 1998, First Union was acquired by Wachovia, another large banking corporation. The strong bank backing of First Union Rail has been key to their success by allowing them to offer financial deals to clients that they could not find at a privately-owned enterprise. In 2008, the shuffle of parent companies continued when Wachovia was acquired by Wells Fargo & Company. This acquisition was tougher on First Union Rail than the first two, as the financial viability was questioned by their new parent company. After a series of layoffs and deliberation, First Union Rail remained as one of Wells Fargo’s subsidiaries. Since then, sales have steadily increased and solidified their position within the railcar leasing industry.
First Union Rail has positioned themselves in the industry as a financial powerhouse due
to the backing of Wells Fargo. The bank ownership gives them more money to spend both on customers and acquisitions as whole. Most recently, this financial power allowed by Wells Fargo led to the acquisition of a fleet consisting of 2,370 railcars valued at over $100 million total. The diversification of First Union Rail’s over 90,000 railcars allows them to service many industries with the number of cars that large corporations and railroads need to succeed. First Union Rail also positions themselves as easy to work with, tauting a variety of lease and service structures that are not available through their competitors. This relationship-focused method allows First Union Rail to create individualized strategies and funding options for those with whom they do business. Meeting the specific needs of each client is important to First Union Rail, and allows them to form a bond with each and every one of their partners.
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First Union Rail SWOT Analysis
Strengths: •
First Union Rail offers a tremendous amount of variety in the products they provide
- Offers 41 different types of railcars to meet every need
- Both new and old products allows for price differences for companies who can’t
afford brand new products
•
Strong parent banking company willing to invest in marketing efforts
- Acquisitions in 1998 and 2008 have shown financial viability of company
- Wells Fargo & Co. has over $1.6 trillion in assets
- Increased marketing efforts allows for further reach and increased revenues
•
Banking parent allows for personalized deals and equipment
- Financial freedom allows for lease structures unavailable from other companies
- Personalized lease structures create stronger relationships
- Increased re-purchase behavior due to personalization
•
First Union Rail has a mutually beneficial relationship with competitors
- High barriers to entry protect industry from outside competition
- Allows for mutually agreed upon strategies to create best solution for customers
- Strategies provide for higher satisfaction across the board within the industry
•
First Union Rail offers a large variety of lease structures
- With nine different financing options, First Union Rail allows clients to choose
what fits into their plan the best
- Each individual lease is further customized to match needs for both parties
•
Features a strong and relationship-focused sales approach
- Creates a bond with clients that lasts into the future
- Strong lifetime values for both companies and individuals involved in process
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First Union Rail SWOT Analysis
•
Diverse railcar fleet allows service to many industries
- The 41 different varieties allow for service to 18 different industries
- Each industry has thousands of potential clients
•
Presence at trade shows and seminars increases brand awareness
- Use of sales force at industry events creates a relationship that can be utilized into
the future •
- Sponsorship event increases brand recognition and sales opportunities
Industry research keeps First Union Rail on top of trends and shifts in the market
- Research into industry fluctuations allows adjustment in lease structures
- Increases ability to add and remove railcars depending on demand
•
Constantly purchasing and upgrading new railcars for their fleet
- Gives customers the latest product available
- Buys large quantities from producers before demand reaches peak
- Able to lease cars that are unavailable anywhere else
•
Nationwide distribution abilities service companies in all regions
- Railroad connectivity allows for service and maintenance throughout the country
- Centralized location creates an easy distribution map
- Both sales and service teams highly mobile throughout country
•
Sales have increased in the past year
- Influx of tank car needs has boosted sales
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First Union Rail SWOT Analysis
Weaknesses •
Internet presence is slim compared to competitors
- Website not very well developed
- More information online would allow for more knowledgeable first interactions
•
Social media is non-existent within company
- Do not utilize it at all to connect with clients or potential audiences
