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Surviving at a Falling Transportation Industry with the Help of Emotional Relationship with your Customers
Abstract
Introduction
Public intercity transportation is an example of a rapidly evolving industry. In developing countries, we observe the increasing popularity of airlines, whereas bus lines start to lose their significance.
Methods
The successive bankruptcy of bus companies, which have made a large amount of investment and provided significant employment, is a case worth examining. This article offers a case study from the Turkish public intercity transportation industry in which a bus company distinguishes itself by becoming a love brand with the relationship it establishes with its customers. The case shows that the emotional relationship established during the ups and downs of sectors have become insurance that protects companies during the downturn.
Results
To support our argument, we estimated the occupancy rates of bus companies based on characteristics such as ticket price, travel time, existence of catering service, social media interaction, and year of establishment. We found that the significant variables explaining occupancy rates are the companies' founding year and positive social media interaction frequency.
Conclusion
In an estimation where even the price is not a significant variable at the 0.01 level, the significance of the above-mentioned variables shows that relationship-based dynamics can be important demand determinants in a conventional transportation sector.
1. INTRODUCTION
The transportation industry faces a rapidly shifting landscape, with some sectors threatened by disruption. Intercity public transportation, particularly in markets like Turkey's bustling bus industry, is a prime example. This paper investigates the Turkish bus line market, a sector facing a decline within the rapidly evolving transportation industry. It examines how cultivating an emotional connection with customers can empower a company in such a struggling conventional industry to become a survivor.
Most countries had different modes of intercity public transportation at various time periods as the major mode. In developing countries, especially in countries from Eastern Europe,, airline popularity soars, while bus lines face a decline in relevance. Turkey is one of these developing countries.
The transportation sector in Turkey, particularly the bus industry, faces a complex and increasingly challenging landscape. Characterized by persistently declining relative demand, the industry has witnessed a shrinking number of viable companies. This raises a critical question of what factors enable certain companies to thrive amidst such adversity? Firms that stand out in an environment where the biggest, oldest, and most profitable in the sector go bankrupt attract special attention. This article analyzes Pamukkale Bus Lines, a standout survivor in the declining industry, focusing on their differentiation strategies. The qualitative review reveals a unique example of how the firm's strong romantic bond with its customers can influence customer preferences. The empirical estimation section estimates the occupancy rates of currently operating bus companies using characteristics such as ticket price, travel time, existence of catering service, and year of establishment. As a result of this estimation, we conclude that the founding year and positive social media interaction frequency are important demand determinants. Both the qualitative review and the empirical analyses strengthen our belief in the importance of love brand dynamics. A love brand is defined as a brand that has been able to develop a strong “loving” or emotional connection between itself and its consumers and/or buyers. This studymakes a novel contribution to love brand literature by applying the concept to a previously unexplored sector: intercity bus lines. Existing research demonstrates the positive impact of love brands on hedonistic products and consumer-important categories [1]. This study breaks new ground by investigating its effectiveness in a functional, conventional sector. By focusing on the bus industry, the study aims to illuminate the transformative potential of emotional connections for even traditional companies facing decline.
The following part will make a historical review of modes of transportation in Turkey and provide details about the transformation of bus lines.
1.1. Public Transportation in Turkey
The Turkish transportation landscape has seen a shift in dominance. Until the 1950s, railways reigned supreme, with the state-owned TCDD managing the network. Established after the republic's founding in 1923, the network aimed to connect major cities. Despite significant government investment, challenges persisted, limiting growth. By 1923, the network spanned 2,352 kilometers, reaching only 7,000 kilometers by 1953 [2]. This expansion slowed dramatically after 1950, with annual construction averaging 200 kilometers pre-1950 and a mere 30 kilometers post-1950 [2]. This shift in focus from railways paves the way for the analysis of emerging dominant modes of transportation in Turkey. Foreign aid in 1948 (Marshall Aid) spurred a transportation shift. By the 1950s, modern public vehicles reached most regions year-round. This led to the “golden age” of bus lines, lasting until the early 2000s.
During this period, investments in railways decreased, making them less competitive compared to direct bus routes with lower prices. As the number of bus companies grew, the market segmented, with some offering luxury services at higher prices. Pamukkale emerged as a leader, connecting smaller Aegean and Mediterranean towns, which were especially popular during summers.
