Uber vs Yellow Cab - Difference in Marketing Strategy and Competitiveness - Case Study Example

Uber vs Yellow Cab Name Institution Course Date Uber vs Yellow Cab Introduction Australia is flocked with many taxi service providers which have increased the competition between them. The taxi service market have revolutionized with the introduction of smartphone-based app that has connected the drivers and the riders (Hill, 2015). This has reduced the need for burdensome laws and regulations. In Australia, there has been a growth in the use of smartphone apps for hiring taxis which has led to the growth of the industry. Some taxi service providers in Australia that utilize this technology include Ingogo, Uber and goCatch. Nevertheless, some companies in the industry still use the traditional means of taxi booking and have been faced with competition from app-based taxi providers. One of the app-based taxi companies operating in Australia is Uber (Karun, 2015). Uber has grown considerably fast over the years and has turned out to be a huge threat to traditional taxi companies. For instance, Black and White Taxis, Swan Taxis and Silver Service to name a few are among the most affected by Uber revolution in Australia. There are many factors that lead to the success of a taxi company. There are a number of lessons that Uber competitors should learn from the company in order to have a sustainable competitive advantage (Hill, 2015). This paper will highlight the business and marketing strategy used by Uber that has led to its fast growth.in addition, the report will highlight the strategies used by Yellow Cab Taxi company operating in Australia and will compare its operations with those of Uber. It will detail out the changes that Yellow cab can undertake in order to gain a competitive edge over Uber Taxi service (Karun, 2015). Yellow Cab Taxis Yellow Cab Company started its operation in Chicago in 1914 as a manufacturer of taxicabs (Johnson, 2006). In 1925, the company became a public holding company in the United States. In 1929, Yellow Cab Company sold its manufacturing operations in order to concentrate on car hire. In 1996, the company became a taxicab operator (Leonard, 2006). The company then split into different companies distributed across the globe that bears the Yellow Cab Name. Yellow Cab Company Australia is located in Melbourne, Queensland, Perth and Tasmania. The major competitor of the company is Uber that has introduced new technology in the taxi service industry. The Yellow Cab Company has grown to be one of the largest taxi service providers in Brisbane (Smith, 2009). The company represents the first taxi company to introduce computerized dispatch to taxis. The computerised data dispatch was meant to increase the effectiveness and offer an efficient and safer taxi service (Johnson, 2006). These systems have been installed in more than 580 taxis. In contrast to Uber Technologies Inc. Yellow Cab does not utilize the smartphone App for its taxi services. It is based on the old taxi strategy that involves calling for taxi when need be (Castle, 2015). Unlike Uber, the company own a fleet of taxi that are controlled and coordinate d by the company which ensures safety and security for the customers. Yellow Cab Marketing Mix In comparison with the Uber marketing mix, Yellow Cab Company has a weak marketing strategy which requires some modifications. Product In terms of product, Yellow Cab offers taxi services that can be accessed by booking and reservation (Thoebald, 2016). This has proven to be disadvantageous since it might take a lot of time for a driver to reach the customer’s location. The amount of services offered by the company is limited unlike that of Uber (Price, 2014). However, the company is in the process of developing and implementing its own smartphone application services in order to revolutionize and acquire a competitive edge. Distribution Yellow Cab operates in more than 20 cities. Internationalization strategy for Yellow Cab is not as advanced as that of Uber Technologists Inc (Johnson, 2006). In order for a customer to access the services of Yellow Cab, they can book a ride through the phone or online. Pricing Yellow Cab Company is said to be utilizing a pricing strategy based on the distant travelled by their taxis (Johnson, 2006). It is argued that Yellow Cab Company offers affordable services to the customers as compared to taxi companies utilizing technology such as Uber and Lyft. Yellow Cab is unlikely to increase their taxi charges even when the demand is high (Price, 2014). The pricing strategy of the company is considered constant and considerable. Promotion Yellow Cab has heavily invested in marketing and promotional activities. For instance, yellow cab uses the social media platforms such as facebook and twitter to reach its customers (Price, 2014). In addition, the company also uses television advertisement and radio to expand their market. The Yellow Cab Company’s marketing emphasizes the company’s history of service and the jurisdiction controlling the cab industry. Uber Technologies Inc. Uber Technologies Inc. is a tech service provider that offer ride sharing services by enabling connection between drivers and riders by using an App (Karun, 2015). The company has grown and expanded in a short time and its now operating in more than 58 countries. Uber Technologies is valued at $41 billion (Karun, 2015). As a result of its cheaper prices for its services, it has gained a competitive edge over the competitors. Uber has experienced success and has expanded its operations internationally. In 2009, Garrett Camp designed an application that was aimed at connecting drivers and riders. The company started as a privately owned company that utilized a mobile-App that enables the customers to access taxi services (Reed, 2015). The growth of the company can be attributed to the liking of the app by the customers as a result of its convenience and ease of use (Reed, 2015). Uber Technologies Inc does not