Of this total operating budget for the office some $161,000 are expense items which are reimbursed by charter clients. This includes bridge, highway and tunnel tolls for charter trips; certain commissions which are provided for in the tariff which are paid to travel agencies who place charter orders with the Authority; and other attendant charter costs which are reimbursed by the chartering parties. These items are not really operating expenses for the office, but are listed in the office budget for accounting purposes. Actually, the higher the amount of these particular expenses, the greater the revenue to the Authority from charter sales since these reimbursable expenses are proportional to total charter sales.

During this current fiscal year the office has instituted a strict budgetary control system on all units by placing the accountability for fiscal control on the section level within the office.

The office also engages in an ongoing and expanding program to defray costs wherever possible through cooperative promotion or the sale of advertising on certain publications and timetables. In FY '77 it is estimated the office will generate some $6.8 million in non-farebox revenues from concessions, charter and contract sales and advertising sales. This is over 600% of the total marketing operating budget and 5% of the total operating expenses for Metrobus.

Question 6. Provide a comparison of some of the larger transit systems (New York, Chicago, San Francisco, Los Angeles) marketing expenditures and revenues and explain any material differences in marketing department structure.

Answer. Data on the expenditures for marketing by other transit properties is not readily available. However, the Office of Marketing has undertaken a survey (at Attachment C) of major properties to develop this data. When the information is collected and assembled it will be available to the Committee.

It should be noted that transit properties have not organized their marketing efforts along parallel lines, thus making comparisons difficult. Many of the functions found in WMATA's Office of Marketing, such as charter and contract sales, telephone information service, consumer activities, consumer sales, market research and other functions either do not exist at other properties or are not necessarily found within the market organization. Many properties do not even have a formal marketing department and expenditures for various marketing activities are difficult to distinguish from other activities. WMATA is one of few transit properties that house most marketing activities within a single office. Question 7. Describe how media is selected for various promotions. Answer. Media selection for effective advertising requires extension current market and media research data. Media recommendations for Metrobus advertising are generally presented to the Office of Marketing by the Authority's advertising consultant for review and analysis. However, prior to any selection, extensive research of the target market segment is conducted to determine specific demographic characteristics of the audience to be reached, i.e., potential buyers of transit service. The market is then segmented by various characteristics such as age, education, geography, ethnic background, income levels, etc. The market is continually researched to determine where and among which market segments the greatest opportunities lie for selling transit services. The segments are then given priority and again analyzed to determine what characteristics of the service offering would appeal most to each particular segment. The creative strategy is then tailored for those specific market segments, such as teens, housewives, businessmen, students, secretaries, etc.

Against this research and creative strategy the various media are researched to determine where advertising should be placed to reach the greatest number of people within a particular market segment at the lowest cost. Because advertising effectiveness relies heavily on the cumulative effect of the advertising message on a potential buyer, a mix of media, each reinforcing the other, is often employed against a single market segment. For example, a combination, of print media (such as newspaper or magazine) and broadcast (such as radio and television) may prove to be the most effective combination of media for reaching the desired market segment. Therefore, in addition to analysis of various audiences of specific media, consideration is also given to where the greatest reinforcement and cumulative effect of the message can be obtained in a combination of media at the lowest dollar cost.

Media are selected on this basis after careful research of the media available in the market. Certain research tools which are available to media analysts are employed to determine the most efficient media buys. These include, but are not

limited to, use of data provided by Arbitron, Pulse and Nielson which rate various broadcast media and breakdown their various audience characteristics by age, income level, sex, etc., and give the audience figures for each time segment during the broadcast day. In print media various tools are also available from Standard Rate and Data Service, the Audit Bureau of Circulation which provide the same type of research as the broadcast research firms. By employing these tools and obtaining other market and media data, an objective evaluation of the media can be made to base the selection of specific media for purchase on purely an efficiency basis.

The amount of advertising dollars invested in advertising to any particular market segment is directly proportional to the amount of potential that segment represents for selling transit services. The posture of the Director of the office has been to make such media selections strictly on the basis of effectiveness and not for the purpose of creating good public relations with the owners or operators of various media or other persons interested in advertising placement. Question 8. Describe how specific marketing inputs such as survey data, ridership studies, idea generation, and implementing and reviewing plans fit into the overall management structure.

