Marketing strategies of Uber

Introduction

The process of promoting products internationally is called international marketing. This report presents marketing strategies of Uber. International Marketing assists multinationals to attract customers of global market toward their products and services. In this report, the international marketing strategies of Uber will be evaluated through which they have captured the global hailing ride industry. Global marketing opportunities of the company will also be assessed and the competitive analysis of Uber will be also assessed to identify their competitive advantages. The report has used perceptual mapping to illustrate the competitive position of Uber and other contemporary competitors. Porter’s five forces model and SWOT analysis have also been applied to evaluate the competitiveness of Uber and the business environment.

About Uber

Uber Technologies Inc., is an American multinational ride-hailing company. It has different type of services such as: ride service hailing, food delivery, peer to peer ride sharing, micro mobility service with electric scooters and bike. Headquarter of Uber is in Sun Francisco, US. It has services in 63 countries, more than 785 metropolitan areas globally (Uber, 2019). It operates business through mobile apps and website. It has no personal vehicles and all vehicle are hired. Revenue of the company was $23.01 billion in 2021 (Uber Technologies Inc., 2021). In 2020 Q4 alone, the company have 93 million global users (Business of Apps, 2021). It has 67% market share in ride sharing and 24% market share in food delivery (Forbes, 2019). Uber has 22,263 employees worldwide including 11, 488 outside of US. Major competitors of Uber in across worldwide are: Lyft (U.S), Ola Cabs (India), Didi (China), Gojek (Indonesia), Snapp (Iran), Grab (Singapore), Cabify (Spain) and more in global market (Business Strategy Hub, 2019).

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Marketing Strategies of Uber

Marketing strategies of Uber help the company to compete in global market strongly and maintain the leading position by creating high customer satisfaction. International marketing strategies of Uber are stated below.

High Investment in Research & Development sector

One of the marketing strategies of Uber is that the company emphasises on R&D. invests on R&D sector highly and have more than 1000 researchers on their ATG in San Francisco, Toronto and Pittsburgh (Tech Crunch, 2019). The amount of previous year’s investment was $1.5 billion (Tech Crunch, 2019). The company invested $457 million to develop autonomous vehicles, flying cars which is known as eVTOLs and the technology programmes of the company (The Atlas, 2019). They are investing on autonomous vehicles the most instead of depending on drivers in some cases.

The company also said that they will depend on drivers in some cases such as: complex routes, substantial traffic and unfavourable weather. The company have built more than 250 self-driving vehicles with their partners such as: Volvo, Toyota and Daimler (Tech Crunch, 2019). It has been developed by considering the future demand of vehicle. Uber claims that AVs can increase safety and well-organized rides for customers within lower cost than before. Uber does such extensive investment considering that future depends on newness and drives less vehicles. Such proactive actions will keep the company much ahead of competition.

Emphasizes on user friendly app development

Another marketing strategy of Uber is that it emphasises on application development. Developing and exerting efforts to continuously improve the app is a strategy of Uber. It has made the facility with all user friendly aspects and customers can easily use their apps. Features of the apps have made customers highly satisfied toward the company because of user friendly surface. Downloading Uber apps are easy and size of the apps are very small that needs a little space on phone. Customers can download the apps within shortest time. The apps offer customers to book ride anytime at day or night for now and later making the movement convenient than any time in the past.

They apps have options to select pick-up location, drop location, type of vehicles and time with date when customers book for later ride. It is also possible to track the location of driver through GPS integration (SPACE TECHNOLOGIES, 2019). Customers can share their ride details with others by allowing the feature of Uber Clone app. Uber apps have multiple payment options and customers can choose according to their wish, as a result payment system has become convenient. Driver review and rating option of the apps are most helpful options for customers allowing the drivers do correction in their driving skills, manner and behaviours. With this option customers can select the driver who have more rating than others. Such user friendly features have made the customers satisfied.

Highly customer focused services

One of the most influential marketing strategies of Uber is its customer-focused strategies. Uber has high customer focused marketing strategy and it gives customer a clean experience (Forbes, 2018). Uber has car ride, bike ride, ride pool and food delivery services. The company always stays focused on identifying the core demand of customers and fulfilling these demands. Sometime Uber offers free rides and discounts for their regular and first time customers. It provides free credit to the customers who claim free credit after downloading their apps. Uber offers discounts for the regular riders in app messaging and push notifications, this ensures customer engagement and repeated purchase.

Uber provides points for riders every time they have ride with Uber and the points can be redeemed toward Uber cash and other facilities. Rating system of drivers are provided to make the driver choosing easier for customers. Customers can enjoy the rides on both day and night in emergencies and Uber makes sure that drivers are secured. They check the background of drivers and appoint them after collecting every details about them to take actions if they harm customers. These initiatives are globally applauded.

