Factors Influencing Customer Perceived Quality: Market Opportunity Analysis Of Ingogo Taxi Booking Service In Vietnam

Ingogo: Overview and Analysis

Discuss About The Factors Influence Customer Perceived Quality.

International marketing is the process of planning, executing the idea, pricing and distribution of goods and services for creating an environment that satisfies organisational and individual objectives. From this statement, it can be noted that international marketing contains a number of factors and it is vital to study all these factors so that, it becomes possible to select the right conception for reaching to the right market and ultimate goal. For this purpose, the aim of the study is to highlight a successful product from the Australian market that could be marketed in another market of Asia-Pacific region. The two-folded study will first select an Australian product or interest and then it will go for selecting a foreign market opportunities for the chosen Australian product. The paper will be structured as per the established model of market opportunity analysis- the Walvoord model.

The study selects Ingogo is an Australian company that provides online taxi booking opportunities and payments. This idea could easily be brought into the market of Vietnam in the Asia-pacific region because of the existing market of app-based car bookings.

The selected product of the study is, in fact, a service that could be marketed into the market of Vietnam. For this purpose, the study selects Ingogo as an Australian company that provides the online taxi booking facilities and payment services to the customers.Taxi booking and logistics is a growing industry in Australia, New Zealand and the UK. This allows customers to book their own taxi without any bargaining and loss of time (Ingogo.com.au, 2018).

The company Ingogo has its own GPS-enable booking system that allows any nearby taxi services to pick up customer regardless of which taxi service they work for. Customers get the service with fixed fares that include all tolls and charges and no extra fees or surge pricing due to traffic jams. The customer can book their taxi up to two days in advance. Further, the Ingogo taxi service uses state transport regulated, approved and background checked taxi driver and this will provide customers with the best taxi services in comparison to any other app-based taxi services. the most effective opportunity is that people can book their cab 48 hours in advance and therefore, it is the unique service that Ingogo will bring to the market.

For foreign start-ups, Vietnam can be the greatest test bed without having to spend a lot of funds to sustain the business. Recent times, Vietnam is growing as one of the consumer markets as its Gross Domestic Product (GDP) is around the US $ 2215 and the GDP growth expands by 6.21% in the year 2016 (Minh & Hjortso, 2018). This is the highest growth in the world. Once the start-ups get funding, it can be stated that the burn rate is lower in Vietnamese market in comparison to that of other Asian countries. This gives fewer burdens to the business venture since its living cost, labour and marketing cost is cheaper. 

Market Opportunity Analysis of Vietnam

For better understanding the business opportunities in the Vietnamese market, it is essential to examine the macro-environmental factors that are present for entering the market. Hence, PESTEL analysis can be considered as a framework or tool for monitoring the macro-environmental factors that influence the growth of an organization both positively and negatively.

The Socialist Republic of Vietnam is one of the major five remaining single communist party nations in the globe together with North Korea, China, Laos and Cuba. The Communist Party of Vietnam is responsible for keeping the political environment relatively stable. The stable political condition foster domestic as well as foreign entrepreneurs who want to tap the nation’s huge growth potential because of its revived Southeast Asian tiger economy. In the year 2014, Vietnam ranks 119 out of 175 countries in the Corruption Perception Index (Nguyen, 2016). Therefore, it can be stated that entering the Vietnamese marketplace should be proven to be an effective transition without a number of significant troubles. The government of Vietnam is trying to make the country liberalise and FDI is the development strategy for Vietnam (Nayak, Armitage & Andrachuk, 2016).

As per the World Bank Vietnam Development Report of the year 2012, the country focuses on reaching a high level of modernization and industrialization in their economy by the year 2020 (Le, 2018). This strategy enables Vietnam to be competitive with the other potentially growing nations such as Indonesia. The key element of this strategy is that the government of the country has considered clear identification to meet the targets. The elements include achieving relatively stable economic environment, the creation of agile and competitive workforce, stable infrastructure and strengthening the market-based institutions.

