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The three pillars of an economy are the agricultural sector, the industrial sector and the tertiary sector or the services sector. Earlier, the supporting sectors were the agricultural sector and the manufacturing sector. But later the economy has evolved over time and the life of the people have exponentially evolved and their requirement have expanded from mere food, clothing and shelter. The requirement basket has increased and more importance is being emphasized on areas such as safety, assurances and luxury. To accommodate and align these requirements with the increasing needs of the customer, services sector plays in fulfilling the needs of the people. (Kotler 2015).
Marketing services is basically understanding the superficial and actual needs of the customer and providing them with required services. In return the customer is satisfied and pays the provider with nominal remuneration. Biggest contributors in the service industry are hotels and hospitality, education, transportation and insurance. These are the basic service requirements of any human being and are the pulling force of the services sector. (Wirtz and Lovelock 2016).
The chosen company undertaken for study is the Uber and the chosen product is Uber Pool. The next section will provide the background of the company focusing on the prerequisites and functioning.
The official name of the Company is Uber Technologies formerly known as Uber Cabs. It is a public limited company trading in the New York Stock Exchange operating in the transportation industry. The company was founded by Garrett Camp and Travis Kalanick in March, 2009. The headquarters of the company are located in San Francisco, California, United States of America. It is operating its business in more than sixty countries and more than seven hundred and fifty metropolitan cities (Cohen et al., 2016). The current chairman of the company is Ronald Sugar, the chief executive officer of the company is Dara Khosrowshahi and the chief financial officer of the company is Nelson Chai (Cramer and Krueger 2016). The unique selling proposition of the Company is Transportation Services provided through mobile application and website. Moreover, it also provides Food delivery services that functions in the same model as the transportation service. It follows an interconnected network model where the cabs and motor cycles are connected by a complex and dynamic algorithm which is displayed through the mobile application and website to the customer (Angrist, Caldwell and Hall 2017).
The customer needs to log in with email account and personal phone number to create a virtual account with the company so that the company can track the functions and operations performed by the user. The user needs to provide the address of both the pick up location and the drop location through the mobile application. Then the price of the trip is displayed to the user. If the price is affordable by the user then he or she books the ride. On the other side the information of the user is sent to various driers depending on several parameters such as nearness to the location, availability of the driver (Berger, Chen and Frey 2018), and service rating if the driver and so on. Then the driver accepts the booking and goes to the pick up location of the user. On the other hand, the user gets various types of transportation services which differs by price. Moreover, tenure booking is also available based on time and total distance to be covered by the user.
The chosen service marketing theory taken under consideration is Ansoff Growth Matrix for Uber Pool Services. The elements of the Ansoff Growth matrix are Market penetration, market development, Product Development and Diversification (Hussain et al. 2013). The figure is given below. With the help of Ansoff growth Matrix an organization analyses its potential by segmenting the existing servuces in four main segments. There are two main parameters: Product and Market. The axis is measures existing and new on both sides of the axes. The four elements of the model are Market Penetration, Market Development, Product Development and Diversification. The description of the elements in the model arew as follows:
1. Market Penetration: The first element of the model is the Market Penetration, where both the product and the market exists from before. Here the product is already existent and new strategies are to be developed to expand the customer base in the market. Market capturing techniques such as the loyalty scheme has to be introduced to retain the old customers and attract new customers. Other schemes include decreasing the prices of the products, increasing the levels of advertisement, promotion and distribution channel. To overtake the market directly acquiring competitors is also a viable option.
Uber Pool entered the market at a very low rate to attract more customers who cannot afford or interested in paying a larger amount for the other services. The pricing can be termed as penetration pricing. This product is a direct competition to public transport.
2. Product Development: This is the second element of the Ansoff Matrix, where the product is new in the existing market. The relative market risk is low. In this particular strategy, in-depth research and development is required to cater to the needs of the customer of the existing market. Acquisition of a product manufactured by a competition firm for developing a new product for the purpose of catering the extended needs of the market. Strategic partnership is also a viable option in this element to extend the distribution channel and extend market capitalization (Wirtz and Tang 2016).
As a part of the product development Uber Pool earlier did not perform ride tracking and safety precautions (Yin 2016). The development part consists of sharing basic information about the co passengers, ride tracking and safety alert system.
3. Market Development: Market development is the third element of the Ansoff matrix where the product is new in the market and there exists competing brands that are catering to the needs of the customer (Dudley, Banister and Schwanen 2017). The strategies that can be undertaken in the element is firstly, is the cater the dynamic needs of the requirements and needs of the people. Secondly, a new and unexplored market where the reach of the product was limited earlier has to be penetrated. Another good strategy is to extend the reach of the product beyond the domicile of the country (Dawes 2018).
As a part of Market Development, Uber Pool was launched initially in San Francisco and then slowly spread to the rest of the world. Countries like India and Brazil where the per capita income of the overall population is relatively less, the service has gained huge success.
4. Diversification: The last element of the Ansoff Matrix is diversification where both the product and the market is new. On a relative scale this is the riskiest of all the elements. The diversification is mainly of two types. Related diversification is a case where the potential synergy is established between the old business and t6he relatively newer product. The second strategy under the element is the Unrelated Diversification where there exists no potential synergies in the market and there is no direct link between the business and the product (Hall, Kendrick and Nosko 2015).
As a part of Diversification, the service have expanded and entered into food delivery business. The name of the extended service is Uber Eats.
From the above study we can conclude that service marketing is a huge contributor in this sector. The chosen company i.e. Uber is a strong player in the app cab business in the market. The comoany6 understood the need of the people and entered the market at the right time. With the combination of strong internet and smart phone technology the system of provision of services has become easier both for the company and the users of the service. Moreover, the service marketing theory which has been applied to the company is the 8P’s of service marketing. From the study we can infer that each element is equally important for the company and act as a bi8nding tool for conducting daily operations. This is because the high level of technology linked with the operation needs proper functioning of each elements at the same time.
Angrist, J.D., Caldwell, S. and Hall, J.V., 2017. Uber vs. taxi: A driver’s eye view (No. w23891). National Bureau of Economic Research.
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.
Dawes, J., 2018. The Ansoff Matrix: A Legendary Tool, But with Two Logical Problems. But with Two Logical Problems (February 27, 2018).
Dudley, G., Banister, D. and Schwanen, T., 2017. The rise of Uber and regulating the disruptive innovator. The political quarterly, 88(3), pp.492-499.
Firtz, J. and Tang, C., 2016. Uber: Competing as market leader in the US versus being a distant second in China. In SERVICES MARKETING: People Technology Strategy (pp. 626-632).
Hall, J., Kendrick, C. and Nosko, C., 2015. The effects of Uber’s surge pricing: A case study. The University of Chicago Booth School of Business.
Hussain, S., Khattak, J., Rizwan, A. and Latif, M.A., 2013. ANSOFF matrix, environment, and growth-an interactive triangle. Management and Administrative Sciences Review, 2(2), pp.196-206.
Kotler, P., Burton, S., Deans, K., Brown, L. and Armstrong, G., 2015. Marketing. Pearson Higher Education AU.
Lusch, R.F. and Vargo, S.L., 2014. The service-dominant logic of marketing: Dialog, debate, and directions. Routledge.
Wirtz, J., & Lovelock, C. (2016). Services marketing. World Scientific Publishing Company.
Yin, N., 2016. Application of AHP-Ansoff matrix analysis in business diversification: The case of Evergrande Group. In MATEC Web of Conferences (Vol. 44, p. 01006). EDP Sciences.
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