Uber - Ride Sharing Company
Introduction
Uber is the biggest taxi company that operates in four hundred and sixty-three cities in the world. It was started by Travis Kalanick, a serial entrepreneur from the Silicon Valley, and since 2012, the company has been expanding exponentially. Uber has faced opposition in many cities in the world, from London to Nairobi in Kenya, and there have been cases of assault on Uber drivers. The impact Uber usually causes the problem has on local taxi industries, as it offers cheaper rides with better efficiency, pushing the traditional taxi drivers out of business on price advantage (Knight, 2016). Uber crossed the $50 billion valuation mark in 2015, to become the fastest growing company in the world and only comparable to Facebook in the past.
Key Competencies
Uber has a strong financial backing that enables it to offer bonuses and fair pricing in new markets to woo people to use the service. For example, in London, Uber paid drivers a bonus of $1 per ride, making traditional cab drivers to shift to using the application, while others took to the streets. On the side of the riders, Uber fares are usually much lower than normal taxis. In Nairobi, a ride on Uber is 30% cheaper than a ride on traditional taxis, and sometimes this gap is bigger.
Apart from its intensive marketing and aggressive market entry techniques, Uber uses mobile technology to connect riders with drivers. The technology runs on all major smartphone operation systems; Android, Windows, and iPhone. With this technology, riders call a car with a click of a button, and the charges for the ride are automatically determined by the application, saving riders from price bargains and saving time. Riders prefer Uber for its effortless mode of operation because it allows people to check the reviews on the driver, the time he will take to arrive at the point where he will pick the customer and the condition of the car. Riders leave reviews for drivers, meaning that the expertise and professionalism of a driver are determined by the kind of service he gives to the customers.
Uber’s value proposition is built on the need to sign up as many drivers as possible, so as to be able to command the taxi economy, and depend on the increased network to make money. Recently, the company has partnered with car manufacturers for car leasing agreements, where drivers get good deals to buy cars for use with Uber (Newcomer & Zaleski, 2016). The car leasing service allows people to give their cars to Uber drivers for $130 per week.
Sustainability
Uber’s business model is highly sustainable as it makes the company profitable in every market within three years of operation. Uber takes 25% of the total fares paid by clients, and in the last five years, the money has been reinvested in the company through advertisement campaigns, customer support and customer development (McAlone, 2016). The company is already making a profit in the US and Canada, at a rate of $0.19 per ride, despite a fierce rivalry from Lyft, which has launched a multibillion market grabbing campaign (Newcomer, 2016). Lyft has been handing people $50 vouchers to ride on their cars, a move that is aimed at making the people experience the service and woo them from Uber. The price wars started in 2013 when Uber was paying their ambassadors $750 for converting drivers from Lyft to the Uber service (Gavett, 2015).
Role of Corporate Culture
Uber is known for its lean teams comprised of business development specialists in most cities where the company operates, then aggressive marketing teams that are mandated to make as many people as possible to adopt the service. The company comes out as a technology savvy company that employs the best software developers and engineers, providing better than market rate salaries and creating a good working environment. The CEO usually appears in the media in boy shirts, jeans, and T-shirts. The easy way in which the company is run appeals to young people who are not excited by the traditional workplace, and drivers who want as minimal interaction with their customers as possible. Thus, Uber's corporate culture helps in expanding its business in many cities, and creating a strong brand (Armstrong and Kotler, 2010).
Marketing Mix
Uber's marketing mix is insistent on price and promotion because the company targets to make people aware of its price advantage and bonus payments. In concentrating on price and advertising, the company passes the messages of the product and its availability with a touch of a button, or place. Hence, it can be said that promotion of its services is the most fundamental aspect of Uber's marketing, as it has spent billions of money on this cost item. Normally, the application is superb and easy to use, even for someone without excellent understanding if information technology.
SWOT Analysis
Uber has an upper hand in the market, especially outside the United States. In countries like India and South Africa, Uber only competes with traditional taxi service companies that do not offer an adequate threat to the pricing and quality of the product. Other strengths for Uber include its financial backing (recently it received $3.7 billion from Saudi Arabia billionaires) and exciting marketing campaigns. Weaknesses of Uber are usually exploited in America where the main competitor, Lyft, has been spending millions of dollars on expansion, at a time when Uber does not plan to spend on bonuses and advertising in America, as it had planned to be making profits by now. Opportunities still exist in thousands of cities in the world, though the company faces the threat of losing already captured markets while pursuing new ones.
References
Armstrong, G., & Kotler, P. (2010). Marketing: An Introduction (with MyMarketingLab and Pearson Etext Student access code card). Harlow: Pearson Education (US).
Gavett, G. (2015, March 30). Spy novel or start-up? Retrieved June 5, 2016, from https://hbr.org/2014/08/spy-novel-or-start-up
Knight, S. (2016, April 27). How Uber conquered London | Sam Knight. The Guardian. Retrieved from https://www.theguardian.com/technology/2016/apr/27/how-uber-conquered-london
McAlone, N. (2016, April 14). Uber says it’s “profitable” in the US — here’s how much it makes per ride. Retrieved June 5, 2016, from Business Insider, http://www.businessinsider.com/uber-says-its-profitable-in-the-us-2016-4
Newcomer, E. (2016, April 14). Lyft is gaining on Uber as it spends big for growth. Retrieved from http://www.bloomberg.com/news/articles/2016-04-14/lyft-is-gaining-on-uber-as-it-spends-big-for-growth
Newcomer, E., & Zaleski, O. (2016, May 31). Inside Uber's auto-lease machine, where almost anyone can get a car. Retrieved from http://www.bloomberg.com/news/articles/2016-05-31/inside-uber-s-auto-lease-machine-where-almost-anyone-can-get-a-car