Fuelled by the increased and rapid growth of FDI, 2017 emerged as one of the significant years for the concerned country. Apart from this, Vietnam is engaging with Trans-pacific Partnership (TPP) which is free trade agreement signed by 12 pacific-rim nations such as New Zealand, Canada, Australia and some others. This biggest and complex free trade agreement has a strong effect on Vietnamese economy (Chinadaily.com.cn, 2018). The main goal is to cut tariffs and barriers to entry. The country cut the corporate tax rates from 28% to 20% from 2008 to 2018. Therefore, the economic factors in Vietnam provide some positive landscape for the entrepreneurs. With the GDP growing at around 6.81%, the trade figures and record high FDI reaches an all-time high of US$ 400 billion and it can be stated that Vietnam is becoming the high priority for the foreign investors in the year 2018 (Bui, 2018). FDI inflows in Vietnam have increased considerably after 1988 and socio-political stability is the main reasons for this.

FDI	2014	2015	2016
FDI Inward flow	9,2000	11,890	12,900
FDI Stock (million USD)	90,911	102,900	115,099
FDI inwards	21.0	15.4	27.9
FDI Stock	48.0	53.8	57.6

PESTEL Analysis of Vietnam

Table 1: Foreign direct investment growth in Vietnam

(Source: Tradingeconomics.com, 2018)

Vietnamese market has abundant labour force. The number of people belongs to working age (17-40) is around 53,750 million as per the statistics of 2013 and this accounts for more than 50% of the population (Khuong & Dai, 2016). However, the labour force is under-skilled and for this reason, the government of the country has passed education law, 2005. Further, it can be stated that the population growth rate is near about 1% in most recent years and most of the people locate in Hanoi and Ho Chi Minh City. Based on the labour market forces, Vietnam could be a great marketplace for the foreign marketers that are looking to emerge from the market.

Vietnam is ranked 18^th in the world because of the huge number of internet users and around 20% of the total internet users prefer to purchase online. Apart from this, the government of the country has approved a number of projects and plans that support telecommunication and information technology in Vietnam (Zhou, 2016). One of the projects includes ‘Improvement of computer usage and public Internet access ability in Vietnam’ and this project was launched in the year 2011 in Hanoi. Therefore, the app-based taxi service will get support from this market (Refer to Appendix I).

The general legal environment in the concerned country is complicated as regarded by the foreign investors. Investors state that the legal framework of Vietnam is deficient in transparency, dependability and consistency. However, the government introduces different laws such as Enterprise law, Investment law and other global agreements to encourage start-ups for local and foreign investors. The Vietnamese market allows 70% of Foreign Direct Invest and thereby, Build-operate-transfer ventures are allowed in this market (Papadopoulos & Heslop 2017). The tax rate in Vietnam is 10% and there are two reduced rates and 0% on international transport and exported services (Chinadaily.com.cn, 2018). Corporate tax is 20% and capital gains are taxed at 25%.

	Vietnam	East Asia and Pacific
Number of payments of taxes	31.0	22.6
Time is taken for administrative formalities (Hours)	542	198
The total share of taxes	39.6	33.8

Table 2: Comparison of corporate taxation

(Source: Tradingeconomics.com, 2018)

Hanoi is one of the most polluted cities in Vietnam and it is among the most polluted cities in Southeast Asia because of high population density and excessive transportation. However, people in the country are becoming more aware of the surrounding environment and thus the government of the country introduces Environmental protection law in the year 2005. This law was amended in the year 2013 and emphasized on the implementation of the waste processing of the business. From this perspective, people are tending more towards the sharing economy and the sharing economy saves both money and environment. With these initiatives, it is clear that the business idea has that potential to be a success.

