Uber is American company that was started in 2009 and is at the tender age of 8 years but its growth is tremendous and is expended aggressively to 81 countries and 581 cities across the world. It is a cab aggregator that connects taxi drivers and passengers looking for taxi service via smart phone app. Uber does not own any fleet of car neither it employs any driver. Since its launch, it has received a terrific response from the customer especially young business executives and services are also endorsed by famous personalities and celebrities. Its unique business model has set the disruption and threat to other cab providers who act like a monopolist.
The purpose of this case study is to analyze the Uber which is just a service marketing firm in respect to its relationship management program. Since the organization is still new, there is lot of scope for the numerous initiatives. This case study also discusses the benefits that accrue to organizations and its customers once healthy long term relationship is developed between the two parties, market segment that Uber is targeting and what is it strategy and other initiatives to attract the target market and establish long terms relationship. Lastly, it will also talk about the various metrics that will be used to gauge the success rate of its marketing initiatives.
1.1 Identify the benefits that accrue to the organization and its customers if a valued relationship is developed between the two parties.
Healthy relationship between any organization and its customers is a win-win situation for both the parties. Loyal Customers are the most important asset of any organization. In case of Uber, people who uses Taxi services for their work, after parties, during events are its key customers and various segments of drivers that it employs is its internal customers. If the Uber customer are satisfied and has healthy relationship with the company, they act like the marketing agent of the company. They will share their experience with their friends and family who would also then give a shot to try the services of the Uber (Posen, 2015). Thus Healthy relationship with its customers will help the organization to increase in revenue by increasing its business. Not only this, customers will have the benefit of getting excellent service in terms of reliable pick up, seamless integration by paying through credit cards without the hassle of tips and change, allow them to choose the driver by selecting higher rating driver and reject to travel with driver having low rating (Geradin, 2015).
For customers as they start using service more and more and become more satisfied with the services, they can count on the services of Uber. Customers need good services which they can count on during a time of need. Once customers become familiar with the organization, it tends to use their services more. Not only this, in several countries, people are preferring to use service of Uber instead of using their private vehicle due to heavy parking charges and parking at the very farther end from the main destination, lack of parking space. Also, Due to green initiatives by various NGOs and corporate there is growing concern among people to save environment by reducing their carbon footprints. Though Uber uses UberPool where ride can be shared with other person which is an excellent way of reducing traffic as well as pollution in the cities especially in the cities like Tokyo, Beijing, people are still shy from using their services (Cramer, & Krueger, 2016).
It is because they have never use the services and are not sure or have bad experience initially and now are not much comfortable in trying their services. If Uber develop a healthy relationship with the customers, People will be more comfortable is using their services and definitely give them a try. Some section of people thinks about if they share the card information with the organization and driver cancelled the ride, their money can be deducted from the card even without their fault. Thus, trust, reputation has to be established with the customers to give them confidence that they will not be cheated. Uber uses innovative methods to capture markets of people who have bad experience with the Uber. It offers them free rides and other discounts so that they use services f Uber again and gradually they will get comfortable with the reasonable pricing and ultimate services of Uber (Rogers, 2015).
Organizations can become sustainable by winning the trust of its customers. Not only this, once it has a reasonable group of followers, the organization establishes itself as a brand. There are numerous benefits of becoming a brand these days. Uber can start any other business and it gets the customers easily because it has already established itself as a brand and won the heart of the consumers. Also, Uber can also earn more money by advertisements in form of painting a taxi as well as advertisements within the taxi by keeping the pamphlets of other products (Wallsten, 2015).
Not only this, when organization is growing and become a brand, it also focuses on global issues like environment and define their corporate social responsibility to help people and society. When organizations are struggling in increasing the market share and acquiring customers phase, it cannot focus on the other issues. Also, if the organization is not having a healthy relationship, they will see their business evaporating faster in the future and that shifts its focus in downsizing and layoffs and brings negative attention by media. During such times, even talented people would not like to work in such organizations and such organizations suffer from lack of skilled manpower.