- Lacking any presence whatsoever
•
Bank firewalls and security prevent more open communication
- High security prevents open communication
- Burdens ability to provide social media channels, so they avoid it altogether
•
Small industry leads to less use of new marketing tactics
- Personalized approach leads to lack of a need for marketing materials
- Promotion to industry as a whole is often unnecessary
Opportunities •
Economic forecasts are stable with some growth
- Stability allows for establishment of a marketing plan
- No drop in sales expected
•
Long life of railcars allows for relationships to last for years
- Each car lasts 40-50 years total in service
- If need of car continues, lease renewals provide revenue for decades
•
Building of new railcars allows for purchases and diversification
- 60,000 new cars are built per year
- Purchase of new cars increase diversity and industries serviced
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First Union Rail SWOT Analysis
•
Certain industries are growing at a rapid pace, allowing for high demand
- Natural gas industry is growing rapidly
- Increased need for tankers and hopper cars for fracturing sand
- Demand for cars far exceeds supply, allowing for extremely high lease rates
•
Competitor activities are known and generated through customer feedback
- Knowing what your competitors are offering allows programs to adjust accordingly
- Can turn unsatisfied competitor’s customers into your own through this knowledge
•
Asset managers can utilize new methods to earn rent on all products
- Objective is to keep all units earning rent and buy new units
- Constant updates allows for the highest return on leases
•
Variable lease lengths allow for personalized approaches for new industries
- Typical lease length varies from 3-7 years
- Allows you to supply railcars for only as long as your client needs them
- Variable maintenance structures provide additional dimensions to lease offerings
Threats •
There currently are no customer voids that are not being met by themselves or competitors
- With a defined population of providers and companies that generally use the
products, most market demands have already been met
•
Pending legislation within the railroad industry and on a governmental level threaten
practices
- Proposed bills to re-regulate aspects of railroad industry will have a large impact
- With oil and natural gas as largest current markets, regulations imposed on these
materials will have a significant impact on railroad companies by drying up demand
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First Union Rail SWOT Analysis
- If railroad self-regulation rules that are formed through the Association of
American Interchange Rules change, cost and liability differences could be huge
- Disputes between the international and GAAP accounting rules (U.S.) may cause a
merging of policies. If some of the proposed changes go into effect, leasing
becomes less attractive for larger companies and could greatly hurt business
•
Some markets are being saturated with products
- Lumber market disintegrated with the housing crash. There is no demand for flat
lumber cars currently
- With the price of natural gas dropping and an increase of environmental
regulations, the coal market is beginning to become saturated with equipment
•
New specialized competitors can arise and take segments of the market
- Smaller companies like Mitsui and Macquarrie have specified strategies that may
pull some businesses away
•
Stable economic forecast may stall marketing efforts
- Without much growth or shrinkage coming within the industry, marketing efforts
may struggle to make an impact in the overall landscape of companies
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First Union Rail Target Market Profile
The target market for First Union Rail is any company or industry that needs to ship vast
quantities of materials and goods. One target market is the railroad industry because First Union Rail leases cars to these companies so they can use or lease them further to their own individual clients. Railroads oftentimes make the largest purchases from First Union Rail as they have the network and relationships to reach smaller clients that First Union Rail does not possess.
Another target market that would be interested in transporting their goods through First
Union Rail are crude oil and natural gas companies because they are currently the hottest targets. They are growing industries that constantly need to transport their goods. First Union Rail should target these industries because they could potentially become loyal customers and the demand for these products will continue to increase into the future. They can also work with these companies to meet their specific needs. From leasing to marketing and fleet management services, First Union Rail has the experience and resources to help any company. These companies are located in the United States and can come from any region because First Union prides itself on reliable shipping.