Comparison of Corporate Taxation in Vietnam

The general market relating to the ride-hailing apps in Vietnam is highly increasing. Many Vietnamese now prefer to use a number of ride-hailing apps and they view these services as safer and cheaper. According to the viewpoint of Voang & Okamura (2015), Vietnam, the communist-ruled nation has near about 45 million motorbikes but the expansion of the ride-hailing services across Southeast Asia is shaking up the traditional taxi services which are a key source of a number of informal workers. It is worth mentioning that, such new services (ride-hailing apps) have been warmly welcomed by the local customers as the smartphones are rapidly increasing in the market. Further, being provided with names, photos and plate numbers of each driver, people get a sense of credibility and security.

There are a number of ride-hailing services in the market such as Grab, Uber whereas Grab is the most developed taxi services in Vietnam. Various ride-sharing apps such as Grab and Uber change the Vietnamese way of using taxis and it gives a huge impact to the traditional taxi services. As opined by Eskenazi & Boutueil (2016), 87.55 % people like ride-hailing apps such as Grab as such taxi services help the customers to travel at a cheaper price. Thus, the local traditional taxi services like to lower their prices to compete with the rapidly developing industry. In the concerned market, like Grab, another app-based ride-hailing service Uber has put forward the industry in a growing percentage. It is worth mentioning that, the Deputy Minister of the nation states that, the application of IT to connect with the number of transportation companies such as Grab and Uber is a good innovation. Leading Vietnamese traditional taxi services try to launch smartphone apps to compete with these ride-sharing services (Refer to Appendix II). 

In terms of revenue generation, it can be stated that the revenue in the ride-sharing segment amounts to near about 36 million in US dollar in the year 2018. As stated by Karis (2018), the revenue generation is expected to show an annual growth rate of around 15.2% (CAGR 2018-2022) resulting in a market volume of around 64 million in US dollar in the year 2022. In addition to this, the user penetration is now at 3.4 percent in the year 2018 and it is expected to hit around 5.1% in the year 2022 (Trang, Van & Oanh, 2017). From this data, it can be shown that the average revenue per user amounts to around the US $ 11.06. Based on this statement, it can be stated that the market size of the industry is very large in Vietnam and the market is developing in a huge percentage.

Environmental Factors in Vietnam

From the above-held discussion, it can be stated that the similar services exist in the Vietnamese market. However, the services that are provided by the company are somewhat different from the existing competitors. The company uses local taxi drivers by collaborating with the state taxi services and considers fixed price model. The passengers can take the taxi services by using the app and by paying lower and fixed prices as well. However, the company may get main competition from the existing ride-hailing taxi services such as Uber and Grab but the services provided by Ingogo are not available in the Vietnamese market and thereby, it can be stated that the opportunities exist in the market for the company. 

In terms of Cost of entry, it can be stated that the concerned country takes Trans-Pacific Partnership which is a Free Trade Agreement (FTA) with Australia, Canada, New Zealand and others into account (Vo & Nguyen, 2015). With the help of this, the Australian company get extensive tariff reduction and this will boost the company to enter the market. Further, it can be stated that Regional Rules of Origin provides a number of new opportunities for the Australian exporters to tap into the international supply chains in this particular region. Further, Vietnam ranks 82^nd in the World Bank’s Ease of Doing business report and based on these; it becomes helpful for the Australian Start-ups to emerge in the market. For the FTA, the cost of entry is very minimal for the Australian company.

Further, the service is widely accepted into the market as it is the way both the drivers and passenger profit and save money. At the same time, a number of existing taxi drivers can rejuvenate their career which is the prime value of the government towards massive employment (Ozturk, Joiner & Cavusgil, 2015). 

Therefore, on the basis of probable product acceptance, it can be stated that the profit potential is high for the company.

For emerging into the Vietnamese market, it is essential for Ingogo to select the target market profile so that, it becomes possible for the company to develop a market strategy to compete with the existing services. The young population is growing in the Vietnamese market and this generation tends to use Smartphone because of the huge availability of internet. As estimated by Hung, Hui & Tam (2018), the Smartphone users encompass 138% of the population. Therefore, the target market profile will be the mix of the demographic and geographic segmentation which help the company pricing its services. In terms of demographic, Ingogo targets young generation belongs to the age group of 17 to 35. The fixed price strategy will be helpful for the students to grab the services of the company. Further, people can book Ingogo taxis for planning their trips before the day of going. Therefore, it can be stated that the target market also focuses on the local and the international travellers.