However, Turkey's EU aspirations and technological advancements in the 2000s led to the rise of airlines. Heavily subsidized airlines became cheaper than buses on longer routes, offering significant time savings. Even on shorter routes, where air travel's time advantage is minimal, a “snob effect” [3] emerged. Flying, once a luxury, became a way to show status, leading many to choose air travel despite similar travel times on buses. Consequently, airlines dominated routes exceeding 6 hours [4].
Furthermore, the opening of high-speed train lines (Eskişehir-Ankara 2009, Ankara-Konya 2011, etc.) offered faster travel at lower prices compared to European and American high-speed trains. This further squeezed bus operators from shorter routes [5].
These developments significantly impacted luxury bus companies like Varan and Ulusoy, which quickly lost passengers to airlines. Varan was acquired by Ulusoy in 2011, but Ulusoy itself went bankrupt in 2017 [6]. Kamil Koç faced financial struggles and changed ownership twice, now operating as a budget option within FlixBus [7]. Even Metro, the industry leader, adopted a franchise model with individual bus owners. Pamukkale, however, carved a niche by appealing to a specific customer segment - those seeking a high level of service and avoiding air travel. It thrived on Aegean and Mediterranean routes until the late 2010s. However, the recent economic downturn and foreign exchange fluc- tuations negatively impacted Pamukkale, a company heavily reliant on buses prices of which are Euro based.
1.2. Love Brands
A love brand is a brand that manages to develop a strong “love” or emotional relationship between itself and its consumers/buyers. In a previous study, Pawle & Cooper [8] defined such brands as “entities inspiring loyalty beyond reason,” suggesting an emotional foundation. In another study, Bauer et al. [9] highlighted the use of emotionally charged advertising, exemplified by slogans like “Mini – Is it Love?” and “McDonald's – I’m lovin’ it.” Management literature acknowledges the significance of love in fostering brand devotion. Rossiter & Bellman [10] proposed that advertising can cultivate positive emotional attachment expectations but requires actual positive brand experiences for sustainable success.
The concept of “love brands” is intrinsically linked to a high level of customer engagement. Brodie et al. [11] defined customer engagement as a multifaceted entity encompassing cognitive, emotional, and behavioural dimensions, playing a significant role in fostering relational exchange. Similarly, Pansari and Kumar [12] further dissected this phenomenon, viewing it as the “mechanics of a customer's value addition to the firm,” encompassing both direct and indirect contributions. Direct contributions include purchases, while indirect contributions encompass positive word-of-mouth, influence on others' activities, and customer-driven company valuation. This linkage between brand love and positive word-of-mouth is empirically supported by Carroll and Ahuvia [13], demonstrating that “love brands” foster favourable brand advocacy. Therefore, cultivating brand love fosters a fertile ground for multidimensional customer engagement, ultimately fuelling positive brand perception and value creation.
The strong emotional connection established by “love brands” transcends rational decision-making, leading to “repurchase or action loyalty.” Podoshen & Andrzejewski [14] suggest this behavior deviates from classical economic models of rational actors optimizing benefits, opting instead for “irrational buying.” In this state, brand consumption itself becomes pleasurable, generating a powerful urge to purchase regardless of future consequences. This “impulse buying” arises from a conflict between the desire for immediate pleasure and the ability to resist such urges [10, 15].
Existing research by Barker et al. [16] suggests “love brands” in hedonistic categories and those tied to personally significant products lead to higher profitability [1]. This study posits that such emotional connections can grant companies “competitive resilience” even in declining industries, extending beyond hedonistic products to encompass conventional sectors like intercity transportation.
The text prioritizes “love” over terms like “propensity” or “choice” to capture the emotional resonance between customers and brands. “Propensity” leans towards a brand, and “choice” implies a conscious decision, but “love” evokes a deeper, emotional attachment. Love, in this context, goes beyond a calculated decision; it fosters an emotional bond that fuels positive behaviours and brand perception [17].