own a fleet of taxies but rather, every driver suppliers his personal vehicle, insurance and maintenance (Castle, 2015). As a result of the increased demand for Uber service, Uber has the potential of achieving an estimation of $ 10 billion in revenue this year. Uber has established its presence in Australia in cities such as Queensland, Victoria, and Western Australia. Uber has upgraded its navigation services by partnering with Google and Apple which has improved its navigation and location technologies (Uber 2014). Uber’s Marketing Strategy Like most companies operating in this challenging and complex business environment, Uber is expected to understand its target market and develop an effective marketing mix that will lead to its success (Delo, 2014). Owing to its technology and innovation, the company has few constraints compared to other traditional taxi companies, although it has been faced with a number of regulatory obstacles and public resistance. Uber Technologies Inc. utilizes the smartphone technology of the customers and connects them to drivers with vehicles acting as a cab (Delo, 2014). This technology has provided a more effective and affordable way of purchase of service by the customers. Products Uber Technologies Inc. offer digital product to the customers. in order to access their services, customers should download Uber app on their phones (Karun, 2015). When in need of a taxi ride, they use the app to alert a nearby driver. This allows the customers to track a nearby location of a taxi which saves time. In addition, Uber also offer other services to the customers according to their preferences (Bilton, 2012). For instance, the most used service is UberX which is considered the low0budget option. UberLUX is an expensive taxi provider as a result to its luxity. Other services of Uber include UberPOP, UberFresh, UberPool and UberSUV. UberPOP is a low-cost taxi service that allows customers to share a taxi and split the costs. Uber is in the process of expanding its services (Bilton, 2012). For instance, recently, the company launched UberRush that is used to deliver packages and UberEats that delivers meals to customers. These new services have allowed the company to diversify and expand its services into new business operations (Theobald, 2016). Distribution Uber carry out its operation in about 58 countries and 250 cities (Auchard and Steitz, 2015). Uber has expanded its popularity partly as a result of the ability of its app to enable the cutomers track a nearby driver. Also, drivers utilize the app in order to locate direction. The company has about 162,000 drivers in United Sates alone. This number increases significantly every six months. In order to be successful, Uber had partnered with other organisations such as American Express, Times Internet and AmericaMovil to name a few. Strategic partnership has enabled Uber expand internationally and strengthen its brand (Auchard and Steitz, 2015). Pricing Uber often utilize its smartphone app to establish its pricing strategy. When a customer completes his ride with an Uber driver, the customer’ is charged using the credit card. Charges for speed of more than 11 miles per hour are used in regard to distance travelled (Karun, 2015). The company operation is founded upon cost leadership strategy.it offers considerably lower rates compared to taxis. OpenStreetCab nevertheless argue that Uber Company might be charging lower costs only when the fare is more than $35. In addition, Uber utilizes logarithm to determine its prices when demand is high. This means that the company uses a peak pricing strategy when the demand goes up (Auchard and Steitz, 2015). Many customers have criticised the company for charging high prices saying that its uses this strategy to price gouge the customers (Taxi Apps, 2015). There are times when the charges of Uber go up to seven times the normal prices. Through the hostage that was experienced in Sydney, Australia, Uber charged up to four times their usual charges since people were struggling to evacuate the area (Uber, 2014). Also, the company responded by requesting its hike charges since it urged the drivers to collect their passengers within the area although, clients were irritated. During this surge, the number of drivers significantly increased by almost 80 per cent (Uber, 2014). Therefore, Uber ought to resolve this different circumstances so as to develop a pricing strategy that is fair to its customers. Promotion Uber has employed quite a number of promotional activities with an attempt to get their brand known. Most at times, it utilizes buzz marketing to gain attention to its services (Uber, 2014). For instance, Uber set up an on-demand ice cream trucks within seven major cities during the National Ice Cream Month. In addition, Uber associated with General Electric so as to provide free rides to their San Francisco customers’ remindful of the movie ‘Back to the Future’ (Uber, 2014). They also utilise promotion to demonstrate their remunerations as a comparison with their rivals. For example, Uber accepted an agonistic advertising approach to its key rival, Lyft, via a Facebook ad campaign. Therefore, Uber advertising most at times stresses the efficiency, convenience as well as low costs services (Uber, 2014). Uber facing Challenges On the other hand, Uber has been faced with a number of challenges. These challenges includes; internal struggles, global matters and legal and regulatory challenges to name a few. The company has continued to face more challenges as they expand globally as various countries opt at banning Uber services (Uber, 2014). Due to these emerging challenges, Uber ought to accommodate its marketing strategy to counter both domestic challenges as well as different laws employed in other nations. To curb such internal challenges, Uber ensures that they maintain their trust with their passengers offering safe and comfortable ride. They have done this by specifically coming up with a rating system that