Ride-Hailing Apps in Vietnam

On the other hand, the geographic segmentation divides the market on the basis of units of geography. In Vietnam, near about 33% of the population lives in urban areas and it means, most of the people are still living in the countryside and rural areas. Therefore, it can be stated that most of the people prefer to use cabs for reaching to the cities like Hanoi and Ho Chi Minh City (Hoang, 2017). From this perspective, it can be stated that the target market profile will the people live in countryside region. With the help of this service, it becomes possible for the people to reach to the urban areas easily by taking the ride-hailing services of the company.

Apart from considering target market profile, it is essential for the company to consider market entry strategy. First is price competition and second is ease of access. It can use technology based differentiation for market entry. Since, it can take a very small cut unlike the other companies; it can also cut down costs and nail the price challenge. Therefore, all these things can assist Ingogo with market penetration. Assuming the existing opportunities, it can be stated that, the entering the target market through online platform will be effective and beneficial for the company. Further, the company uses its own GPS enabled booking system that allows any nearby taxi service to pick up the bookings. Therefore, by having an online platform as the main source of company existence, it becomes possible for Ingogo to list the local taxi services.

Conclusion

The idea of online taxi booking services with fixed fare pricing model in Vietnam leverage a number of opportunities. Performing the research over the Vietnamese market, it can be stated that, the opportunities in the Vietnamese market do exist. The ride-hailing apps are steadily growing in the market and people prefer to use such services because of the convenient and safe journey. Further, it can be stated that both the passenger and driver can be beneficial by using the app-based service. This is because most of the taxi drivers become able to rejuvenate their professional career and passengers become able to get the cheapest and safest ride through this service. On the other side, Vietnam has weak financial structure and lack of guarantees in property rights along with high level of corruption. Strong points of Vietnam are the positive economic perspective in terms of the economic growth; even in the global crisis. The market is young, new and cheap to start the business, most importantly; the cab service industry is rapidly growing with technologically qualified manpower. Ingogo can start the cab service in large cities as the areas have certain socio-political stability and the government is thinking to liberalise the economy.

Based on the above-held discussion, it can be stated that the company has potential opportunities for emerging into the Vietnamese market. However, the market is growing and the government considers a number of new strategies for inviting foreign start-ups in the local market. From this perspective, the company needs to stay aware of the changing trends and preferences of the customer to stay competitive in the market.

For having a successful business profile, some recommendations can be made for the start-up company in Vietnam. The first recommendation is to lower the fare so that, it becomes possible for the company to enhance the customer base. This is because, the economic condition of the country is growing and therefore, most of the people follow a tight budget to persist. From this perspective, the use of lower fare price will help the company to give tough competition to the existing competitors in the market.

Secondly, it can be recommended that the company should tie up with the local travel agencies to reach to the target market effectively. This is because; the company offers pre-booking facilities (customers can book their rides 48 hours ago) and therefore, customers can use the services for their trip purposes. In this situation, the collaboration with the travel agencies will help the company to enhance the number of customers.

Online Research can be perceived as an integral part of the secondary research. This particular study is based on secondary market research that is, the study performs web data extraction for the Australian Company. The researcher faces some of the limitations while performing the secondary research. One of the most potential barriers is the lack of availability of current data. It can be stated that the Vietnamese market is in a growing stage and therefore, the government of the nation considers a number of measures for encouraging start-ups. Not all of the websites provide current data regarding the growth of the market and therefore, finding current data about the market is cumbersome.

Another limitation is all about lack of time. It is worth mentioning that, doing market research requires a lot of time in gaining an in-depth understanding. For gaining knowledge about the market trends and preferences of the customers in the Vietnamese market, it is essential to give a significant time. From this perspective, it can be mentioned that time performs as one of the barriers in this situation.

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