I International Symposium Engineering Management And Competitiveness 2011 (EMC2011)

June 24-25, 2011, Zrenjanin, Serbia

THE POTENTIAL FOR IMPLEMENTING A DIGITAL

MULTIMEDIA MARKETING COMMUNICATION SYSTEMS
ACROSS THE PE “SERBIAN RAILWAYS” NETWORK
Zlatibor Ljubinković*
PE ”Serbian Railways”, Nemanjina 6, 11000 Belgrade, Serbia
zlatibor.ljubinkovic@gmail.com
Henry Barnard
”Inteleksija”, Stepe Stepanovića 35, 11450 Sopot, Serbia
henry.barnard@btconnect.com

ABSTRACT

Serbian Railways has the potential to provide a sophisticated multimedia based marketing communications
platform for a wide range of businesses and organisations throughout its extensive operating region. The
Railway currently carries some 10 million passengers per year and this is set to increase dramatically as
ambitious EU backed expansion plans are implemented over the next decade. The advent of new and
relatively low-cost technologies make it possible to segment this growing but faceless passenger population
into clearly differentiated and highly relevant target markets for a wide range of enterprises. This ”captive”
audience can be organized into geographic, demographic/socio-economic, psychographic, behavioral or
product-related sectors to suit whatever marketing strategies an organisation might wish to employ. The
paper investigates how the installation of proven digital multimedia systems into stations and passenger
rolling stock could provide a valuable and relatively low-cost marketing platform for any large or small
enterprise/organisation to communicate and promote their respective products and services. Finally, it
addresses both the challenges and benefits of implementing such a system as well as exploring its potential to
provide Serbian Railways with a significant on-going revenue stream and as an important support of SME’s
development.

Key words: railways, digital multimedia, marketing communications.

1. INTRODUCTION

In order to diversify products to new markets, or increase a products’ demand in already

established markets, target marketing is increasingly being used to great effect as part of the
marketing mix and combines well with the more traditional mass marketing techniques. Target
marketing techniques provide the ability for marketeers to tailor their messages to meet the needs
of specific vertical or niche market audiences and this method can often be far more effective
particularly where there is a captive audience as there is in this case. The authors of this paper
consider that there is a largely untapped opportunity for the railways to provide a sophisticated
multimedia based marketing communications platform for a wide range of businesses and
organisations throughout its extensive operating region. With the advent of relatively low cost
technologies, it is now possible to segment the Serbian Railway passenger population into clearly
differentiated and highly relevant target markets for a wide range of enterprises.

This paper also considers the potential for such a platform to provide valuable and perhaps
subsidised marketing support for SMEs which in turn will assist in the growth of the Serbian
economy thereby benefiting Serbian society at large.

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2. MEDIA AND NEW HYBRID DIGITAL MULTIMEDIA SYSTEMS

Media is essentially the routes by which messages are passed on, for a limited period of time, from
a sender to a recipient. A broad view of it is to consider businesses or people as units of energy or
material known in communication terms as intermediaries. They convey information to each other
and so forge links between them. In marketing terms, information is the primary objects of market
exchange, and media plays a crucial role in any communication process. Media is divided into the
following categories:
• Print media - daily newspapers and periodicals, post, etc.;
• Electronic media - radio, television, computers, radio stations for advertising, etc.;
• Media posted in public places - posters, boards, billboards, illuminated signage, etc.;
• Media in a space - shop windows, exhibitions , fairs, theaters and similar media;
• Media on the move - public transportation vehicles, as well as all other means of
transport;
• Multimedia - uses multiple different types of media integrated into a whole.

This last definition of media in the list gives a good introduction to the new hybrid digital
multimedia systems, the implementation of which would allow Serbian Railways to become a
sophisticated platform of marketing communications for a wide range of companies and
organizations. The term digital multimedia systems implies any combination of two or more media
in digital form, which are so integrated that they can be presented through a unified interface, using
a computer program, which broadcasts the content from one central place to multiple remote
locations, according to the process of “Digital Signage’’, (see Figure 1).