Demographics: • Males, ages between 40-65 • Supervisors or managers of equipment purchases in large corporations or railroads • Four year college education with potential graduate programs • Personal income level exceeding $100,000
Psychographics: • Politically conservative • Subscribes to railroad trade publications and actively reads for new technologies and services • Values a long-term and strong business relationship with those he does business with
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First Union Rail Product Positioning
First Union Rail is seen as a reliable and trustworthy company. They built many long lasting
business relationships that prove they have loyal customers. They work with their customers to figure out the exact type of equipment they desire. They also have a number of services to offer their clients to make it more convenient for them to do business. First Union Rail can often enhance the value of under-performing or obsolete equipment by upgrading, modifying, or rebuilding the asset. Many companies seek to work with First Union Rail because they are a Wells Fargo Company, which is a renowned banking corporation. That allows the clients to know they can afford to expand their business. There are many small shipping companies that cannot go up against First Union Rail because their name is not as well known.
Combined with the name value and association that First Union Rail has, the ability for their
sales representatives to go above and beyond to meet clients’ needs is unparalleled. First Union Rail is dedicated to finding the proper solution to every shipping problem, whether it be for a railroad, corporation or even their fellow leasing companies. Rather than viewing these companies as competition, a mutual understanding and effort between these groups can create the best end result for their clients. While seen as unorthodox by some, the value that is received by the customers is second to none and creates a lasting relationship between them and First Union Rail. In addition to this, a large service fleet run by First Union Rail makes sure that all purchases made from clients continue to work well into the future.
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First Union Rail Audience Profile
Audience Persona: Kevin Andrews
Kevin Andrews is a 47-year-old form Minnesota. He has been married for the past 22 years.
He and his wife, Norah, have three children, all of whome attend private school. With his busy work schedule he makes sure to spend as much time as he can with them on the weekends; attending their games and playing with them in the yard.
Andrews attended The University of North Carolina with a Bachelors of Arts degree in
Business Administration. Next he attended the University of Minnesota where he obtained his master’s degree in management. Shortly after he graduated he was hired by a marketing firm to do their research. After that he started getting into the railroad industry.
Kevin Andrews is the Equipment Manager at Railworks. He has 17 years of railroad
management and business development experience. Prior to becoming equipment manager Andrews held dual responsibilities as vice president of sales for FCM Rail, Ltd. and national sales director for Progress Rail Leasing. He held equipment-related positions at both of the companies. Andrews hopes to help expand Railworks to make it a globally known company.
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First Union Rail Audience Profile
Audience Persona: David Smith
David Smith is a 58-year-old male from Texas. He currently works as the vice president
of equipment for ExxonMobil’s transportation division located in Irving, Texas. David works approximately 50 hours per week, with half of these hours generally spent on business trips out of the office. David lives in a high-end neighborhood in Southlake, Texas, one of the more prominent Dallas suburbs. He and his wife Beth have three children ranging in age from 20 to 25.
David graduated from Harvard University in 1976 with a Bachelor of Arts in Business
Administration. David went on to graduate school at Northwestern University, where he graduated with a master’s degree in Business Administration from the Kellogg School of Management. He started working with ExxonMobil in 1994 after stints with other supply companies, where he specialized in equipment management.
David would describe himself as a hard working and dedicated individual who looks for the
best deals possible. This not only relates to his family life, but also to his purchasing decisions for ExxonMobil. David prefers face-to-face deals rather than online, and favors a strong relationship between the companies he does business with.
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First Union Rail Objectives, Strategies & Tactics
Objective #1: Increase market share
As a company that is a part of a specialized industry such as railroad transportation, it is
crucially important for First Union Rail to seek profitability in the market. As a subsidiary company of Wells Fargo that offers its services across North America, First Union Rail does not have a major concern of outbidding its competitors in market prices. Since First Union Rail offers its equipment and services to several industries, it must remain as one of the top market leaders. To continue to be one of the leading providers of railcars, First Union Rail must utilize volume sales, which will ensure cost advantage for them. For First Union Rail to remain as a premier diverse railcar leasing company, it must gain increased bargaining power. The increased bargaining power will solidify First Union Rail’s reputation among suppliers and channel members. This is an essential component to increase market share so that the company has easier accessibility to negotiate and offers the best prices.
