Executive Summary
Uber Technologies Inc has come up with a unique business model in the transport sector that enables its users to access rental cars and taxis using mobile applications. This technological invention has enabled it to expand its products to all parts of the United States. As it seeks to expand its operations to the international market, this firm should be ready to overcome global market challenges.
Product Description
Uber Technologies Inc offers unique services in the transport industry. It has come up with a mobile application that allows users to request transport services using their smartphones. According to Mason and Reyes (2015), the business concept developed by Uber is exceptional. Car rental services have been in existence for a very long time. It is one of the oldest industries in the transport sector. People always know where to get a taxi whenever they need it. Some people even have specific phone numbers for taxi drivers so they can easily make a call whenever they need these services. However, Uber noticed that international visitors had problems accessing the taxis. This new app was meant to solve this problem. These visitors, and even the locals, can now locate rental cars that are nearest to them and request for the services in an online platform.
The new feature in this service is that clients do not have to look for the taxis physically, as was the case before. The new app allows them to identify cars that are available for hire and are conveniently located near them. They can also know the car models and the fee needed to hire them. For instance, one may need to hire a Mercedes Benz because of personal reasons. In the traditional model of this industry, this would be a great challenge. However, this firm has made it possible. Uber services satisfied the needs of people who want to rent cars in various parts of the United States. The model was originally designed to meet the needs of travelers who lack information about the right places to get cars they needed. However, the product became very popular among the local Americans, especially because it offers its clients a variety of products.
The product is suitable for people of different ages, gender, social status, or any other demographical groups. However, the most appropriate market segment for this product is the youths and young adults. The largest groups of people who use smartphones are youths and young adults, hence they were chosen as the appropriate target market. In terms of sales revenue and population, the target market is very large, especially if the firm expands its operations to the international market. Geographically, the target customers are found all over the country. The main advantage of this market segment is its psychographic and behavioral patterns when making purchasing decisions. Most of them are impulse buyers.
External Analysis
The macro-analysis of the service’s industry can be done by looking at factors such as the economy of the country that defines the purchasing power of the clients, emerging trends in the industry, among others. The United States has enjoyed economic stability since the end of 2008/2009 economic recession. This means that the purchasing power of the target audience is relatively high. The new trends where many people prefer hiring cars may also be considered favorable to this firm (Hall, 2006). The improved security is also very critical for the progress of this firm. The micro-analysis of the industry can be conducted using Porter’s Five Forces Model.
Bargaining power of suppliers
The bargaining power of suppliers is a major factor that may affect ability of this firm to achieve success. When suppliers have a stronger bargaining power, then they can set unfavorable terms for this firm. Uber relies on car hire companies as its main suppliers. It has developed a close relationship with these car hire companies to ensure that its clients’ needs are met. This close relationship with suppliers has enabled it to dictate most of the terms of trade between it and the companies offering the cars.
Bargaining power of the customers
According to Doole and Lowe (2008), bargaining power of the customers is another major factor that may affect competitiveness of a firm in the market. If the clients have a stronger bargaining power, then they can always ensure that they dictate terms of trade that is only favorable to them. Uber has not faced this challenge in the market. It has developed an effective business model where consumers have everything they need but little power to dictate the price. A client can get any car he wants through this app at the desired location, but their choices come with unique prices. It means that the bargaining power remains with the firm.
Threat of new entrants
The threat of new entrants may affect a firm’s ability to excel in the market. For Uber, this threat is real. Its business model is unique and it came at the right time. That is why the firm has been very successful since it came to the market. At the time the firm launched its services, there were no firms offering the same products in the market. However, new entrants have come to the market posing serious challenge to this firm. The biggest problem that this firm faces is that its business model is so easy to emulate. Firms have emulated the model in various parts of the world. This has eliminated the uniqueness of the business model. This firm is relying on the strength of its brand to manage the threat posed by new entrants.
Threat of substitutes
According to Gondek (2011), many firms are currently faced with the threat of substitute in various industries. The closer the substitutes are to the services of a given company, the greater the risk of stiff market competition. The service offered by Uber can be substituted by the traditional taxi services that many people are used to all over the world. Instead of using the app, one can easily walk down the street and pick a taxi without any stress. The threat of substitute is greater among the elderly who may not understand how to use the app. Moreover, they do not trust services offered in the online platforms. Targeting this market segment may offer this product prospect of growth in the market.