Figure 1: Distribution system of digital content elements

These systems are already used by different industries, including: commercial, sports,
entertainment, hospitality, corporate business, transportation, education, healthcare, public sector
and banking (Digital advertising). Digital multimedia systems used in transportation are expanding
all around the world, for example in Germany, France, Britain, China and Canada. (Review of 2010).
In Serbia, these digital multimedia systems are used in public transport vehicles in Belgrade. A
representative of the company, “XXL Marketing” claims that this is not profitable (“Buses as
a medium“). Over and above this assertion, the first problem is placement of the monitors, as
although many people use the buses each day obstructions reduce the number of monitors that can
be easily viewed by passengers.
Computers and the Internet are an integral part of multimedia technologies. Specialised software
means that information can now be transmitted as text, images, graphics, movies, video clips,
music and sound effects, which can be further processed and manipulated. Interactivity is one of
the most important features of digital multimedia systems, and it represents a change from one-way

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communication through traditional media, towards diffuse communication where every person and
device become both emitters and receivers (Bluetooth, touch-screen displays etc.)

3. THE RAILWAY AS A MARKETING COMMUNICATION PLATFORM

The Serbian Railway Network, with its many stationary and moving spaces in which people gather
and travel to different destinations, represent meeting places for a great many people whose
presence, with the implementation of digital multimedia systems, can be used as a platform for
marketing communications in order to promote products or services of different companies.
Passenger railway stations in the major centres in Serbia are the ideal place for placing monitors to
broadcast appropriate digital content. There are several types of public transport vehicles that are
particularly suitable for the installation of digital multimedia systems, especially the Electric-Motor
Trains which operates the BG train system in a small part of Belgrade and the White train system in
a larger area of Belgrade, and other EMTs used as long distance passenger trains. The electric-
motor trains, of which there are currently 16 in operation, consist of four parts: a towing car at
either end, with drivers’ cabs separated from the passenger areas and two seated carriages between.
They have a capacity of 308 seated and 350 standing. Each year, on average, they carry more than
40% of all passengers. In addition to the Electric Motor Trains Serbian Railways possess another
35 classic passenger vehicles for international traffic and 80 classic passenger vehicles for internal
transportation of varied types. The cars are classified as follows: Apmz, Bpmz and WRmz are used
for international traffic on the EuroCity trains, of which there are ten currently in use. There are
also 15 passenger cars of the series At, Bt and BRt for internal traffic on the InterCity Serbia
trains. The Apmz and Bpmz series of cars are passenger cars with passages running down the
middle and without compartments. The WRmz series is a restaurant car with a buffet section. The
cars have a length of 26.4m and a mass of around 50 tons, with a top speed of 200 km/h. The
number of seats is 58 in Apmz, 80 in Bpmz and 32 in the WRmz dining room. The international
wagons are designed for high comfort and are equipped with air conditioning, closed vacuum toilet
systems, electro-pneumatic systems for opening and closing doors, and seats with movable
backrests and speakers. The wagons in the At, Bt and BRt series for domestic traffic are almost the
same in structure, but their technical specifications usually lag behind - their speed is 160 km/h and
there is no air-conditioning or similar comforts. It should be noted that rail passenger cars with
compartments are unsuitable for this intial solution due to their small spaces.

3.1 Creating of the content of advertising intended for passengers in rail transport

First of all, it is necessary to determine the number of passengers using Serbian Railways.
According to available data (MIRS, 2010; Press, 23.06.2008; PE,“SR“, 12.12.2008; PE,“SR“, 29.09.2009)
in 2006 14.1 million passengers used Serbian Railways. In 2007 this figure was 9.8 million; in
2008 it was 8.8 million and in 2009 it was 8.5 million (see Figure 2). These figures show that over
four years the average annual footfall was 10.3 million passengers, which equates to 858,541
passengers per month, or 28,618 passengers per day. What is surprising is the downward trend in
passenger numbers over this period. This is due to the inability of railways to adapt to market
conditions, the domination of road transport, poor quality of service, outdated technology, bad
organization and the economic crisis.
This trend is diametrically opposed to the plans of the EU, which by 2020 expects the following
from railways, however, a combination of EU and Foreign Direct Investment (FDI) and Serbian
government funds could greatly assist Serbian Railways to achieve the EU’s plans to:
• Increase usage of passenger transport from 6% to 10%
• Triple the productivity per employee
• Make energy savings comprising of a 50% increase in energy efficiency and a 50%
reduction in gas emissions
• Create an increase in infrastructure capacity in proportion to traffic needs. (Eif-C.of C.)