Thus, if a valued relationship is developed between customer and the organization, they will be huge benefits for both the parties. Organization sets itself on becoming a reputed brand and gaining market share while consumers get better services prices reasonably from the organization. In a longer term, satisfied customers will do word of mouth publicity for the organization they trust and have a long relationship, which attracts more customers adding in the customer base of the Uber. The benefit of relationship marketing for Uber can be highlighted as:
Uber can target people who use public transport and other taxi service for their day to day life commute. Uber acts as the taxi aggregator and provides better services to people than most of the other taxi services at a more reasonable price. Not only this, UberPool also provides cab sharing experience. Thus, People who can afford little more than public transport, they can use Uber Pool which offers huge convenience and offer point pickup and drop. Also Uber has numerous varieties of services like UberXL, Uber X, Uber SELECT, Uber SUV, Uber WAV, Uber BLACK, Uber POOL (Rayle, Shaheen, Chan, Dai, & Cervero, 2014). All such varieties offers different experience to the customers and charges are also different. Thus, It can target for a mass segment of the people ranging from those who uses luxurious car services to those who use cheap cabs and even those who use public transport by inventing the concept of a shared cab services.
Not only this, Uber has provides their services during events and thus leveraged the same in a big way. These special real life events are categorized by the founder of Uber as accelerants which are very important events in order to increase the visibility. These events actually show a temporary need of the huge taxi services. Uber in anticipation of demand asks drivers to weight nearby and if there is real increase in demand as compared to supply, Uber starts showing surge pricing to its consumers meaning it can charge twice, thrice and any amount from the customers depending upon the shortage of taxi vehicles. These events are:
Targeting the right customer is very much important for any marketing programme in order to become successful. Otherwise, if the marketing efforts were not directed correctly towards potential customers, they will not reap any results and the huge marketing budget may go waste without attracting any new customers (Barro, 2014). On the other hand, customers who are not the potential users of the organization when started receiving information about the products and services of the organization, they feel invaded and think of ads as completely irrelevant to them. Thus, it can also increase the negative publicity of the organization. Also, If the right target segment is not selected, it eventually means a marketing mix is also not correct and the organization perceived to be confused by the consumers. Organization has to be very clear about the potential customers and market it serve and thus develop a correct marketing mix for each of the segment. Targeting the right consumers is one of the basic reasons for the success of any marketing initiative.
In this age of Globalization where consumers are spoilt for choices and possess high bargaining power over the organizations, it becomes evident for the organizations to establish long terms relationship with the consumers as they do not shy away from changing the organizations. As a result, it is increasing getting difficult for the organizations to have loyal consumers. There are various ways by which management may encourage long term profitable relationships with its target customers. Some of them are as follows:
Sponsoring the event where potential consumers are expected: This is one of the most common as well as successful strategy that is adopted by most of the Organizations. Today, Uber is sponsoring many events related to environment where it asks people to reduce their carbon footprints by preferring shared cabs. These events are quite powerful as they allow organization and its staff getting directly in touch with consumers. Uber is very active in sponsoring the events of a national importance and is quite opportunistic in that sense (Rauch, & Schleicher, 2015). Not only this, organization also sponsors the events like music nights, events at Pub and parties where youngsters will be participating because it is one of the most important segment that Uber is directly targeting.
Offer Customer rewards: Uber has been very good in this sense and that is how it disrupts the existing Taxi service providers business. Uber ask people to refer the Uber to their friends and relatives and when the person who is referred will travel, both the person who has referred and the person who was referred will get free rides (Edelman, & Geradin, 2015). This model of expanding by giving discount is started by the Uber in many countries and now many other organizations are following it. People love to get free rides and thus shed their fear of using services of new vendor by trying for free. And if they have tried once, it is very much possible that they will come back again due to reasonable pricing of Uber except during times of emergency when it charges Surge pricing from people.
Ongoing reward to people by using innovating approaches for rewards: Uber comes with rewards quite frequently. In fact at a given point of time, there is always one or the other offer going at Uber. Sometimes, offers are every 4th ride is free if payment is done though master card. During non peak hours, Uber offers discounts to people to encourage them to travel more. Uber also keep on adding new payment methods like wallets and platforms and ask people to use the new ways of payment and offer them discount. In this way, it’s a double profit business for Uber because on the 1 hand, it is earning commissions from the company that have launched new innovative method and secondly it will attract people looking for discounts (Preston, & Van de Velde, 2016).