Frequently bends host country’s laws and regulations

Uber breaks the rules and regulations of host country while operating business and many countries banned the company. For example, it was banned from Bulgaria in September 2015 because of appointing drivers who do not have taxi license and professional driver’s license (The Guardian, 2017). The company allows the drivers who breaks legal laws, has no fare meter in taxi, seat occupancy sensors. It seems that Uber works aggressively to operate their business without considering the rules and regulations of host country. But it manages the government of host country to go on with their service.

Facing head to head competition successfully

One of the most important marketing strategies of Uber is head to head competition in the market. Uber has experience of operating business in more than 70 countries across the world and it is making them competitively ahead of competitors. It has presence on remotest areas and timely availability that made their position competitive than the competitors globally. Uber has inclusive range of services such as: Uber X, Uber XL, Uber Go and Uber Pool is the most demanding services. Competitors of Uber fails to offer so many options to their customers. It has become partner of some companies to jointly produce customized vehicles and it is giving an inclusive competitive advantage to Uber. It is operating autonomous vehicles under its network and competitors have not brought this service yet, keeping Uber ahead of competition.

Global marketing opportunities for Uber

Global market brings vast scopes for Uber and the company can increase its growth by utilizing the scopes. Available global marketing scopes for Uber are stated below:

Increasing demand for App-based transportation services

The demand of app based transportation services have increased enormously in recent days and tend to increase with higher growth rate.

From the above stated graph it is seen that number of the app based transportation revenue was $127.75 billion in 2017 and it was increased to $153.591 billion in 2018. The revenue have increased to $25796 million in one year. In 2019, the revenue has reached to $183.677 billion and the revenue increased to $30086 million from 2018. The increasing revenue of app based transportation shows the vast opportunity for Uber because the revenue is expected to be $31.76 by 2023. Uber can capture the revenue of global market by maintaining their quality of service. If Uber becomes able to maintain the quality of services, the increasing customers of hailing ride will stay with the company. As a result, the company will be able to increase market share globally with higher growth rate.

Global reputation and demand of the company

Key global marketing scope for Uber is the reputation and demand it has made globally. It has more than 75 million passengers globally and the amount of customers shows their demand (Business of Apps, 2019). New hailing ride companies will need many years to build the global reputation which is made by Uber. On the other hand, Uber already has the reputation and the company can achieve higher growth by utilizing this global reputation. They will not need to give much effort to promote their new service of artificial intelligence driven cars. The global brand value of Uber will attract customers toward the new vehicle and increase its sales.

Does not need vehicle only needs apps

Uber provides service by being partner with taxi drivers and other companies and does not need own car. It only provide service through their apps and it helps them to increase their business broadly without any major risk and costs. Therefore, Uber can increase their vehicle quantity by making deals with more drivers and car companies to increase their profitability.

Global network

One of the key global marketing scope of Uber is its global network. The global network helps the company to offer great experience of ride to the customers. Uber has largest global footprint with 785 metropolitan areas of across the world (Uber, 2019). It operates more than 15 million trips through all over the world. (Notes Matic, 2018). International presence of Uber have made its position more strong in global ride hailing market.

Emerging economies

Emerging economies such as: Brazil, Russia, India, China etcetera have great opportunity for the growth of ride hailing services (The balance, 2019). Remotest areas of emerging economies have the potential to make Uber more profitable. Uber can target the remotest areas in where they have no network and it will help them to increase their demand highly. Because of the growing GDP of emerging economies, people of the remotest area are capable of affording Uber rides and it will make them more profitable.

New window of opportunity

Artificial intelligence drive vehicles are the new window opportunity for Uber in global hailing market. Uber will be able to provide this service within lower costs than driver based vehicles because the company does not need to pay to drivers. It is also safe because these vehicles have all the advanced facilities with safety belts, children’s seat with special safety belts and many more. As a result, Uber will be able to attract more customers than before because no competitors of the company have this service.

SWOT Analysis of Uber

SWOT analysis of Uber will assist them to know about their strengths, weakness, opportunities and threats. They will be able to utilize the strengths and opportunities for better growth. The company will be able to prevent weakness and threats by identifying them through SWOT. Therefore it will make Uber stronger in the competition.

Strengths: One of the major strength of the company is its brand value and it makes them stronger than competitors.Current value is over $68 Billion and the high valuations attracts investors. Uber has created high customers satisfaction that keeps them strong in global competition.It has dynamic pricing strategy that depends on the demand and supply that makes them highly benefited.

Weakness: The service of Uber depends on the drivers’ behaviours and customers will pass negative review about Uber if the driver’s behaviour is bad.Uber is app based service and dependent on internet service therefore it is widely accepted in developed country except developing and undeveloped countries.The entry in hailing ride industry is easier therefore it faces high competition in every country.