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Before promotional content can be developed for use on the railways, it is necessary to segment
these seemingly impersonal passengers according to the following factors:
• Geographical - relief, climate, population density and population trends;
• Demographic - population, gender, age, ethnicity, education, employment, marital status,
household types and household income;
• Economic - macroeconomic conditions, consumer purchasing power;
• Sociological - represents the result of complementary: culture, subculture, social class,
reference groups, leaders’ opinions, family, role, status and lifestyle;
• Psychographic - motivation, perception, learning, personality traits, beliefs and attitudes;
• Behavioristic - circumstances under which purchases are made; specific uses, the status of
consumer loyalty to the product, readiness to purchase, customer views.

millions
16
14
12
10
8
6
4
2
0
2006 2007 2008 2009 Years
Figure 2: The achieved results in the terms of the number of transported passengers

Peric (2008) noted that marketing research on the behavior of the audience began in the US in the
1930s, and was further developed in the 1980s. His report showed that 66% of American
advertising companies had already dealt with the analysis of motives. The originator of this
approach is the psychoanalyst Maslov (1982) with his theory, called Hierarchy of Motives. A
follower of this approach, Professor Kovacevic (1988) suggested that in order to achieve adequate
organization of passenger traffic, it is necessary to recognise the motives for the trip, the motives
for choosing the means of transport, along with the flows of passengers and their basic
requirements in terms of regularity and frequency of trains on certain routes, and also the quality of
primary and secondary services. This can be broken down into the following areas:
• Motive for travel represents the different reasons for travelling and can be grouped together
in the following classifications: business purposes; commuting; education; shopping; health;
weekday travel; tourism; holidays; attending public events; other atypical travels.
• The motives for choosing the means of transport is affected by many factors including:
cost, transport speed, flexibility, traveling comfort, transport capability, enjoyment of the
journey, structure and quality of additional services (e.g. catering, audio and video,
entertainment or advertising programs, and other available means of communication),
security, ease of access, and regularity.
• Determination of passenger flows is also a very important element in the organization of
passenger traffic and it can be segmented as follows: annual basis, on a certain railway line,
on individual trains in order to determine their efficiency; on individual trains in order to
determine how economical they are and their profitability; determination of the number of
passengers at intersection points (departure stations, terminals, intermediate stops and border
stations) and determination of passenger flows in the perspective.
Creation of promotional content requires advertisers to know what it is that they should say to their
target audience and where and when they should say it in order to elicit the desired response.
Considerations include: the rational, emotional and moral appeal, motivating themes or ideas and
audience motivations. In order to create and broadcast good promotional content, a comprehensive
statistical analysis, profiling and classification of Serbian railway passengers needs to be

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undertaken. This will allow the broadcasting of good quality and highly targeted messages or
advertising without the topic being missed or failing to create the desired reaction in the audience.
Advertisers must know what content they want to broadcast, the motives of travel and passenger
flows, the passengers’ needs and preferences, and the classification of trains according to type,
range, route and timetable as well as being familiar with their audience, and knowing the timing
and placement of their target group.

3.2. Assumptions of effects on use of alternative media

Taking into account the average number of passengers, plus 18,651 railway employees (PE,,SR“,
2011), the size of the potential marketing audience is close to the population of a small Serbian
town. In laymen’s’ terms this is a small theatre when compared with radio or television audiences
which at any point of time is made-up of hundreds of thousands or even millions of people.
However, the communication effects of traditional media have been declining in recent years.There
are currently several methods for the measurement of range, frequency and impact of media. In the
United States results using CPM methods (Cost per thousand impressions) show that there is
smaller investment required in advertising through digital multimedia systems in public places than
in other media (Wiki analysis), as seen in Table 1 below. Other measurements show that digital
multimedia systems increase awareness of the brand by 48%, increase the consumption of
customers by 30%, increase sales by 32% and increase in the number of visitors into retail areas by
33% (Visual Impact).