Answer. A distinction is drawn on the management level between the program for the Office of Marketing and the Authority's marketing program. On the one side of the coin is the Authority's overall objective to provide the consumer with the finest transit service feasible within the various fiscal and operational constraints. This is a consumer-oriented attitude on the part of every level of the Authority's organizational structure that is concerned with bringing services to the marketplace which fill the needs of consumers as perceived by all the various indicators of those needs. That is the Authority's marketing program. The program for the Office of Marketing is concerned with implementing some of the aspects of the overall marketing program, principally those direct actions which determine the character of the market and attempt to create a selling environment in which consumer acceptance of the product is more readily manifest. Thus, all the actions of the management of the Authority which are concerned with the service offering and the consumers' needs are an integral part of the Authority's marketing program.

Since the Office of Marketing sits on equal footing at the top management level with the operating and planning departments, integration and coordination of objectives of the various activities takes place in the development and formulation of Authority policies relating to providing a good product which can be sold in the marketplace. Research and market identification takes place both from the pure marketing viewpoint in the Office of Marketing as well as from the planning function which is concerned with, to a large degree, service development and pricing. Service improvement, whether through cleaner buses, better driver responses, better routes and schedules, fare adjustments, better information-are all aspects of the service offering which generate ideas for marketing the product to the broadest possible market. The work plan for the Office of Marketing, Project 76 (copy attached at Exhibit D) is a reflection of the entire Authority marketing effort and represents, to a large degree, the inputs from the various components within the management structure.

Question 9. Describe how market and market potential are identified and how specific segments have been identified and penetrated in the past.

Answer. The Office of Marketing identifies its market and potential markets through ongoing consumer and marketing research. This research is conducted in various ways, but the ultimate goal is to develop as much knowledge about consumer habits and market potential as possible and to acquire as much knowledge of our product position against the marketplace. Consumer research is conducted to identify areas where the Authority can make improvements in the product in accordance with customer needs and preferences. Marketing research is conducted to identify markets and potential customers for various transit services and to identify the best methods and channels for communicating with them. Research to date has been conducted both by outside market research firms and by in-house staff. These have consisted of various attitude and market studies some of which are compiled in Exhibit E, entitled "Resident and Rider Attitudes Towards Metrobus," (July, 1975). This report summarizes the research findings through the first half of 1975.

These findings and the additional research which the Marketing office conducts have been translated into purposeful actions aimed at penetrating the market

within the scope of the objectives of the Office. The task of the Office of Marketing has been guided by these findings. The objectives of the marketing plan have been established as outlined below in order of priority.

1. To provide meaningful and responsive action to the needs of transportation consumers in the National Capital Region;

2. To make it possible for consumers in our existing service area to use Metrobus to the fullest possible extent;

3. To attract and persuade them to do so;

4. To measure and report the extent to which this happens;

5. To develop plans and programs which make for even greater growth in service and patronage;

6. To provide a mechanism whereby all functions within the Authority may cooperate to improve Metrobus services;

7. To provide WMATA with whatever revenue is attainable without damaging or distracting the Authority's primary community service objective.

In each area, WMATA has made significant strides since the acquisition of the four bus companies some three years ago and since the inception of the Office of Marketing at that same point in time. Overall, the most telling achievement is contained in ridership increases which have occurred. Prior to the acquisition of the former bus companies, ridership had long been declining at an alarming rate. Since acquisition, and by conscious effort by the Authority, ridership was stabilized and began to grow at an increasing rate each year to the point where it is now 4 per cent over last year. Additional revenue has steadily increased. Patronage trend lines indicate continued growth in ridership. Even though the operating fleet of the Metrobus system since September of this year is less than it was previously, revenue and patronage continue to climb upwards. Annual patronage is now at a record 122 million rides.

