Service Marketing: Uber Case Study | Assignment Collections | assignmentcollections.com

Introduction

Since ancient times, various forms of business associations for the purchase of high value goods and services have been noted. In the 21^st century, technology enhanced contact between people thus initiating the creation, production, and distribution of goods and services amongst consumers within a common framework. The digital sharing economy has further offered individuals opportunities to find employment, generate revenue, and increase access to goods and services that otherwise may not be utilized (Barbu, Bratu & Sîrbu, 2018). Uber, an app-based online business within the transportation sector among its competitors, applies the sharing economy approach to collaborate its customers: drivers and passengers: on mutual aid basis to share physical assets and sustain the economy (Natyari & Pradana, 2016). In this relation, the company’s marketing strategy focus to attain customer value despite its reputation scandals.

Customer Value and Role in Mission

Uber’s company vision: “Transportation to be as reliable as running water for everyone, in every city in the world”, defines Uber customers as anyone who wants to move from one location to another within the city. As such, Uber service consumers are mainly individuals who are seeking transportation alternatives besides taxi and public transportation and drivers who seek to generate income by providing on-demand transportation services. According to (Kumari, Sharma, Deohans, Saha & JayaKalyani, 2019), Uber is a great two-sided platform with strong indirect network effects. Based on a peer-to-peer model, the company creates easy access for matching supply and demand between passengers and duties in transportation. Through information technology, Uber opens opportunities and connects anyone who has a personal vehicle to give a ride at any time to any person who desires to keep their pay rates. In this regard, Uber’s priority is getting customers on the move no matter what mode of transport is available.

Preliminary studies confirm that since Uber launch as an official business in 2011, the firm was marked operating in over 66 countries and 507 cities globally by 2016 (Pugliese, 2016). A data sensor tower further identified that the mobile app Uber had been downloaded over 8 million times with positive customer reviews regarding its services (Natyari & Pradana, 2016). Research information from Uber users gives Uber credit for its safe, comfortable, and trustworthy services. This relates to the company’s mission statement: “To bring transportation — for everyone, everywhere. … Transportation that’s safer, cheaper, and more reliable; transportation that creates more job opportunities and higher incomes for drivers.” According to Pugliese (2016), Uber implements technology to give its customers what they want, when they want it. Uber anonymously collects data from users through emails to predict customer needs. Over the years, Uber has created different segments to satisfy customer specification. This ranges from Uber Black for VIP drive to Uber X for common service among others. In addition, the business gives customers information on the name of their driver, car model, fare charges, and driver ratings from past users to ascertain consumers of their security and gain trust. On the other hand, drivers can rate users and may cancel on users with poor ratings. As such, Uber shifts the power of choice to customers enhancing their commitment to the service.

The online business uniquely operates on the principle of surge pricing to ensure revenue for drivers. Surge pricing or price discrimination refers to dynamic pricing, where prices increase if the supply is short. Uber tends to increase its pricing during rush hours as from 2pm or during bad weather such as heavy raining that increase demand. With increased demand drivers are more likely to be available at work. Pugliese (2016) describes that Uber capture driver value by giving the driver 80% of the cost of each ride, while benefitting from a 20% cut off. As such, increased in pricing means more income for the drivers. Increasingly, when prices raise people often wait for prices to drop and more drivers go to neighborhoods thus initiating closer demand and supply. Despite this, some economists argue that consumer like predictability and price discrimination may weaken the business hence prices should be constant in light of consumer satisfaction.

Company Analysis.

Headquartered in San Francisco, California, the Uber platform has been hailed severally for its breakthrough as the largest ride-sharing technology in the business world. The firm has significantly impacted its home economy since its launch by claiming a net worth of $72 billion by 2018. Despite this, the company has received criticism that threaten its strong reputation (Jacquet, 2018).

A major strength of Uber is its strong brand recognition and ease of use at low cost (David, 2020). As earlier noted, the Uber app was downloaded by millions of people in 2016 and reviewed positively based on its safety, comfort, and trust. Relatedly, the company’s mission aims to provide cheaper and safer transportation services to its consumers. According to (Kumari, Sharma, Deohans, Saha & JayaKalyani, (2019), Uber offers lower fare prices compared to traditional taxis. Its operation on low fixed investment and readily available services at the tap of a button on an app, has enabled Uber to easily distribute in cities and expand at a fast past. Moreover, Uber’s strong brand recognition in over 60 countries has overtaken its brand competitors such as Honda, Ford and GM. So far, this has enabled it to launch other related products in its positive umbrella such as Uber eats.

Nonetheless, the company’s reputation has been jeopardized by complains of sexual harassment and its culture of unethical practices. According to a CNN report, 103 Uber drivers have been associated with sexual abuse scandals within the United States and similar incidences noted in New Delhi, India. In fact, Uber’s market share fell from 84% to 74% due to related sexual scandals reported by women clients (Kumari, Sharma, Deohans, Saha & JayaKalyani, 2019). David, (2020) notes that Uber is famous for skirting regulations deemed unwarranted; thus, initiating conflicts with governments that have led to fines levied against the company in Germany, India, United Kingdom, and France.

Based on the company’s many strengths, research projects that Uber has an opportunity to expand vastly worldwide. Since its launch, Uber’s operating philosophy have always encouraged people to use the app and use it in place of seeking traditional taxi services. The company’s statistics further project that Uber may hold a favorable position in the market if it strategizes a win-win plan for both its service providers and its mission (Uber Statistics). However, Uber’s innovation design can be easily copied by its market competitors such as Lyft, Sidecar, Didi Chuxing, and Curb (Kumari, Sharma, Deohans, Saha & JayaKalyani, 2019). In relation to Uber scandals, such threats may weaken its customer base hence Uber needs to innovate effective strategies to have an advantage over its competitors and ensure favorable competition in the market (Jacquet, 2018).

UBER SWOT ANALYSIS

Competitive Analysis

As aforementioned, Uber’s marketing services are challenged by other ride-sharing companies such as Lyft, Curb, and Didi Chuxing. Almost launched at the same time as Uber, Lyft, Curb and Didi Chuxing have been positively recognized in the transportation industry and sought as alternatives to Uber (Kumari, Sharma, Deohans, Saha & JayaKalyani, 2019).

Key

1-low 2-moderately low 3- moderate 4- moderately high 5-high

Based on chart results, Uber ranks highest in total points 13, Lyft and Curb are at the same level with 12, while Didi Chuxing ranks with the lowest total points of 11. All the ride-sharing companies showcase low fare pricing compared to traditional taxi expect Curb, whose prices were noted to be higher compared to that of Uber. In terms of price discrimination breakdown, Uber ranks highest with increase of prices of up to three times the normal price. On the other, hand, Didi Chuxing offers stiff competition to Uber with optional fare increase for drivers depending on the distance and sometimes no surge in fare prices during short supply. Lastly, Lyft and Didi have been rated high in safety as compared to Uber with related sexual scandals. In brief, Uber is the leader, Lyft and Curb are followers while Didi Chuxing is a niche. In fact, business researchers claim that Uber should look out for Didi Chuxing due to its strong partnerships with leading technology companies such as Apple and its headquartered in a resourceful country, China (Kumari, Sharma, Deohans, Saha & JayaKalyani, 2019).