Opportunities: Customers’ dissatisfaction on mass cab market is a great opportunity for Uber because the company can get them by providing quality services.Users of smartphone are increasing across the world and Uber can target the smartphone users. Disposal income of people is increasing globally.

Threats: Competition in hailing ride sector is increasing and it will be tough for Uber to retain customers and drivers.Uber has thousands of ride but the profit of drivers’ is very low that dissatisfies them

Perpetual Mapping of Uber

From the above perpetual mapping it is seen that Uber is the most demanded hailing ride globally with higher price and have the highest cover of global market. On the other hand, Didi, Lyft, Ola Cabs provides quality service within higher price but have less demand than Uber. Whilst Bolt and Grab provides good service with reasonable price and Cabify provides medium quality service. It seems that competitors of Uber haven’t increased their global presence and provides less ride facilities than Uber offers. As a result, Uber is in the top position of the industry and customers buy their ride though the higher price because they have faith on Uber’s brand value.

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Porter’s Five Forces of Uber

Porter’s Five Forces model has been applied on Uber:

Threat of new entrants: High

New entrants can easily enter in hailing ride industry because it does not need own assets or big capital. It just needs apps therefore anytime entrants can entry to the market. But the reputation build by Uber will not be easy for new entrants to replace globally.

Threat of substitutes: High

Threat of substitutes of Uber is high in global market. For example, In U.S. major competitor is Lyft, in India main competitor of Uber is Ola, in Bangladesh main competitor is Pathao. It has competitors in every city and customers can switch to them if they are offered better services.

Bargaining power of buyers: Very High

Bargaining power of buyers have high impact on Uber because the profitability of the company depends on them (Posen, 2015). If customers stop buying Uber rides, the company will lost from the sector. Therefore, Uber tries best to provide best ride offers and best ride experience to hold on customers.

Bargaining power of suppliers: Very High

Suppliers of Uber are the drivers with whom they have business deals and they have very high power to influence Uber. The company operates business through mobile apps and having business deal with drivers and proprietors of the vehicles. Therefore, suppliers can ruin their business if they want and Uber has to maintain their suppliers efficiently.

Rivalry among competitors: Very High

Uber faces tough competition in global hailing ride industry (Wong, 2017). The major competitors of Uber are: Lyft (U.S), Ola Cabs (India), Didi (China), Gojek (Indonesia), Snapp (Iran), Grab (Singapore), Cabify (Spain) and more in global market (Business Strategy Hub, 2019). All these competitors are competing furiously to hold on their position and offers best deals with discounts, free rides and other facilities to attract customers.

Recommended marketing strategies for Uber

Investigating the international market requirements of hailing ride

Hailing industry offers safe ride with experienced drivers, better service with discounts and lower price, different payment options including online payment, fair meter, advanced user friendly apps, fastest response, customers’ safety, tracing drivers’ location etcetera. All these factors in hailing ride industry are the major requirements of customers. Uber always puts significant effort to research new market, new services, and features with existing service. As a result, it will attract the customers of new market toward Uber.

Service design and offerings

Service design and offering helps an organization to deliver great customer experience. Uber will deliver a positive customer experience through service design because it will help the company to implement things sensibly while delivering value to customers. The company will be able to strengthen customer orientation and customers will be easily attracted to Uber and it will increase sales highly.

Customer friendly service

Uber is a customer focused company but will be more customer focused to provide better service than before and create demand easily. The company provides discounts, different ride offers, even free ride, prize points, food delivery from famous restaurants and new customers will be treated like existing customers. Apart from these facilities, it will offer more customer friendly offers to increase sales. Uber has developed driverless ride by considering the future demand of customers. This ride will be safer and needs lower costs therefore it will help them to become more profitable.

Driver management

Uber will arrange training and development plan for their drivers to ensure better driver management because their reputation depends on the drivers. They will make driver experienced to deliver safe ride experience and ensure customers’ safety on road.

Accept customers’ allegations

By accepting customers’ allegation, Uber can find out the problems which are faced by the customers. When Uber will take customers allegation, it will help them to prevent the problems. As a result, customers will get best service and will be highly satisfied which will increase uber’s reputation more.

Conclusion

Uber is the 1^st hailing service of the world and has maintained their leading position from the starting of business with highest city coverage. It is delivering customer focused service from the beginning of its journey by which it has achieved the leading position in global market. In the case of selecting driver, Uber compromises with quality and legal barriers, as a result some government bane their service. The company should select experienced driver who has driving license to prevent the legal difficulties of host country. Uber have to introduce their driverless vehicles in markets to attract more customers and become highly profitable.