Part of this success can be attributed to meeting the first objective of the marketing effort: providing responsive action to the needs of consumers. One of the most dramatic improvements on the consumer side has been in the area of telephone transit information. At acquisition, the number of calls for transit information was running about 20,000 per week, up to 100,000 per month. Twentyseven information clerks and supervisors were then answering under 60% of the total incoming calls. For example, during a typical week in January, 1973, there were 15,000 incoming calls and only 8,000 were answered. Since that time, the office has doubled the number of operators, implemented a training and retraining program, improved the informational materials with which the clerks work and developed an incentive program for the employees. Calls have since increased to about 35,000 a week (sometimes approaching 45,000) and the answer rate has increased to well over 90%, at times reaching as much as 98%. What has happened is that twice the staff has been handling four times the amount of work and the quality of information has improved substantially. This has made it easier for patrons to get informaton on routes and schedules, therefore, making it easier for them to ride Metrobus. (Operators Training Manual at Exhibit "F").

Additional materials have been prepared to assist consumers on how to ride the bus in metropolitan Washington. Personalized timetables give specific information to any consumer on request. Couponed advertising allows a convenient method for consumers to obtain tailored information about riding the bus. Most of the advertising budget is directed to bringing good hard information into the hands of consumers to help them use the Metrobus system. Some examples include the direct promotion of new lines and service changes through direct mail, special flyers, posters, radio broadcasts, special timetable distribution. Additionally, timetables are widely distributed in schools, offices, employment centers, information outlets, hotels and libraries throughout the region.

Advertising has provided a strong impetus to ridership, through motivational and education messages which provide information on riding as well as point out the attractive features of the transit alternative. The improvement of the appearance of the fleet and improved routing and scheduling have also served to attract riders. Promotion of these improvements makes it known to the consumer that transit services in our region are improving drastically to provide them with better and better service. Introduction of a new fare system has helped equalize fares throughout the transit zone and substantial information support went into making it easier for patrons to accommodate to the change.

During the period of March-April, 1975, ridership dropped slightly. Coincident with this decline was a reduction in the amount of advertising and promotion being conducted as a result of a budget squeeze. While evidence that the decline was related to the reduction in the promotional effort is not obtainable, it has been accepted that information support and promotion are closely associated with increasing ridership trends. The premise that information in the hands of the consumer and reinforcing promotion will motivate people to ride the bus has been part of the fundamental objectives of the marketing plan.

Consumer research has been conducted on an ongoing basis to determine the needs of consumers and to define marketing opportunities for selling bus service. As experience accumulates within the office and knowledge of the market and its opportunities continues to expand, more plans and programs are developed or others expanded to meet consumer demand and thereby increase revenue and ridership.

An aggressive sales promotion program in line with the objective to attract riders and hold their patronage has been implemented and refined over the past few years. Additional programs are constantly being developed to motivate consumers to use the system and to use it more often.

An annual work plan for the office has been developed and shared with other Authority elements in an effort to guide the consumer-oriented actions of the office toward greater achievement in the area of patron services.

The organization of the office was established and is constantly refined to achieve the consumer-related objectives of the office. Consumer Representatives, Transit Information, Consumer Research, Promotion and Information, Merchandising Sales, Charter Sales, Consumer Sales and Contract Sales are all devoted to bringing better service in a fully responsive way to area residents. Other consumer services have been initiated such as the "Where and When" program which brings sales and information staff into major activity and employment centers to promote ridership and provide personalized, up-to-date system information to residents. An example of this approach is the college information program through which a booth is set up by information staff at college registrations to distribute transit information and sell tickets and tokens to students at particular schools. The office produces timetables for each college in the area with the specific routes and schedules to and from the campus. Each one carries the name and seal of the particular school.

The Authority's "Omnibus" is operated by Consumer Representatives who travel to various locations throughout the transit zone to hear consumer complaints, suggestions and to help them with particular transit needs.

Personalized timetables are offered to riders through couponed advertising and other promotion. The customer simply fills out a simple coupon telling where he or she wants to go. A timetable is then prepared clearly marking the routes and transfer points and the fare zones for that particular customer's needs. To date, over 9,000 requests for personalized timetables have been filled and sent to customers.

In addition, 247 ticket and taken outlets have been established throughout the transit zone for consumer convenience. Sales of fares from these outlets are running about $10 million per year. With the exception of the six manned information and fare sales outlets, there is no direct cost associated with these sales operations.