assured trust and consistency between passengers and drivers (Uber, 2014). In addition, Uber ensures that their drivers maintain high levels of rider comfortability. This is by enabling their customers’ rate their drivers according the level of their rides. Comparison between Uber and Yellow Cab Uber services have been observed have top notch flexibility in terms of their vehicle fleet and their delivery time. This is due to their increased number of taxi services all over major cities (Ryall, 2015). On the other hand, Yellow Cab has a lower level of flexibility as compared to Uber since it still utilises old methods of delivering services and also they have few number of drivers. This leads to delayed services causing inconveniences as well as inconsistency to their customers. Therefore, for Yellow Cab to effectively compete with Uber, they need to increase the number of their drivers and also quicken their plan to introduce smartphone application services (Ryall, 2015). In addition, Uber has significantly coped with social and environmental sustainability aspects but at a lower rate. They have demonstrated this aspect by conforming to the environmental rules and regulations concerning to environmental pollution. Then again, Yellow Cab has a limited approach to social and environmental sustainability (Ryall, 2015). Therefore, for Yellow Cab to face their competition, they need to engage themselves with various social and environmental sustainability activities such as promoting charitable events and also encouraging conservation of the environment. This will enable them to promote their both their brand and their customer loyalty significantly. It is difficult for Yellow Cab to compete with application based services such as the ones Uber provides (Uber, 2014). Due to the rapid technological evolution, many people own smartphones which have the capability of accessing almost any kind of service including Uber services. This gives Uber the opportunity to be ahead of Yellow Cab. Therefore, for Yellow Cab to effectively compete with application based services provided with Uber, they ought to invest in developing an application that can enable them reach their customers with easily without any difficulties (Ryall, 2015). This will attract a huge deal of customers through their online platform. Furthermore, Uber is well known for their sweet deals and discounts as opposed to Yellow Cab (Uber, 2014). This is one of their strongholds that has enabled Uber attract as well as maintain their customers. With their frequent deals and discounts, they surpass the services offered by Yellow Cab that settle on a flat fare rate depending on their destinations. Thus, Yellow Cab should introduce discounts for their customers so as to encourage them to continuously use and prioritize their taxi services as the ideal cab service. Conclusion The emergence of the use of technology in form of smartphone-based apps in the taxi service provision has revolutionized the industry. Uber is among the companies that make use of this technology in its operation. This has led to its growth and success. In addition, many customers today prefer to use the smartphone app in looking for a driver nearby. This saves on time and is considered convenient. As a result, traditional taxi companies like the Yellow Cab Company has landed in trouble in terms of stiff competition from Uber. Innovation and technology used by Uber has yielded benefits for the company and has boosted its competitive edge. Yellow Cab Company is considered to having a weak marketing mix that should be modified in order to prevent its failure. There are some lessons that Yellow Cab Company can learn from Uber and also improve its performance. First, it should invest more on internationalization process, implement smartphone application service and take part in environmental and social sustainability. References Auchard, E and Steitz, C March 18, 2015, “German court bans Uber’s unlicensed taxi services,” Reuters. Retrieved from http://www.reuters.com/article/2015/03/18/us-uber-germany-ban-idUSKBN0ME1L820150318 Bilton, N 2012, “Disruptions: Taxi Supply and Demand, Priced by the Mile,” The New York Times. Retrieved from http://bits.blogs.nyti+mes.com/2012/01/08/disruptions-taxi-supply-and-demand-priced-by-the-mile Castle, J 2015, UberX vs Taxi-Which is the Best? Behind the Wheel. Retrieved from https://www.choice.com.au/transport/cars/general/articles/uberx-vs-taxi-which-one-is-best Delo, C 2014, “In Quest for Ride-Sharing Supremacy, Uber Takes on Lyft with Facebook Ads,” Advertising Age, Retrieved from http://adage.com/article/digital/uber-takes-lyft-facebook-attack-ads/291158/ Hill, S 2015, Raw deal : how the sharing economy and naked capitalism are screwing American workers, New York, NY: Palgrave Macmillan Trade. Johnson, S 2006, My little yellow taxi, San Diego, Calif, Red Wagon Books Harcourt, Inc. Karun, 2015, Times Internet and Uber Enter Into a Strategic Partnership, Uber Blog. Retrieved from http://blog.uber.com/times-internet Leonard, R 2006, Yellow cab, Albuquerque: University of New Mexico Press. Price, N 2014, "Hello Yellow takes the rear vision view of Melbourne’s taxi story", Herald Sun. Reed, B 2015, “Meet the brilliant app that neither Uber nor cab companies want you to know about,” BGR, Retrieved from http://bgr.com/2015/03/18/uber-vs-taxi-cost/ Ryall, J 2015, Taxi vs. Uber War Intensified in Australia after Damning Review. Mashable.com. Retrieved from http://mashable.com/2015/04/06/competition-review-australia/ Smith, H 2009, Brisbane & Queensland Australia, Edison, NJ: Hunter Publishing, Inc. Taxi Apps 2015, Indian officials drafting national rules for Uber other taxi apps, The Wall Street Journal. Retrieved from http://www.wsj.com/articles/indian-officials-drafting- national-rules-for-uber-other-taxi-apps-1428427528 Theobald, M 2016, Yellow Cab Mfg. Co., Coachbuilt.com. Uber 2014, Introducing UberXL: Our Low-Cost SUV Option. Retrieved from http://blog.uber.com/uberxlsf Read More