Communicate Frequently: Effective communication is one of the established and successful ways of keeping in touch with consumers and established a long term relationship with them. Organization must ask how frequently does it communicate with its potential customers as well as existing customers and what is the mode of the communication. Not only this, organization should also check the content of communication. It should not always be the case the organization is bombarding users with the promotional communications (Natyari, & Pradana). In such cases, it often irritates users and users unsubscribe from the communication. There is no harm in sending promotional messages but it should not be the case that organization only send promotional message. It sometimes should send messages like news at the organization share some news or joke from the consumers.
Collect Feedbacks from the customers: It is very important to collect feedbacks from the customers and implement it. Uber has followed different approach of collecting feedback. Not only it collects feedback from the customers about the drivers and cab services but also about the customers from the drivers. If any customer has low rating, it will be taken off the system and he will never be able to use the services of Uber (DeMasi, 2016). Bad customers are sometimes some customers who avail the services but do not pay or misbehave with the driver. Also, if any driver has low rating, customers can reject to travel with that driver and select another cab. Also, Uber also give incentives to drivers with high ratings. As a result, drivers are try to get maximum rating and thus provide best services to the passengers and leave no stone unturned in impressing them. They also keep their car clean and also provide music, Wifi services, magazine, and drinking water in the cab to the passengers at no extra cost.
Treat your employees/contractors first who will acts as ambassadors: This strategy is that organization must keep its employees happy and satisfied. If this is done, its employees will act as the ambassadors for the company and help the organization to increase its customer base. However, this is something Uber is not good at. Initially, when Uber starts in any new city, if offers impressive cut to the drivers but as the more and more Uber cars are getting on the road, drivers are increasingly become dissatisfied. In the past, there have been numerous incidents of strikes by Uber’s drivers worldwide where they raised concern over their low earnings which were not the case in the past when they started (Venkatesh, & Easaw, 2015). However, some strikes gained popularity while others did not but it is clear that drivers are not satisfied however the Uber give them lot of perks flexible working hours like whenever they want to work, they simply login to their mobile apps.
Distribute Goodies from time to time during local events: Uber also distribute goodies during important days of the country. For instance, In India, it distributes food to anyone who has booked a cab during a particular timing on the Independence Day. Thus, it gives people feeling of respecting local culture. Not only this, During healthcare day, it started a campaign in Collaboration with Apollo Chain of Hospitals in which you can book a cab, and can will come to your location along with a doctors and offers free basic tests. Such initiatives from time to time keep people aware about the organization. One of the principles of marketing is to distribute free gifts to people. Also, when people go at some showrooms, they will be treated with a free starbucks cup (Spain, Thompson, & Engle, 2015). The strategy behind this is the way human mind works. Humans generally do not like to take the favors and they are given favors, they will try their best to reciprocate the favor. By giving them free gifts and drinks in the showrooms, Organization make people biased when they are making their purchase decision. Uber is also following a great deal of this principle by offering people free rides, huge discounts, free riders to referred people. Apart from it, it has many other innovative strategies.
Marketing is one of the biggest expenditure for any corporation. Thus, if is not incurred in a correct way, there will be a huge loss to the company in terms of shrinking revenue and evaporating business. In the past, there were not effective tools and techniques that allow measuring the effectiveness of the marketing campaigns however there are many tools and techniques available as of now. Few of the techniques are as follows:
Conclusion
Uber has grown very fast with its disrupting technology of connecting cab drivers with passengers. It has received a terrific response from the people worldwide and its success is evident from its aggressive growth and expansion to more than 80 countries in less than a decade. However, there are incidents of anger display, strike by the drivers in various parts of the world. Thus, Uber has to effectively manage itself with the help of 360 degree kind of review. If it really wants to grow, it should satisfy laws, respect its drivers and many other things not just the consumer satisfaction. In this case study, various marketing programs that Uber has been using are discussed like distributing freebies, target big events, give discounts to people, communicating frequently with people. This also talks about what are the various market segments that Uber is targeting and how it is targeting them. Case studies also talks about that Uber will be benefitted hugely once it has established a strong long term relationship with the consumers. With established relationship, Uber can use its brand and can start new businesses also. Once a brand becomes reputed, people will be ready to give it a try in new range of businesses also.
References
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