Strategy #1: Improve product quality Tactic 1: Launch a new eco-friendly railcar to showcase to the company’s specified industries such as (coal, lumber/ wood, metals, paper etc.) that will increase product quality and provide unique appeal. Having an external appeal such as environmental consciousness gives First Union Rail leverage against its competitors.
Tactic 2: Using the company’s website and railroad industry trade journals to promote new products to potential clients. The direct promotion of how First Union Rail can help specific industries transport their materials for less will generate new clients and business. If First Union Rail is able to offer their services at a rate that their competitors can’t match, or if their appeal includes aspects unmatched by others, they will have a leg up on the competition.
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First Union Rail Objectives, Strategies & Tactics
Strategy #2: Reasonable pricing for cargo and equipment Tactic 1: Provide financial leases and rental rates that vary to accommodate each industry appropriately. Offering custom leases to each individual company not only will help create business relationships between First Union Rail and their targets, but will also lead to higher satisfaction and word of mouth marketing. Allowing the buyers to control the leasing process gives them a sense of power in the buying process, and can help you maximize potential profits because of it.
Tactic 2: Research industries and compile an internal database to view and track which cargo is the most expensive to ship. The research collected on each type of material and the costs related with transporting it will better allow First Union Rail to create leases for their clients. With price sensitivity now prevalent in these purchasing decisions, having an idea of the customer-related costs is key to running a successful enterprise.
Strategy #3: Implement distribution channels internationally Tactic 1: Add new distribution channels internationally and increase the intensity of distribution in each channel. Since First Union Rail is currently only providing services to North America, it would impact the company greatly to get involved internationally starting with smaller companies, which will increase brand equity. Adding new routes to existing distribution channels will expand services locally. Once finalized, by creating an interactive map for all locations and posting it on the website, First Union Rail can appeal to new prospect companies looking for shipping and leasing services. Expanding their service base not only allows for the ownership of more railcars, but also opens the company up to an audience they have never been able to reach before.
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First Union Rail Objectives, Strategies & Tactics
Objective #2: Strengthen repeat purchases and brand loyalty
Since First Union Rail is a part of a high demanding industry that is imposed by regulatory
policies and demands for greater efficiency, it is necessary for the company to have brand loyalty in order to remain relevant. To ensure the company is a reliable source for solutions, it has successfully combined the financial strength and expertise of experienced transportation professionals. What makes it such a unique company is that they provide all of its resources in-house, which eliminates the need for outside partnering organizations. As the one of the primary companies for consulting on rail transportation equipment, brand loyalty enhances its presence amongst other industries. If industries pledge their continual support to First Union Rail, revenue and sales would increase, help progress new developments and overall protect the financial longevity of the company.
Strategy #1: Implement membership programs Tactic 1: Offer discounts to companies on rail equipment after a certain number of purchases or rentals with First Union Rail. By giving companies a mass discount on the products they purchase, they are more likely to return in the future. The discount may effect sales in the short-run, but the lifetime value of each account far exceeds a smaller percentage discount that is given to them.
Tactic 2: Set up an online dashboard for clients to see their current benefits. By connecting with industry professionals online, the company creates a system through which potential buyers can learn more about why their products are the best choice. In addition to showcasing the products, First Union can demonstrate each type of lease in one place, allowing for a comparison to be made actively before ever having to involve further company resources.
