The marketing plan for Uber was wildly successful despite the obvious challenge of launching a service in over 100 countries that directly disrupted the powerful taxi industry. The market size for Uber is enormous, since it is literally any area where passenger ride services are needed, and there is an available labor supply of drivers. By literally taking over existing taxi markets by streamlining the process for both drivers and passengers, the company has quickly risen to be one of the largest in the world, valued at $40 billion (Rogers, 2015).
Uber has two levels, in terms of the product and the customer, because the target market is both drivers and passengers. The value proposition for customers is simple: a ride, much like a taxi, that is easier to hail, easier to track, easier to pay for and less expensive (Chen and Sheldon, 2016). For drivers it is the promise of work, when they want to work, on mostly their own terms. Unlike the regulated taxi market, becoming an Uber driver is easy.
The macro-environment was a challenge for the senior leadership of Uber, particular sine they had a policy of launching the service first, and seeking regulatory permission later (Rogers, 2015). There was also substantial opposition to the service from taxi drivers, who organized many protests (Barro, 2014).
The opportunity is to continue aggressively entering new markets, including markets that are just modernizing or developing. The threat is the ease with which the model is copied on the small, regional scale now that Uber has opened the market to deregulated passenger services.
The product is typically described as a ride from pick up to destination, although there are many variations on this. For example, Uber Pool provides for sharing with others, and price savings. The product itself is not the passenger ride services, but the marketing and information management platform which matches passengers to drivers. The customer pays Uber directly using digital currency (either a linked debit or credit card, PayPal or similar services), and a proportion goes to Uber and a proportion goes to the driver. The driver is not an employee of Uber, but rather a private contractor who uses the application. To that end, both the drivers and the passengers represent the customer.
The pricing strategy much balance the needs of Uber’s two kinds of customers- passengers and drivers. To that end, there are features built right into the application that implements basic ideas from economics. When demand is high, for example, there is surge pricing, which can be two, three and even four times the regular pricing (Chen and Sheldon, 2016). This helps to ensure that enough drivers have an incentive when demand is unusually high for events or due to weather (Chen and Sheldon, 2016).
The company hardly seems to need any recommendations, given the rapid growth resulting in a global market leadership that has disrupted and permanently damaged the regulated taxi industry (Cramer. and Krueger, 2016). Take for example the New York City market for taxi medallions, which under the regulated industry were worth over a million dollars and assured cab drivers of retirement (Barro, 2014). Now, because of Uber and similar services, they are worth less than $35,000 due to fallen demand (Barro, 2014). This was no small feat. There have been several backlash movements against Uber, with allegations that include assault, steps management (Rogers, 2015). The company has adopted many positions that illustrate a commitment to corporate social responsibility, including participation in food drives and immunizations drives. Despite this, it only takes one bad incident with considerable publicity to undo the good will that these sort of programs need to bring. Uber needs what amounts to an attitude change. Being as big as it is today it is no longer an underdog taking out the powerful regulated taxi industry. If people turn their backs on Uber because they perceive it to be uncaring in response to the needs of customers, then Uber will be known as the company who created the new business model, but was ultimately displaced from the market with a fall that was just as rapid as its rise.
Uber has proven to be a giant and the leader in multinational passenger services by launching its information management platform that matches drivers and riders. The aggressive marketing plan, combined with the value proposition, resulted in rapid adoption and growth in sales.
- Barro, J., 2014. Under pressure from Uber, taxi medallion prices are plummeting. The New York Times.
- Chen, M.K. and Sheldon, M., 2016, July. Dynamic Pricing in a Labor Market: Surge Pricing and Flexible Work on the Uber Platform. In EC (p. 455).
- Cramer, J. and Krueger, A.B., 2016. Disruptive change in the taxi business: The case of Uber. American Economic Review, 106(5), pp.177-82.
- Rogers, B., 2015. The social costs of Uber. U. Chi. L. Rev. Dialogue, 82, p.85.