Exam 10: Entering Foreign Markets

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Stagecoach is not a stranger to international forays, having previously operated in Hong Kong, Kenya, Malawi, New Zealand, Portugal, and Sweden. Although Megabus is clearly a late mover in North America, Stagecoach s international experience and sole focus on the North American market makes the future of Megabus to look bright. Four features stand out. First, tickets are inexpensive, starting at $1. Megabus uses a yield management system, typically used by airlines, which offers early passengers dirt cheap deals and late passengers higher prices. All tickets have to be booked online. This not only eliminates the expenses of maintaining ticket booths, but also attracts a more educated demographic group. Second, instead of using depots, Megabus follows the Chinatown buses by using curbside stops (like regular city bus stops) to board and disembark passengers. Interestingly, dumping the depot model not only saves a lot of money, but also makes Megabus more attractive, because passengers do not have to spend time in the poorly maintained (and sometimes filthy and unsafe) bus depots. Third, luxury features such as Wi-Fi and power outlets, typically not available even when flying first class, have made travel by bus attractive to the online savvy, younger crowd. Among surveyed passengers, 37% said that Wi-Fi and power outlets were central to their decision to travel by Megabus. Finally, as gas prices skyrocket and environmental consciousness rises, especially among America s college students, bus travel offers an unbeatable green advantage. At 8 cents per mile, a bus is four time more fuel-efficient than a car.