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First Union Rail Budget
The budget proposed is only an estimate, as some of the strategies and tactics may incur higher costs when they start to be implemented. By being smart and using internal resources, First Union Rail can save money on certain tactics by efficiently planning and delegating tasks. The majority of the budget is allotted to new product development and initiating international distribution channels to gain market share. Other important budget elements include advertising and promotions. Tactic Launch a new eco-friendly railcar
Price $500,000
Promote in trade journals
$5,000
Create financial leases and special rental rates
$0
Research and compile database
$0
Add international distribution channel Offer discounts after repeat purchases
$100,000
Online dashboard
$500
Equipment packages
$0
Advertise custom packages
$1,000
$0
Description Designing, developing and producing a new eco-friendly railcar Monthly ads throughout the duration of the campaign in various trade journals and online advertisements These won’t cost money to create, but rather time and planning to offer deals that will be money-saving yet profitable for the company This will be done internally by staff who are already employed and will not incur costs of an outside agency or research consultant Plan and implement an international channel This will cost nothing to offer, but will require planning to make sure First Union Rail does not lose money by offering such deals Hire a web designer to create and implement an online dashboard for clients to access for deals and promotions No cost, but research and time to decide what products to bundle and offer as a package with services Cost of advertising online and through other cheaper channels the new customizable packages
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First Union Rail Timetable
Based on a 12 month campaign time frame, the strategies and tactics will take the majority of the year to implement. Pre-planning will be necessary to ensure a successful implementation and consistency among all parts of the campaign throughout the entire year. Tactic
Jan.
Feb.
Mar.
Apr.
May.
Jun.
Jul.
Aug.
Sept.
Oct.
Nov.
Dec.
Launch eco-friendly railcar
X
X
Advertise in trade publications
X
X
X
Provide finance leases
X
X
X
X
X
X
X
X
X
X
X
X
Compile internal databases to track
X
X
X
X
X
X
X
X
X
X
X
X
Add international distribution
X
X
X
X
X
X
X
X
X
X
X
X
Offer discounts after 5 purchases
X
X
X
X
X
X
X
X
X
X
X
X
Set up an online dashboard
X
X
X
Create and offer service packages
X
X
X
X
Advertise customized packages
X
X
X
X
First Union Rail Creative Example
First Union Rail
Helping Transport Your Goods
First Union Rail offers a variety of customized finance and operating lease structures, as well as marketing and transportation management services. A Wells Fargo Company
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First Union Rail Evaluation
To evaluate these campaigns, First Union Rail will conduct a survey among the affected
customers and constituents who were active with the company through its implementation. First Union Rail can do internal research through their customer relationship management system to track new customers, leads and repeat purchases from existing buyers. If First Union Rail decides to implement an international component, they can evaluate by tracking the business that was brought in versus the money it cost. Analyzing sales data and customer information during this time frame will help gage whether the campaign was successful and if new customers were gained.
First Union Rail will be required to analyze sales figures from the year of this plan’s unveiling
in comparison to those of the past. In addition to simply comparing the two numbers, First Union Rail must account for any external factors outside of marketing that would have an effect on sales. Sales figures are important to First Union Rail, but the majority of success is based within the client relationships they hold. Having personal discussions with numerous clients will allow First Union Rail to see if their plan was taken as a success by these partners, or if there is any area they can improve on into the future. The feedback of current clients is vital in adjusting the campaign so that new industries can be reached in the industry.
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First Union Rail Company Information & Sources
Company Type: Private, however is a division of publicly traded Wells Fargo & Company (WFC) Founded: 1995 Location:
One O’Hare Center
6250 River Road
Suite 5000
Rosemont, IL 60018
Corporate Contact: Rick Grossman, Vice President of Equipment Industries Serviced: Aggregates, cement, chemicals, coal and coke, ethanol, fertilizer, food
products, grain, lumber and wood, liquid petroleum products, metals, motor vehicles and
parts, non-metallic minerals, pulp and paper, stone, clay, glass, scrap metal, plastics and resin,
and wood pellets.
Products Offered: Autoracks, boxed cars, covered hoppers, flat cars, gondolas, intermodel,
locomotives, open top hoppers and tank cars.
Services Offered: Operating leases, finance leases, sale/leaseback, portfolio acquisitions, asset
sales, lease/sublease, loans, management services, remarketing and renewal, and railcar
upgrading, modification, and rebuilding.
Information source: firstunionrail.wellsfargo.com
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