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  • Subject area(s): Marketing
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  • Published on: 14th September 2019
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1. Executive summary:

Uber is an App-powered transportation service that was founded in 2009 by Garrett Camp, the co-founder of StumbleUpon and Travis Kalanick, who had sold his Red Swoosh start-up for $19 million in 2007. It has since expanded rapidly across 56 countries, ultimately saturating the global transportation industry. At first, Uber's purpose was to function as a lifestyle company and a luxury car service but now it strives to be the most convenient, economic, and personal riding experience and accommodates all kinds of riders. Whether you're a VIP looking to travel  in style or a young professional trying to find the cheapest and quickest way to get from  point A to point B, Uber is the app for you. Uber is constantly finding ways to revolutionize the transportation service and diversify it's already impressive range of  transportation vehicles. Its unparalleled success in the industry has allowed it to not only dominate the market but also incorporate innovations into its service, i.e., the Uber chopper and uber cars that deliver groceries and necessities.

Uber transformed the way people looked at private transformation. In 2010, Uber launched the mobile app and used technology to transform the taxi industry. In past 9 years Uber has reached to a total revenue of 2.6 billion dollars in the first quarter of 2018.

Uber was launched in India on 29th august, 2013, launching its first product in Bangalore. Uber's entry into India was much like its entry in countries around the world. Small teams of “international launchers” moved swiftly from city to city, living out of suitcases and hotel rooms, and setting up Uber's operations. Customers were initially roped in through the promise of high-end cars for jaw-dropping fares. Uber's financial muscle, propped by VC dollars, came in handy. People raved about getting rides in Audis at the price of an auto. Uber India Systems, which provides marketing and support services for Uber's businesses, has posted a marginal increase of 10% increase in its total revenues from Rs 374 crore in FY16 to Rs 410 crore in FY17, according to the company's financials with the MCA.

Uber's marketing strategy will position itself as the primary transportation service in the minds of businesspeople and Millennials. The quality of the UberX experience will provide a more personal, on-demand, and efficient approach to the car service industry. The new action programs will be launched to include the implementation of Uber Kiosks, a revised social media campaign, and a new Refer a Friend program. Based on the First Year objective, the new Uber budget plans for a 100% increase in profit. Uber will closely monitor drive and customer satisfaction, brand awareness, and the overall brand image to ensure continued overall growth in the company.

Uber's mission is simple, to provide transportation as reliable as running water, everywhere, for everyone. It has become a highly ambitious company that now wants to completely eliminate the concept of car ownership and wants to monopolize the car transportation industry. The taxi industry has continued to see new transportation apps such as Uber stealing significant chunks of market share from regular taxi's but that hasn't curtailed an industry which has become increasingly saturated. Instead, prices for both taxi medallions and taxi riders have been reduced over the past year, benefitting both taxi owners and riders.

2. Situation Analysis

2.1 Market Summary:

Uber uses a mix of demographic and geographic segmentation variables which helped the company pricing its services accordingly. Both geographic and demographic segmentation is important because Uber needs to know which areas to target for customers who are ready to use an “on order transportation service” over public transport services. You will not find Uber in Rural areas but mainly in urban areas only where it replaces taxis. Differentiating targeting strategy is used by Uber in order to the share of wallet customer brings in and how to increase wallet size by upselling. If we want to define the type of differentiation used by Uber, then we can use the terminology “Cost based differentiation”. Because of the very structure of Uber as a company, there is a huge pricing advantage to the end customer when they compare Uber taxis vs Publicly available modes of transport. User benefit based and pricing positioning strategy is used by Uber to attract customers from different strata of the society. Because day to day travel is a huge cost to customers, positioning on the basis of Economy makes a huge difference in the mindset of the customers.

2.2 SWOT Analysis:

One of the most acclaimed start-ups, which showed the power of the internet and has a really inorganic growth is Uber. Uber is an app and is known as the company which has the largest fleet of automobiles and yet, it does not own a single car by itself. Uber is a ride sharing app and it replaces people having to step out of their homes to hail a cab. Now the cab comes to your doorstep. This, and the fact that Uber has a fantastic and low pricing policy for its users, makes Uber a favourite app for the frequent or even random travellers. Many office going crowd are now regularly picking an Uber cab instead of driving to the office themselves.