The following section investigates Pamukkale Bus Lines, a sole survivor in a shrinking bus market, hypothesizing their success hinges on an established emotional bond with customers. Specifically, the study examines the sociological underpinnings of their survival during a potential bankruptcy threat. By analyzing social media data and tangible resources, this case study aims to uncover the mechanisms of “love brands” navigating challenging economic landscapes.
2. MATERIALS AND METHODS
2.1. Case Study: Pamukkale and its Concordat Process
Pamukkale Bus Lines, established in 1962, exhibited unconventional branding strategies that fostered a “love mark” relationship with its customers. Prior to the 1990s, the company subconsciously distinguished itself through its use of red (contrasting the industry's blue preference) and the incorporation of “cotton” in its brand name, signifying softness amidst competitors' strength-oriented terms. This challenged gender norms in an industry lacking female employees. Further deviating from the focus on speed and luxury, Pamukkale adopted the slogan “gets your loved ones back,” emphasizing emotional connection. Initiatives like distributing toys on children's holidays, offering couples' discounts on Valentine's Day, and greeting passengers with heartwarming messages solidified this emotional bond. The company transported aid for free, demonstrating social responsibility. By actively engaging with customer travel experiences on social media, Pamukkale fostered a personalized dialogue, solidifying its “love mark” status through strategic and emotionally resonant choices [18] Due to the change in the transportation industry’s structure and general macroeconomic deterioration of the country, on October 27, 2018, Pamukkale applied to the court in order to restructure its debts as a result of the negative economic conditions it was in and requested a concordat. The firm cited a deterioration in cash flow for this demand.
A concordat is a court-approved agreement between a debtor and its creditors that aims to avoid bankruptcy by restructuring the debtor's debts. This method is available only to institutions that are experiencing financial distress but are likely to recover in the future. To initiate a concordat, the debtor must file a petition with the court and demonstrate good faith and honesty (Brewster et al., 2015). If the creditors accept the petition, the court will oversee the negotiation of a restructuring plan, which may include debt reduction or maturity extension. Once the plan is approved by the court, it becomes binding on all parties involved [19].
The 3-month concordat period, intended to facilitate the company's financial recovery, ultimately culminated in its declared bankruptcy. Following scrutiny of the January 24, 2019, financial reports, the court board determined the company's commercial activities to be unsustainable, resulting in the rejection of the concordat request and the subsequent declaration of bankruptcy [19, 20].
An intriguing sociological phenomenon emerged following the public announcement of the company's decision. Despite potential dormancy on social media platforms, loyal customers, many with longstanding patronage, mobilized across channels like Twitter, Instagram, and Facebook. United under the #Pamukkale hashtag, these campaigns fostered community dialogue, brainstorming individual actions to ensure the company's survival. The provided examples offer a glimpse into the emotionally charged nature of these public expressions. Social media data was collected from publicly available sources between 05.03.2023-11.03.2023 for the period October 2018 to February 2019.
You have always been the best. I have no doubt that you will continue to be. These folks forbid you from falling. (M.D, Twitter, 27.10.2018).
I spent my childhood and youth in this company. I don't even have one bad memory. Continue your journey with Pamukkale. (D.M, Twitter, 27.0.2018).
You have shared the best memories of my university time. We will witness many more together. Do not worry. (M.K, Twitter, 27.10.2018).
You have brought me back to my beloved at every opportunity, and may Allah give you good days, too. (E.T, Twitter, 29.10.2018).
You conquered my heart when I was little, on the roads of Datça, where no one wants to go. Don't be discouraged by the economic developments that put the sector in trouble. You have a nice way. (U.S. Twitter, 28.10.2018).
Whatever happens, we are with you for the sake of your quality, which other companies cannot even beat. After every dark night, the sun rises. (Ç.E.G Twitter, 27.10.2018).
Let's buy our tickets from Pamukkale. Let's help save the company. (A.H. Twitter, 27.10.2018).
If necessary, I will go to university again and buy tickets from you every week. You relax. (Y.D. Twitter, 27.10.2018).
Don't leave us to other companies. What would I do without you on 8-hour roads? (C.A, Instagram, 27.10.2018).
A good bond with the customers could only be established this much. We wish you to overcome the difficult process as soon as possible and to always deliver us to our loved ones. (E.Y, Instagram, 28.10.2018).
