1Ganesh Iyer

Marketing Myopia Bombardier and Amtrak

Summary

Summer 2008

XMBA 206.1

2Ganesh Iyer

Amtrak and the N.E. corridor (The Situation)

How important is Acela to Bombardier? Technological breakthrough – Hi-speed train that runs on lousy tracks

» If Bombardier “pulls this off”, they have a “Silver Bullet” – Nobody in the world has a high speed train that runs on lousy tracks. – The world is full of countries with lousy tracks that wants faster service – Large potential global market

Showcase account

Establish relationship with Amtrak for future sales

Strategic Implications Make it work, even if the project is not a money maker

This as an “Investment in learning” about high speed trains.

Showcase account - publicity must be managed.

3Ganesh Iyer

Amtrak and the N.E. corridor: (Situation Management)

Has Bombardier’s handling of this project damaged its corporate image?

» The reference account is “turned off”

» Jeopardize not just high speed trains but the entire Amtrak business

» The technology is great and passengers like it…but Bombardier’s conflict resolution process is terrible.

4Ganesh Iyer

Bombardier had to realize that they were marketing a relationship product not just a technology.

» Quality of an “Relationship Product” depends upon both seller and buyer Relationship Management is critical

Lawsuits are the last resort.» Are you right? And can you prove it? Even then the lawsuit may take years. » Consider the long term effects about publicly deriding the reputation of your

customer

Bad press and complaints may have been inevitable but if Gunn and his team at Amtrak had a relationship with Bombardier

» Bombardier could have avoided denigrating statements = crapper doors

» Would exist a congenial approach to solving problems this is critical if you need information from your buyers.

» Critical for “Relationship Products” where the ultimate quality is based on both parties.

Marketing MyopiaRelationship Management for a “Relationship Product”

5Ganesh Iyer

Learning: Marketing Myopia

If your firm is like Bombardier (Market Leader, Technology Leader and Innovative)

» Beware the curse of Marketing Myopia.

» Pay attention to customers (even bad customers) and not just your product.

Avoiding Marketing Myopia is important for Bombardier as it is for P&G.

Marketing is costly but…» So is redesigning products, costly R&D and salvaging public

relations disaster.

6Ganesh Iyer

Removing Marketing Myopia Marketing Orientation

Execution Toolkit Ask what is the basic customer need and not

what is the great product we are selling?» A marketing orientation means understanding consumer

needs and connecting with them.» It means not being mesmerized by your product.

Sincerity (Reputation) >> Product = Marketing Orientation.» You can recover from a bad product but almost never

recover if the customer doubts your sincerity.» If “sincerity” is costly then avoid that business.

7Ganesh Iyer

What happened?

Lawsuit settled 2 years after the case, » Bombardier only got 42.4 million of the 70 million it was owed by Amtrak plus all the

legal costs, » But Bombardier loses maintenance contract…prevents Bombardier from learning

through its involvement in maintaining the trains.

By 2005…Amtrak and Acela are doing well and Bombardier is selling trains to Amtrak having re-established the relationship.

» David Gunn over the past 3 years turns out to be Amtrak’s best president in years holding down costs

In November 2005 Amtrak’s board fires Gunn.» The Bush administration wants to privatize Amtrak starting with the profitable

Northeast corridor and Gunn opposes it.

In October 2004, Bombardier secures the only high speed train order sold outside of northern Europe since 2002

» Sale of 20 high-speed trains to China (Bombardier’s part of the deal is $263).

8Ganesh Iyer

Analysis Framework

Market

Customer AnalysisMarketing Orientation

Competitor AnalysisMarketing Orientation

Company AnalysisMarketing Myopia

Marketing Strategy

Product

Price

Promotion

Place