Strengths

Brand Equity: Uber is a recognised Brand Globally with presence in over 50 countries. Uber has already surpassed Automobile giants like  Ford and Honda on Brand value Parameter. With increasing internet penetration and coming of age technology, Uber is expected to grow rapidly in the coming years. It is currently valued at over $68 Billion. Due to the high valuation of brand, Uber attracts investors too.

Low Fixed Investment: Uber, being an aggregator does not require high fixed investment and so it becomes easier for Uber to add more cities to its network. It has expanded rapidly because there is no fixed investment or infrastructure required.

Emphasis on Customer Satisfaction: Uber has always prioritised customer satisfaction. Uber has understood that it is serving in a totally customer driven market where competition is increasing. To keep an edge over the rivals, it needs to provide better customer satisfaction and enhanced user experience. A recent survey comparing the customer satisfaction of Uber and Ola in India has clearly shown that Uber is far ahead. About 65 % chose Uber over Ola when it comes to user experience.

Dynamic Pricing strategy: Uber has adopted the dynamic pricing strategy which works on the demand supply principle of economics. Higher the demand, Higher the price. This becomes really beneficial for the company and the drivers. In peak hours as well as in Night time, drivers earn a good amount of money.

Adaptive: Uber is also known to adapt very well to business conditions. Because of its international exposure, Uber faces various problems in various regions. Uber is known to be a smart marketer and has adapted very well wherever it has established its business.

Growth rate: The growth rate of Uber can be seen below. This concerns growth rate in India only. As we can see, Ola is expanding by more than 100% year on year and this expansion has continued in 2017.

Weaknesses

Highly Dependent on Manpower: Drivers are the face of the company and thus the company's image depends on the behaviour of drivers towards the customer. This is a highly uncontrollable situation even though strict guidelines are provided to the drivers.

Highly dependent on Internet: Uber is heavily dependent on internet connectivity to expand and develop itself in developed countries. Thus, it is facing problems in developing and emerging countries where internet is slow or poor.

Caters only to Tech Savvy individuals: Digital Literacy in developing nations is low and hence technology based applications such as Uber only cater to those who are technologically updated.

Controversies: We had written an article on business lessons from Uber rape case. Uber has encountered controversies in the past mainly because of the drivers and their behaviour. This affects the image of the company and a trust deficit is created in the minds of the customer which is difficult to cover up.

Low barriers to entry: Uber is in an industry where the barriers to entry are very low so it will face competition in multiple fronts. Already in India, Meru, Ola and others are giving tough competition to Uber.

Opportunities

Dissatisfaction with unorganized market: Customers are unsatisfied with the unorganised cab market  which presents an opportunity for Uber to take advantage of. This is one of the main reasons for the success of Uber. Local cab drivers are known to be rude and do not comply.

Increasing internet penetration: With Government's move to digitise India, Number of smartphones are increasing and technology based applications like Uber can expand their services to other cities and enlarge its footprint over the country.

Alternate transport: Uber has launched ‘Uber chopper' in various countries and can look for other transport medium catering local needs. In India, Uber can launch Bus aggregator system.

Poor government transport: In markets like China and India where there is over population and people are tired of using public transport, Uber provides a kind of privacy and relief where the user gets his own space to travel and does not have to drive in Traffic.

Special transport: Uber can provide special transport services such as paid ambulances or urgent and emergency vehicles for dedicated transport operations.

Logistics: A smart idea for Uber can be to launch movers and packers support whereby people can search movers and packers in the nearby area via Uber. Local logistics can also be integrated. Though this is easier said than done.

Threats

Government regulations are unclear: The primary point of disagreement between cab aggregators and government regulators is about their legal status and whether they should be treated as conventional taxi companies or as IT companies.

Customer retention and brand switching: As competition rises, it becomes all the more difficult to retain customers and drivers for Uber. Any monetary advantage can sway the customers and drivers from Uber.

Low margins: Uber helps the drivers to get a high number of daily rides but it does not have a high-profit margin for the drivers and thus they can easily be swayed away.

Revolt from unorganized market: The unorganized market of cab drivers can revolt against such companies which are taking away the bread and butter of drivers from unorganized market. Such a revolt will directly affect the operations of a brand like Uber.

2.3 Competition

   

As a new entrant in city like Raipur where some cab services providers also Uber will be receive both direct and indirect competition.

Direct Uber Competitors:

·   Ola Cabs:

 It is an Indian transport company which was founded in the year 2010 in Mumbai. It has its headquarter in Bangalore. Ola has in created it's customer base in Raipur. It has been there in Raipur for at least 3 years. Now it's quite popular in Raipur.