It is not possible to understand how they could go bankrupt when we love them so much. They have a place in our lives with such beautiful memories, and even though it is a travel company, people recommend it to each other. I hope they get it. (A. Ekşi Sözlük, 26.01.2019).
The bankruptcy of it, is like the death of someone you've known for a long time. (X.. Ekşi Sözlük, 25.01.2019).
After all, why should I support a commercial company? If anyone asks the question; as someone who has traveled with bus companies many times, I can tell you that Pamukkale bus lines represent the kindness we want to see in the future of the country: dignity and gentleness. It represents quality and success. It represents the educated Turkish people's not giving up on their country despite hundreds of incompetence, contempt, and ignorance being popularized. It is one of the three - five things left to us from the Anatolian life, which we miss, that they call the old Turkey. (B. Ekşi Sözlük, 25.01.2019).
Let's do a campaign or something, and we could all go and buy tickets or tell us what we can do. We love you. The most beautiful company with its cleanliness, with its staff that covers me when I sleep. (S. B, Twitter, 25.01.2019).
Source: Twitter, Instagram and Eksi Sozluk (Turkish social media website).
A civil organization initiated a unique strategy to support a financially struggling company. They encouraged individuals to purchase unused open tickets from the company, even if they didn't immediately intend to use them. This “buy open ticket” campaign gained significant traction, with the link prominently displayed on the company's website. While the direct financial impact on the company's debt was modest, the initiative played a crucial role in boosting the confidence of its creditors. This was evident during a creditors' meeting held after the company appealed its bankruptcy decision. Notably, 83% of creditors voted to annul the bankruptcy decision, expressing their renewed hope for the company's survival. This overwhelming vote ultimately swayed the court to revoke the bankruptcy ruling, highlighting the significant influence of social support in influencing creditor sentiment and potentially shaping corporate outcomes [21, 22].
2.2. Empirical Analysis
This study follows a qualitative exploration with the intention to econometrically assess a novel hypothesis: demand for bus services is influenced by intangible factors beyond classical economic determinants. Occupancy rates will be the dependent variable, regressed against factors like ticket price, average bus age, in-cab service quality, and journey time [1]. This approach isolates the independent contribution of each factor, including the intangible service quality, to passenger demand. By quantifying these influences, the study offers a more nuanced understanding of consumer decision-making in the bus travel market.
2.2.1. Data
This research utilizes a proprietary dataset maintained by the Turkish Bus Federation. Owing to the confiden- tiality of commercial information, the dataset is not publicly available and restricts its use to private entities. Encompassing the years 2017, 2018, 2019, 2022, and 2023, the dataset excludes data from 2020 and 2021. This omission is attributed to operational disruptions caused by the COVID-19 pandemic and associated passenger limitations during those specific years.
This study utilized anonymized data from 41 Turkish bus companies operating on two key routes: Ankara-Izmir and Istanbul-Bursa. These routes were chosen to minimize size and location bias, connecting the capital city (Ankara) with the western metropolis (Izmır) and Turkey's largest metropolis (Istanbul) with a major industrial center (Bursa). The dataset comprised pre-processed and weighted data equally representing both routes, which were served by the majority of bus companies in the country. To ensure confidentiality, all data has been indexed with 2017 as the base year. The variables used in the study and their explanations are as follows.
2.2.1.1. Occp Rate
Occupancy rate of a bus company for the specific routes (number of passengers/capacity).
2.2.1.4. Refresh
A dummy variable that takes the value 1 for the companies that serve hot beverages in the cabin and 0 for those that do not.
2.2.1.6. Establish
Age of the bus company (years since establishment).
This study aims to estimate occupancy rates for intercity bus firms using explanatory variables. Ticket prices are excluded as companies offer similar pricing. Average journey duration is expected to have a negative impact (longer = less appealing), while in-cabin service should positively influence occupancy (better service = more desirable). The core focus lies on two variables: year of establishment (indexed, older firms denoted by higher values) and social media frequency. These variables represent the intangible bond between brands and consumers, with both expected to have positive correlations with occupancy rates (older, more established companies and those actively engaging on social media are predicted to attract more customers).
