Statement of Problem
Uber is a ride hailing mobile application that has gained significant popularity in different countries, especially their home country the United States of America and the rising market in India. Every day, hundreds of thousands of people hail a cab from the application and enjoy the efficient and customer oriented services. One problem that has caused several problems for the application has been surge pricing. It has created a significant outburst of anger and disappointment for loyal customers as every time they open the application for booking a ride they are informed about the rate multiplier. This means customers end up feeling no matter what they do, they would need to pay additional rates for using Uber services. This problem negatively affects the image of the company as customers feel cheated and consider the organization as an exploiter of their trust.
Uber has also run into trouble with the government of several states in India, which is one of the prime markets for Uber. Especially in Karnataka, Uber has struggled to gain a license for operation due to security issues and surge pricing activities. Not having access to one of the most lucrative and fastest growing markets is a major problem for the company and takes out their potential to maximize their reach. It is important for Uber to find a solution to their current predicament, as the present problem cannot last for long or they will end up losing to their competition in the United States and India (Sinha, 2015). There are several solutions that can be looked at that can help in solving the problem. This paper will discuss the ways ride sharing application such as Uber can solve their problem and serve their customers effectively.
Data Collection
It is obvious that changes are needed at Uber that helps the company to overcome surge pricing controversy and find a solution that helps in retaining loyal customers and cab drivers. It is clear that the company needs to get rid of their surge pricing tactics as it works against the best interest of customers. Also, the surge pricing strategy also has attracted the attention of governments as they feel the ride hailing application is exploiting citizens and forcing them to pay overboard for services. Overall, changes are needed as customers and the government has started showing concern on deliberately increased prices of a taxi ride by giving excuses of peak hours, limited drivers, etc. Therefore, process innovation is needed that eradicates surge pricing ofthe Uber business model and replaces it with another system that customers can support and feel they are being treated fairly by the company (The Indian Express, 2016).
One of the best solutions that can be presented to the current problem for Uber is to charge an upfront fare based on the distance of travel and expected time from point of pickup to dropping point. The goal is to inform customers of the rate they will need to pay for a ride at a particular point of time in advance (The Indian Express, 2016). In addition, carpooling services can be offered to customers who are travelling to the same destination. This would ensure that ride fare would be shared between pooling customers and they would not feel the burden of high charges during the peak hours. The combination of fair rate sharing and pooling survives would help in satisfying the need of customers and ensuring that Uber would maintain its businesses and overcome the customer disgust they have gained through price surge tactics.
Data Analysis
The process innovations that would be implemented to overcome the problem of surge pricing are upfront rates and carpooling. An upfront rate is a method that will inform customers about the price charged for their ride in advance and help them decide whether they want to call the driver. The method would charge rates based on the distance and expected travel time to ensure a fair rate is communicated to the customer. The method would overcome the hate for the multiplier effect of the surge pricing faced by customers when they open the app during peak hours, but it would retain the price fluctuations based on the number of drivers available in a location and the distance to be travelled. Another method that would be implemented for overcoming the struggles of surge pricing is carpooling that has already been active on the platform, but the new concept would limit the number of riders to only two at a time and would ensure that both riders are of the same sex to overcome the possible non-interest from customers.
The process of innovations of upfront fares and clubbing riders based on sex for pooling would have their own advantages to the operational problem of Uber. First of all, upfront fares would help in developing the trust again among customers as they would get an honest quote in advance of their fare and would get an opportunity to decide whether they plan to ride or not. Upfront fares would also ensure that most of the customers would not complain after taking the ride about the unethical pricing charged from them as they are informed in advance of the travel rate. The solution of carpooling with only two riders at a time of the same sex would ensure that customers who prefer to avoid carpooling might consider it a safe solution for higher rates during peak hours. The goal of moving on from surge pricing is to ensure customers are not forced to pay spiked up rates, and carpooling would reduce the spiked up rates as the fare would be shared between the riders and the final cost would be lowered between people.
Results and Conclusion
Some of the process improvements that would be made through innovations introduced are:
Rebuilds the Trust
One of the reasons for people to trust Uber over other ride sharing apps and services is trust they have developed, especially in terms of speed of their service and fair rates. Bring upfront rates would ensure that customers would not complain about inflated rates after taking the ride as they are informed about the ride charge in advance.
Reduces the Rates
Carpooling with the advantage of traveling with just one more companion of the same sex is a smart solution that would ensure customers would feel safe while travelling and would enjoy lower rates. Customers would end up sharing the ride rate and the final price paid would be much lower than the standard rates.
Gives the Power to Customers
The advantage of upfront rates is that it gives power to customers as they can choose whether they want to take the ride or not. Simply put, customers approve the rate before taking the ride. The advantage of carpooling is that it ensures that customers pay low rate, even during peak hours. In addition, customers get to decide whether carpooling system is suitable for them.
Choice of Process Improvements
The choice of upfront rates is an obvious choice as it ensures that customer complaint of overcharging and exploitation of customers is managed. By informing the upfront fare on the basis of the distance to be travelled and the expected travel time, Uber develops an expected price that is not hidden from the enquiring customers. The other process innovation of carpooling with two riders at a time of the same sex would also solve the problem as customers would end up paying lower rates and would feel safer with customers of the same sex. The system will more or less solve the problem of peak hours and limited number of drivers available in an area.
Conclusion
Uber has been facing significant problems due to their policy of surge pricing and customers have been highly disappointed while paying multiple times the standard rate. This problem has led to the need for development of methods that can help Uber overcome their current customer discomfort and increasing lack of trust over their services. Two solutions that can help the company are upfront fares and carpool with two riders at a time of the same sex. These solutions would help the company to redevelop trust among customers, provide them with a safe solution, solve the problem of overcharging, and transfer the power to potential customers. Overall, the solutions provide an effective tool for the company to overcome their troubles and find effective solutions to their business reputation threatening problem.
References
Shrivastava., A. (2016, 29 June). Uber hits back, says we are as foreign as Ola. Retrieved 22 July 2016 from, http://timesofindia.indiatimes.com/tech/tech-news/Uber-hits-back-says-we-are-as-foreign-as-Ola/articleshow/52968260.cms
Sinha., A. (2015, 28 October). This Is How Uber Is Entering A Deep Shit Zone in India. Retrieved 22 July 2016 from, http://news.nextbigwhat.com/uber-india-issues-297/
The Indian Express. (2016, 24 June). Uber ends surge pricing, rolls out upfront fare in the US and India. Retrieved 22 July 2016 from, http://indianexpress.com/article/technology/tech-news-technology/uber-is-ending-surge-pricing-rolls-out-upfront-fare-in-the-us-and-india-2872955/