 In Raipur, It has 3 categories – Daily rides, Rentals and Outstations.

 In Daily rides, there are 3 types of Cabs are available – Micro, Mini and Prime Sedan. It also has Autos.

 In Rentals category, you can rent a prime sedan at flexible hourly package.

 In Outstation category, you can book a Prime SUV, Prime Sedan and Mini car to ride out of town at affordable price.

 It has started its subscription like Ola Select to get exclusive benefits like Ride without peak pricing on selected Cars, Skip booking queue, Prime at mini fares, Free Wi-Fi etc to attract more customers.

 Ola has more than 55% market share of taxi market while Uber has 40% market share of taxi market in India in March, 2018.

·   Jugnoo:

 Jugnoo is India's first auto-rickshaw aggregator which started the objective of making daily commute easy and reliable.

 It was founded by a handful of IITians in November in 2014.

 Jugnoo now provides a wide range of local services on-demand – Auto Rides, Groceries, Food Delivery, Meals, Logistics and even a location-based local social network.

Indirect Uber Competitors:

·   

   Local Taxis:

 Local taxis are indirect competitors of Uber. Transportation is very necessary. There are so many local taxi providers which gave competition to Uber. Local taxis operates on first come first serve basis. With the first to arrive Taxi comes first on the queue and takes the first passenger.

 Local taxis will give a stiff competition to Uber as they can negotiate prices with the clients. Most of the local taxis are operated by the owners who are not after profits but little money for vehicle maintenance and subsistence. For e.g. Bharat taxi is largest car rental provider in Raipur.

 People who don't know about online cabs generally prefer local cabs. In Raipur, there are more than 12 taxi service providers which will be giving competition to Uber.

    Public Transport:

 Compared to taxis, this is a relatively cheaper most of transport in many cities. It provides mass or shared transportation to various destinations. It may be by bus, sharing autos etc.

 Transport cost depends on distance which is very cheaper as compared to other modes of transport because it is public transport. Safety and comfort are the issues in public transport because it deals with mass and it does not depart the station until it is full. That's the only drawback.

2.4 Product Offering

Uber offers a lot of services in other cities in India like

 Uber Pool

The easiest way to save money as well as the environment by sharing the cab

 UberGo

The lower segment of Uber where you get your own cab at reasonable rate

 Uber Premier

This segment gives you a great comfortable ride in a sedan at best market rate

 Uber XL

The SUVs comes in this segment. Planning a movie or shopping with family ? This is the best choice

 Uber Black

This segment gives you the feeling of VVIPs. This segment has Audi, BMW, Mercedes

 Hire Go

Not sure for how long you need a cab ? This gives you the service on hourly basis

 Hire Premier

A sedan that can be hired on hourly basis.

2.5 Keys to Successes:

Benefits for Customers:

When Uber first came to India in metro cities like Delhi, Mumbai, Kolkata etc. It started with its promotional referral offer which was that If you refer a new person to sign up and take his/her first ride then both of them will get a ride free of worth 400 INR. It was very big successful in creating a large customer base.

 Same promotional offer can be launched in Raipur also to attract a huge amount of public. So that it can create a huge customer base in Raipur.

Benefit for Drivers:

Customer's aren't the only ones who experience a positive effect from the implementation of this service. Uber drivers will be also benefitting. Uber will creating employment for those drivers who are having difficulty finding work in the city.

 Disrupting Old Industry:

As India is now becoming technically sound. Smartphone market is increasing day by day. That will help Uber in creating a huge customer base.

It will disrupt old taxis service because more people will be using online cab services like Uber for transportation purpose because of low cost, comfortability and accessibility at any time.

      

   

2.6 Critical Issues

Many uber drivers are struggling to pay off their loans on the cars they have brought. The incentives were so great in the beginning and most of the people in the service industry thought of leaving their jobs to go and drive uber. Uber has given its drivers a great promise that hasn't be justified in terms of earnings they are getting and they are struck in that rut now.one of the biggest suffer of this lessening of incentives is in the banks. There are repossessions of the cars happening.

The other issues comes from the legacy of earlier CEO Travis Kalanick. The company kind of followed the long shadow of the leader. Extremely high performance orientation, which means if you performed very well and you did something  wrong on the side, which could be harassments side, that could be overlooked and performance could be given the precedence.

