Uber, a ride-sharing company, was founded in San Francisco in the year 2009 in response to the city’s inefficient and limited taxi service. It has grown leaps and bound since then to operate in 70 countries. It has an investment of $16 billion since its inception and is currently valued at estimated $70 billion in 2017. (Dudley et al., 2017). Uber has diversified in other businesses like food delivery, but for purpose of this report, only transportation business is considered.
The unique product offered by Uber is its ‘technological platform’ which brings together drivers and customers. There are high value exchanges on the platform between producer (drivers) and consumers (riders). Uber’s real-time car tracking feature on smartphone with multiple cashless payment options is unique and it allows customers to hail nearest cab and pay for it, all through smartphone. The technology behind aims to allocate and reach customer in no more than 9 minutes (https://www.ridesharingforum.com/t/11-of-ubers-38-changes-for-drivers-in-2017/537). Further review and ratings for each driver creates trust for riders even before the start of ride. Information and interactions are the principal assets for such platform which creates value and is also their competitive advantage. (Van Alstyne et al., 2016). Uber’s mission statement reflects its long term vision and is stated by its founder Kalanick as: “provide transportation as reliable as running water, everywhere for everyone”. (Dudley et al., 2017).
The slogans and values of Uber echo it’s marketing orientation which focuses on its technology, customer base and its drivers. Some of them are:
1) “We build globally, we live locally” (http://nymag.com/intelligencer/2017/11/ubers-list-of-new-core-values-are-friendlier.html) – This value harnesses the global technological capability of uber to connect with its drivers, riders and communities.
2) “We are customer obsessed” – This value focusses on customers to ensure their loyalty by solving their problems, maximising earnings for its drivers and lowering costs for its riders.
3) “We act like owners” – This value seeks to empower each of its drivers or riders to come together to seek out and solve problems and to help each other.
Market is a sea of diverse human beings and each of them are distinct like fingerprints. They all are living in different circumstances in countless different ways and hence have different needs (Weir, 1960). To create an effective marketing strategy, it is important to have a differentiated marketing strategy based on Segmentation which will target the desired consumer segment and corresponding product or service offered by the organisation. Further it needs to market and position its services or product as value proposition to them. (MBAX 3,2).
Uber started with Uber Black and catered to rich young people (https://medium.com/uber-for-x/uber-business-model-canvas-know-what-led-uber-to-success-7bca35472546) but then soon brought in other services to cater to different consumer segments. This illustrates that Uber is a marketing oriented organization which understands the needs of its different customers and hence has created differentiated services for them. Following services are offered on Uber Platform which connects different segments of producers (drivers/car owners) to different segment of consumers based on their needs.
Uber X: Connects private car owners with riders for an affordable ride.
Uber XL: As Uber X but for upto 6 riders
Uber Pool: Shared rides like Uber X with other people to make it more cost effective.
Uber Auto: Only in India offers users to hail Auto-rickshaw service instead of car. Further segmentation based on market requirements and availability.
Uber Black: Luxury rides by professional drivers.
Uber Black SUV: Luxury ride by professional drivers for upto 6 people
Uber Access: Wheel chair accessible rides for catering to retired and handicapped
Below is analysis of Uber’s Segmentation, Targeting and Positioning.
Adapted from (https://research-methodology.net/uber-segmentation-targeting-and-positioning/#_ftn1) 166 words.
Value proposition of Uber: Being a platform provider to bring together drivers and consumers, Uber creates value for both by giving earning opportunity for drivers as a full-time or part-time service provider and save cost for consumers by providing them cheap and alternative to dysfunctional point-to-point transport services. Moreover, here are the value propositions for
1) Ride at affordable prices.
2) Point-to-point service.
3) Available on-demand.
4) Ensured ride.
5) ETA – Track on smart phone.
6) Cashless transactions.
1) Extra income.
2) Flexible work timings.
3) Efficiency and less downtime
4) Higher average wages.