2.3. Results
The study employs the fixed effects method with panel data to address the challenge of isolating the causal impact of time-varying factors while accounting for unobserved firm heterogeneity. This approach offers several advantages compared to alternative methods:
2.3.1. Pooled OLS
Pooled OLS treats all observations in the panel data as independent, potentially leading to biased estimates if unobserved firm-specific effects are correlated with the independent variables. Fixed effects, on the other hand, control for these unobserved effects by focusing on the changes in the dependent variable (occupancy rate) within each firm over time.
2.3.2. Random Effects
Random effects also aim to account for unobserved heterogeneity but assume the random effects are not correlated with the independent variables. If this assumption is violated, random effects can also lead to biased estimates. Fixed effects are a more robust choice in this scenario.
However, fixed effects also have limitations. They cannot estimate the impact of time-invariant variables, such as the year of establishment, as these are effectively held constant by the model. Therefore, the study additionally estimates the model using only unit fixed effects to capture the impact of this variable. This approach offers a more comprehensive analysis by leveraging the strengths of both fixed and unit fixed effects models.
The strengths of the fixed effects approach extend beyond this specific study. Due to its ability to control for unobserved heterogeneity, the fixed effects method can be a valuable tool for researchers in various fields examining causal relationships with panel data. This approach is particularly relevant when unobserved factors might influence the dependent variable but are not directly measurable. By focusing on within-unit changes, fixed effects can isolate the effects of time-varying independent variables while mitigating bias from unobserved confounders. This makes the findings from this study more generalizable to other contexts where similar research questions are being investigated with panel data.
In summary, the fixed effects method with panel data is implemented due to its ability to isolate causal effects while controlling for unobserved firm heterogeneity. This approach provides more robust and reliable estimates than pooled OLS and random effects models when the assumptions of those models are not met. The additional estimation is used with only unit fixed effects, which allows for the inclusion of the year of establishment variable, providing a complete picture of the relationship between brand love and occupancy rate.. These estimates are reported in the table below as (I) and (II), respectively. The results of the estimations are given in Table 1 below:
The analysis yielded encouraging results, with most indicators aligning with our initial hypotheses. Notably, the coefficient for “hot service application in the cabin” was negative, which differed from expectations, though statistically insignificant. Since all companies in the dataset offer standard catering, hot beverage service was included as a possible differentiator. However, the findings suggest it has no significant impact on consumer demand. Instead, the perceived quality of service appears to be primarily driven by two key metrics: average bus fleet age and total journey time. The reason why some firms take longer, and some take a shorter time to reach the same destination can be explained by the time lost at intermediate stops. The lack of compliance with departure times is another reason. It is clear that the consumer is sensitive to these two issues, such as the quality of the service provided. While the study did not observe a significant impact of the ticket price on route demand, this may simply reflect the limited price variation within the analysed segment.
| - | (1) | (2) |
|---|---|---|
| Duration | (0.45) | (1.08) |
| -232.62*** | -208.95*** | |
| Social | (7.27) | (19.22) |
| 7.34*** | 7.17*** | |
| Establish | (0.44) | (1.14) |
| 4.24*** | 4.06*** | |
| Constant | (0.25) | (0.71) |
| 727.93*** | 541.42*** | |
| N | (56.29) | (132.32) |
| 202 | 202 |
* p<0.10, ** p<0.05, *** p<0.01
Source: Author’s own calculations.
This study breaks new ground by demonstrating the statistical significance of two intangible consumer-firm relationship proxies included in the model. These findings, aligning with hypothesized directions, underscore the critical role of intangible demand drivers, even within traditionally functional markets like transportation. This potentially represents a novel contribution to the “love brands” literature, extending its application beyond hedonistic products and highlighting its relevance for fostering customer loyalty in unexpected sectors.