Uber has always been on the edge of all kind of arbitrage, which means it seeks regulatory and legal arbitrage. When it comes to competition, Ola is being in far more cities than uber in, and it's difficult to fight some many battles in many places.

India is one of the largest growing markets for online ride hailing cabs. You can reach customer faster if you have more cars on the streets. But you have more cars, the driver earns less. That's where the challenges are.

3. Marketing Strategy

3.1 Mission

Uber started out as “everyone's private driver”, today Uber with changing times, Uber has realigned itself and its new mission is “Transportation as reliable as running water, everywhere for everyone”.

Uber's tagline has also changed, from "Everyone's private driver" to "Get there."

With Changing times we at Uber believe in reinventing ourselves, starting from a mission of providing a private driver to everyone willing to pay and looking for a ride, we have realigned ourselves and our mission now is to be able to provide economical , fair priced cab services to everyone everywhere across globe. Like water we want to be available where mankind is and affordable to everyone. Users need not to think twice before booking a Uber. We want brand Uber to be unanimous with cab booking. Like photocopying is to Xerox.

In line with our mission we want to expand our services across India. After pulling out of China, we are targeting to direct all resources available to us in India. Uber sees a huge potential growth in Indian cab services market.

As of now Uber is available in all major cities across India and we are planning to further expand our operations in cities not covered by online cab services. Before expanding fully we want to check how ready markets are in cities other than where we are currently operating. With that in mind we are planning to expand our operations in Raipur, Kanpur, Allahabad, Kota, Ranchi in Phase I of our expansion plan. If we get good response from these cities we will further expand in other cities as Phase II of our expansion plan

3.2 Marketing Objectives

 To achieve the mission

Main objective of Uber Application is to provide a convenient, inexpensive and safe taxi service and create public awareness of the benefits of using taxi services over usage of self-vehicles and other transportation mediums

 Grow market share

To capture the new market that is still unexplored despite have a strong potential of generating revenue and creating profits. By capturing the cities unexplored, Uber wants to make India one of the biggest market for the firm

Currently Uber is operating in 29 cities in India. Our mission is to be operational in 50 cities by end of 2020

   

 Target new customers

    

    To target new customers and expand customer base in new cities. This will   

   increase the company's profit and will also increase the brand value

   

 Create awareness

To convince customers why to opt for Uber over other old prevailing local     transportation systems like Autos, Buses, local train. Without convincing the customers and gaining their interest, revenue can't be generated

 To achieve competitive advantage and sustain it

There's no point in gaining the competitive advantage if it is unsustainable. Hence the   focus should be on sustaining the competitive advantage post entry into the new cities

   

3.3 Financial objectives

1. Revenue of 50,00,000 should be generated from taxi fares in the first month of operations

2. A revenue of 75,00,00 from other sources like in-app advertising, Uber wallet, in-cab advertising, corporate tie ups, vehicle on boarding fee etc, should be generated in the first quarter.

3. A return on investment of 15% should be obtained in the first year of operations.

4. 10% of the revenue generated should be allocated to research and development.

5. A growth rate of 2% every month is expected in the first six months.

   

3.4 Target markets

The targeted audience mostly consists of college students, or young professionals. The range of our services will be within the busy city, but typically will average around 5 miles for each trip. Uber's services will primarily be used on the weekends, Thursday through Sunday. The target audience needs safe transportation on these days because of the nightlife scene. Uber can also be heavily relied on for concerts, cricket and football games and other special events. Other target audience will be the middle class and for the purpose of site seeing. Other targets will be people who don't prefer to drive.

3.5 Positioning

Uber is positioning itself  as a viable alternative to private car ownership ,and build connect with mass India.

In India the main competitor of uber is Ola which has nearly same rates and services

Moreover there are people who prefer rickshaws over cabs primarily due to its cheap fares ,and hence services like Jugnoo also gives a tough competition to uber also they face competition from local taxi and auto services. Compared to the use of Taxis, public transport is a relatively cheaper mode of transport in most countries that provides mass or shared transportation to various destinations.

In over 50 crore marketing push to position itself as an inclusive and progressive brand uber India has rolled out its second advertising campaign focused on driver partners. Titled ‘Badhetin Chalein' the ad spot features brand ambassador Virat Kohli talking about the experiences of uber drivers who are doing well in life. To position itself in the market and intention to grab a bigger share of the Indian market in the way it is expanding its workforce

4 Marketing Tactics

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