(https://medium.com/uber-for-x/uber-business-model-canvas-know-what-led-uber-to-success-7bca35472546). Further, to discuss how Uber gathers data and uses it to create marketing strategy, it is important to analyse the 5C’s.
Understanding 5C’s of Uber.
A marketing audit is required to ensure that the key resources are available to help seize the opportunities and to avoid threats. SWOT analysis is done to understand the market situation for the organisation. Uber’s SWOT analysis is presented:
1) First mover advantage–high market capture
2) Low fixed investment–Cities can be added with minimum cost injection on existing technology.
3) High investment capital available for investing in technology expansion/marketing.
4) Driver ratings–creating trust before riding
5) High levels of user Convenience – App Centric.
1) High controversies damaging brand image – Starting with unregulated taxi service to management incompetence and scandals.
2) Increasing losses for business – Losses jumped 61% in 2017 to $4.5 billion. (https://www.cnbc.com/2018/02/13/ubers-loss-jumped-61-percent-to-4-point-5-billion-in-2017.html)
3) Business model can be replicated easily – Platform based and needs only marketing.
4) Focussed on professionals and tech savvy people due to app based approach.
5) Increased competition has decreased the fares hurting driver’s income.
1) Rising attractiveness of sharing economy.
2) Internet penetration and access to smartphone increasing.
3) Self-driving cars
4) Sub-par public transport in many Asian cities
1) Low profit margins – Need to get back company in green.
2) Competitors like Lyft, Ola are threat to established business.
3) Pressure from regulators and traditional taxi owners.
4) Drivers leaving due to low profits.
Uber offers its technical platform so its customers are both drivers and riders. Uber essentially does marketing to drivers to drive for them and to riders to hail them.
Riders are looking for a safe, cheap, reliable ride from one point to another while drivers are looking for riders with minimum downtime and maximum utilization of their time driving customers. Uber’s reliable tracking system works for both its Customer groups.
Other value propositions have been discussed earlier for Riders and Drivers.
Uber has an opportunity to tie up with corporates to provide their executives with reliable and cost effective ride to lure more customers.
Uber collects data through its app from drivers and riders to help create better environment for both. They collect billions of GPS locations every day and use data visualisation technology to provide safety to users, availability of drivers, closely matching the driver with rider within 15 seconds or less. It gathers data for speed and acceleration to ensure further safety of drivers and riders. It suggests where the riders are and where the drivers should be heading towards.
This data analysis sometimes goes against Uber’s one consumer group.
Uber’s ‘Surge Pricing’ patent (Lin et al., 2014), stimuluses more drivers to reach where demand is high but it has been observed that there are information asymmetries which riders use or Uber uses which does not favour drivers (Diakopoulos, 2015). Furthermore, though Uber says drivers are entrepreneurs, it has was seen that Uber controls them through technology (ROSENBLAT et al, 2016).
Competitors extensively effect the effectiveness of organisations marketing strategy. Analysing competition through Porter’s ‘five forces’ framework (Porter, 1980) shapes the success of organisation in an industry. (MBAX).
Dudovskiy, J. (2018)
C. Christensen, The Innovator’s Dilemma, Boston, MA, Harvard Business School Press, 1997.
Diakopoulos, N. (2015, April 7). How Uber surge pricing really works. Retrieved from https://www.washingtonpost.com/news/wonk/wp/2015/04/17/how-uber-surge-pricing-reallyworks/?tid=a_inl
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Lin, H., Kalanick T., & Wang, E. (2014, January 9). System and method for providing dynamic supply positioning for on-demand services. Retrieved from http://www.freshpatents.com/-dt20140109ptan20140011522.php
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ROSENBLAT, A. and STARK, L. (2016) ‘Algorithmic Labor and Information Asymmetries: A Case Study of Uber’s Drivers’, International Journal of Communication (19328036), 10, pp. 3758–3784. Available at: https://login.wwwproxy1.library.unsw.edu.au/login?url=http://search.ebscohost.com/login.aspx?direct=true;db=ufh;AN=127361759;site=ehost-live;scope=site (Accessed: 26 October 2018).
(Surge Pricing saved pdf)