The Consumer Representative program offers consumers an opportunity for direct input into the service operation by providing them a voice within the structure of the Authority. These Consumer Representatives, who serve as ombudsmen for the patron, handle as many as 5,000 calls monthly, many of which are translated into direct action for service improvements.

Additionally, the office has constantly improved the non-farebox revenue opportunities for the Authority. Advertising and concessions operations brought in nearly $250,000 to the Authority in net revenue last fiscal year, as opposed to less than $140,000 brought in by the four former companies in the final year prior to takeover. This function has been handled by one Authority staff person who devotes less than a third of his time to the management of these programs. Additional programs are also being developed to increase that total revenue. The revenue producing activities of the office are operated on a profit and loss center basis in order to maximize efficiency and the returns to the Authority. The charter and contract sales section now account for better than $5 million in annual sales. In the first year after acquisition of the private companies, these

sections did 37% more business than the combined total of the four previous companies. This increase was achieved with 40% less staff than the combined four companies. In fiscal year 1974, the office did $5.2 million in sales against $4.4 million for the combined total of the previous owners. Of that $4.4 million, approximately $500,000 was from individual sightseeing ticket sales-an activity from which WMATA is legislatively barred. This increase in sales was achieved with a charter and contract sales staff that had been reduced by WMATA from 28 persons to 16, or a 42% reduction. The professional staff was reduced from 20 persons to 11. The net effect was a substantial personnel cost savings as well as an increase in the level of sales activity and profitability.

Question 10. Please submit documentation of the correlation between ridership changes and marketing efforts.

Answer. Prior to the Authority's acquisition of the four major bus operations in the metropolitan area in 1973, ridership had been consistently slipping downward. Since WMATA takeover the trend has been reversed and is now increasing at an annual rate of 7 percent. This is perhaps the most telling evidence of the success of the Authority's marketing program-since the Authority believes that better service, more reliable schedules, better routes, cleaner and more attractive buses, new bus shelters and stop signs, more courteous drivers, good promotion and better information distribution are all part of the marketing effort. Certainly each of these improvements have contributed to some degree in the successful attraction of riders to Metrobus.

The means that the Authority has to compute ridership is such that it does not allow for a finite analysis of transit ridership, by either geography or market segments. Thus, it is difficult to make precise correlations between specific marketing programs and ridership. This is also compounded by the fact that there are so many intervening variables which impact ridership (i.e. holidays, weather, strikes, fare changes, etc.).

WMATA is showing a system-wide increase in revenue and ridership in spite of a recent increase in fares. To conclude exact relationships with any specific promotional program and these general ridership increases would be at best circumstantial. We can on specific routes illustrate how a marketing effort has helped to achieve maximum ridership levels earlier than could normally be expected. Examples of this are:

20E (Former Trailways Service from Fairfax to Washington) Promotion of this service, which consisted of manning the Trailways buses prior to transfer to Metrobus with information personnel armed with promotional handout material and support posters, and notices in the buses, was so successful that since initiation of the service in April, 1975, three new buses have been added to this line to relieve the critical overcrowding.

M-3-(Union Station-S. W. Mall Rush House Service Shuttle)

The inauguration of this service was accompanied by a test promotional campaign to determine the effectiveness of various promotional techniques. This campaign employed direct mail along the rail commuter corridor; seat promotions on all trains coming into the city; distribution of information materials through citizen community groups along the corridor; use of print mediaespecially newspaper, production of a special pop-up map/timetable which was partially paid for by the sales of advertising space to AMTRAK; and special displays in Union Station. Ridership grew rapidly on this line to the point that within 3 months 80% of operating costs were being covered. On most of these buses standing loads are the normal case. This was a case of highly specialized target promotion which supported the premise that proper information is the best tool for selling transit.

T-11-(New all-day and rush-hour service from P. G. County)

Again, placement of good information on service in the hands of the right market segment increased ridership. Direct mail to an eight-block corridor (four blocks on each side of the line), posters, on-board information materials and some amount of localized radio commercial advertising helped to achieve maximum standing loads on this line within 3 months of implementation.

There are numerous other examples where individual lines, or combinations of lines have been promoted through direct mail, print advertising, handouts, broadcast media that reinforce the basic premise that if the population becomes educated through easy access to information about transit, and if they are motivated through promotion, they will use transit.