Industry’s level of competitive rivalry
Frisman (2014) says that the level of industry’s competitive rivalry is another factor of concern that a firm must consider when analyzing the market. Uber has identified a unique market niche within the transport sector. Instead of using the traditional models that people have been using in the past, it has come up with a new model that uses modern technology. However, the easy with which other market rivals can enter this niche has increased the level of competition in the market. In various parts of the world, businesspeople are now emulating the business model that was developed by Uber. Even in the United States, this firm faces stiff market competition from firms such as Lyft and Sidecar. The major strength of these two firms is that they have relatively large fleet of cars. However, their brand name is weaker than that of Uber.
Internal Analysis
Uber is currently expanding to other countries outside the United States. Conducting an internal analysis of the firm will make it possible to understand its ability to achieve success in the global market. Of interest will be the strengths and weaknesses of the brand and services it offers. The strength of this brand lies in its originality. According to Hill (2015), many Americans prefer brands considered to be original. They tend to believe that imitations cannot offer the same value and experience as the original products. This means that compared to other brands that have recently come to the market, Uber has a huge base of loyal customers who believe in its products. The brand is also known in the international markets. It means that international travelers who come to the United States on a tour or for any reason are likely to use this product.
The main weakness of the brand is that it is almost impossible to create unique experience for its clients that differ from that of competitors. The business model itself was unique, but once it has been imitated, it becomes almost impossible to come up with additional services that the firm can offer its clients. It may force the firm to become more innovative and find alternative means of delivering superior value or additional services to its clients. Another major weakness of this brand is its inability to attract the elderly. According to Grünewälder (2008), the number of elderly people in the United States is on the rise, and any successful firm should not ignore this segment. This brand should be redefined, including the services it offers, to enable it become more attractive to the elderly.
Marketing Mix Recommendations
Uber is very successful because of the business model it developed in the transport sector. Analysis of its marketing mix clearly shows that it is performing well in terms of the product and pricing elements. The product, although widely imitated, offers unique services to its customers. The popularity of this brand is a confirmation that its products meet the market expectations. The pricing has not been a major issue of concern based on the business model of this firm (Ferrell & Hartline, 2014). The place element is excellent because its products are always available to the clients at the places where they are needed. Clients do not have to travel far to have access to the services offered by the firm. The firm has performed fairly well in terms of promoting its brand and products in the international market. Uber has been very active in social media marketing as it seeks to promote its popularity among the target group. It has specifically been using Facebook, YouTube and Twitter to reach out to its clients. The management should consider the following marketing mix recommendations.
- Youths love trendy products. For this reason, the management of this firm should position the product as the latest fashion.
- The firm should rely on both social and mass media in its promotional campaigns to reach out to a larger audience.
- Promotional campaigns should emphasize on the superiority of the firm’s brand. It should emphasize on the originality of the business concept and the need for the clients to stick to this brand.
- The firm should reinvent its product to offer additional value to the clients. This will make it to be seen as a unique brand in the market.
References
Doole, I., & Lowe, R. (2008). International marketing strategy: Analysis, development and implementation. London: Cengage Learning.
Ferrell, O. C., & Hartline, M. D. (2014). Marketing strategy. Mason: South-Western Cengage Learning.
Frisman, P. (2014). Uber’s on-demand car service. Hoboken: John Wiley & Sons Publishers.
Gondek, C. (2011). The product Ford Fiesta: A Marketing Analysis – Part I & Part II. München: GRIN Verlag GmbH.
Grünewälder, A. (2008). Analysis of Nokia’s Corporate, business, and marketing strategies. München: GRIN Verlag GmbH.
Hall, L. D. (2006). Brands and their companies: Consumer products and their manufacturers with addresses and phone numbers. Farmington Hills: Thomson Gale.
Hill, S. (2015). Raw deal: How the “Uber economy” and runaway capitalism are screwing American workers. New York: St. Martin’s Press.
Mason, H., & Reyes, M. I. (2015). Trend-driven innovation. Hoboken: John Wiley & Sons Publishers.