Table 1: The results of some analysis carried out in the U.S. according
To the Cost per thousand impressions (CPM) method
TYPE OF MEDIA PRICE PER ONE VIEWER
Digital multimedia systems (outdoor) In the range from $1.5 to $5
Television network ≈ $25

Digital multimedia systems in Serbian Railways would provide a relatively lower cost solution
compared to alternative types of advertising, as well as visual appeal, possible connection with
existing business systems, transmission of information from long distances, transmission of
messages about goods, brands and services and personal ads designed for commercial purposes and
the possibility of targeting advertising by transmitting selected messages designed for passengers
on a train of a given route. This gives good results with a smaller audience over time; fast and
accurate information related to railway traffic, location of trains and transfer of necessary
information to passengers and railway workers. Messages can be changed at any time, as well as
their placement to address different needs. This improves the satisfaction of passengers whilst
traveling and thus increases the number of passengers over a longer period of time. It also creates
the possibility of improving existing information systems by making the standard media
interactive, thanks to its technical capabilities.The ultimate goals that railways could achieve are:
providing information to passengers through high-tech means; cheap and continuing promotion of
its services; increasing profits through higher passenger traffic brought in through advertising;
earnings from promotional media services given to other organizations; increasing demand for
railway transport services, improving cooperation with other similar organizations and the return of
the long-lost reputation of Serbian Railways. Due to the need for higher initial investment in digital
multimedia technology, railways would have to gather together all relevant institutions, agencies
and interested organizations and present the concept of how they would achieve their main target.
Potential partners for this initiative include:
• Relevant ministries and other state bodies governing development in the Republic of Serbia;
• Local governments, who in most cases would be able to use the resource to advertise local
developments, tourism, cultural and historical content, agriculture and products;
• A wide range of manufacturing and non-manufacturing organizations, which could include:
travel, sports, commercial, marketing, logistics and others, as well as other transport
providers who could benefit from a multi-modal communication platform being available on
the Serbian transportation system.

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4. MEDIA SUPPORT TO SME SECTOR

Recent government statistics report that SMEs represent a key factor of economic development in
Serbia and make up 98.8 % of total registered enterprises. They also make up 65.5 % of the total
number of employees in Serbia (Development strategy SMEs). As such, SMEs are important agents
of economic growth. They raise the living standards and create conditions for a better trade
balance. During the last decade, much has been said and done about supporting the development of
the SME sector. Almost all previous Serbian governments have issued and implemented a Strategy
for SME’s development and growth statistics show that the country has achieved considerable
benefits from this.
Among other elements of the development strategy, one of the most important is the promotion of
activities to support SMEs’ development through a continuous media campaign, as well as to
promote SMEs themselves and their products and services. Most SMEs do not have the ability to
allocate funds for media campaigns using traditional media because prices for advertising services
are generally cost-prohibitive. SMEs in general, and in particular start-up and immature enterprises
have so many demands on their working capital that there is insufficient means to invest in
expensive marketing campaigns. In such a situation, Serbian Railways, by introducing digital
multimedia systems for marketing communications, could become a specialist SME media center
providing practical and even subsidised support for SMEs to promote their goods and services
which is entirely consistent with the stated aims of the Serbian Government development strategy.

5. CONCLUSION

The authors of this paper have recognised that there is a substantial opportunity for Serbian
Railways to create a very sophisticated marketing communications platform to deliver emotionally
intelligent content to highly segmented and predictable target audiences. From this, Serbian
Railways will be able to realise considerable company related benefits together with the potential
for a very healthy financial return on investment (ROI) on a long-term and ongoing basis.

The authors believe that a more important output of this paper is the recognition that the
implementation of such a platform could also play a significant role in helping to grow the emerging
Serbian economy by using at least some of the financial surpluses from this initiative to provide SMEs
with a subsidised means to promote their products and services to their selected target audiences. This
would not only benefit the Serbian Railway company but will also serve the Serbian society at large.

REFERENCES

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