3. DISCUSSION
The Turkish intercity bus industry has witnessed a significant decline in recent decades, particularly since the 2000s. This decrease coincides with the rise and affordability of air travel and high-speed train services. As a consequence, several major and long-established bus companies, once transporting vast numbers of passengers, have either gone bankrupt or been acquired by new ownership. While these developments undoubtedly sparked memories and nostalgia among the public, there was surprisingly little resistance, even on social media, when these iconic companies faced closure. However, a starkly contrasting reaction emerged when a different bus company, perceived as a “love brand,” found itself on the brink of bankruptcy. This company, despite never holding titles like “biggest,” “most luxurious,” or “most admired,” received an unexpected surge of emotional support from its passengers. This outpouring of public sentiment ultimately swayed the company's creditors, leading them to grant a second chance and cancel the court-ordered bankruptcy. This case study highlights the complex interplay between economic trends, consumer sentiment, and brand identity within the transportation sector, suggesting that emotional attachment can influence outcomes beyond traditional metrics of size, luxury, or popularity. This is a rare phenomenon in the economics literature. It is quite surprising that especially those who have not been customers of the company for many years and probably will not be support a commercial establishment by buying open tickets. The customers, who see the company as a heritage that must be preserved, have made the company the most profitable and most expensive passenger carrier in the bus-based intercity transportation sector, with the bus line continuing its operations even though it has shrunk.
This study investigated the impact of long-standing, strong consumer ties on firm occupancy rates. We observed a positive correlation between the two, exemplified by Pamukkale, a long-established company with robust customer connections fostered through operational practices and social media engagement. Pamukkale's high occupancy rates are attributed to consumer loyalty, preventing the company from facing failure. These findings align with existing literature suggesting that while brand love may not immediately translate to increased profitability or market value, it fosters long-term success by boosting both profitability and market value (Nguyen & Feng, 2020). This emphasizes the importance of cultivating enduring customer relationships for sustained business success.
The dynamic nature of modern economies often witnesses rapid growth in specific sectors followed by plateaus or declines. The Turkish bus line case study suggests that cultivating strong, “romantic” relationships with customers during boom periods acts as an insurance policy, buffering companies against subsequent downturns. This phenomenon presents a significant opportunity for economic research, urging companies to view such efforts not as a burden but as an investment in their long-term success. Rather than shying away from the costs and effort involved in building strong customer connections, companies should recognize this as a crucial element of their corporate identity, generating substantial economic value even in challenging times.
CONCLUSION AND RECOMMENDATION
Existing research suggests that “love brands,” characterized by strong emotional connections with consumers, thrive primarily in hedonistic industries offering desirable products. This study challenges this notion by investigating the bus transportation system, which is traditionally viewed as utilitarian and non-hedonistic. This choice is motivated by the sector's significant economic impact (approximately $10 billion investment and 250,000 employees) and documented challenges [23, 24]. Notably, the “Pamukkale bus lines concordat process” exemplifies a real-world case suggesting love brands could potentially flourish even within this unconventional sector. This study aims to explore whether and how to love brands can be effectively implemented in the bus transportation industry, thereby expanding our understanding of their applicability beyond established definitions.
The case study is strengthened by employing fixed-effects panel data estimation to analyze the impact of brand love on performance in the Turkish intercity bus transportation industry, a traditionally non-hedonistic sector. This unique approach contributes significantly to the literature by demonstrating that brand love can lead to substantial gains even in conventional markets. While our findings align with prior studies suggesting the delayed effect of brand love on profitability and market value in the short term, we offer novel evidence for its positive and long-term impact within a non-hedonistic industry. This enriches our understanding of the multifaceted relationship between brand love and financial success.
According to an industry report [25], a major transformation is expected in the European bus lines market, particularly in the eastern regions. This transformation may result in the bankruptcy of some local companies, but the industry itself is likely to survive, albeit potentially shrunk. In this context, the question of which brands will survive becomes crucial. This article delves deep into the love brand phenomenon, understood as a key factor in determining company survival, specifically within the conventional transportation industry. The provided example serves as a valuable guide for companies struggling to stay afloat in such sectors.
This study focuses on the Turkish intercity bus industry as a case study. Further research exploring the generalizability of these findings across diverse non-hedonistic sectors would be valuable. Additionally, future studies could delve deeper into the specific emotional connections that foster love brands within non-hedonistic industries. This would provide a more nuanced understanding of how companies operating in such sectors can cultivate customer loyalty and brand love.
AUTHOR’S CONTRIBUTION
The author confirms sole responsibility for the following: study conception and design, data collection, analysis and interpretation of results, and manuscript preparation.
