Executive Summary
The marketing mix of Uber in the UAE market is based on the combination of marketing strategies that focus on product, promotion, place, and price. The approach to product is characterized by high quality and a wide variety of services. The price strategy, however, does not involve cost leadership, but the pricing is understandable to the customer. Uber is not currently present across the whole country, limiting its service only to Abu Dhabi and Dubai.
Promotion strategies are based on targeting separate segmented populations utilizing different media channels. Although the overall assessment of Uber’s marketing strategy in UAE proves that it has been successful, several recommendations would help to maintain and improve the brand’s position. It is suggested to sustain the experiential marketing approach along with the development of a discount system and reaching other cities of the country.
Introduction
People in UAE cities are highly dependent on transportation due to the peculiarities of the urban environment, which includes wide highways, extensive metropolitan areas, and limited pedestrian infrastructure. Such cities as Abu Dhabi have complex public transport systems, including metro, tram, bus, and ferry services. Still, the majority of the local and visiting population prefers various methods of car travel such as a private or rented car, taxi, or car-sharing, which are also highly accessible due to low fuel costs. After coming to such an environment in UAE, Uber services quickly became popular successfully competing with a range of other companies.
Such advancements can be explained with a variety of marketing strategies. Baker (2016) defines two main elements of a brand’s success – the decision where to compete (target market choice) and the design of a corresponding marketing mix. The latter was first proposed by McCarthy and included four essential components (4 ‘Ps’): product, promotion, place, and price (Baker, 2016). The success of Uber in the UAE market is determined by effective marketing actions regarding each of the scopes with an emphasis on product quality and variety.
Body of Proposal
Uber Marketing Mix in the UAE
Product
Uber offers a variety of services under a single brand name that is mostly based on connecting customers and drivers via the mobile app. The services include ride-hailing, food delivery, car sharing, and carpooling. These services can be customized according to customer’s demand (ranging from UberX to UberBLACK) covering the groups of populations with different incomes. UberCHOPPER is a service available in Dubai that offers a helicopter ride over the city.
Uber emphasizes the importance of quality of its services, which is achieved through strict requirements to drivers and their vehicles, a serious approach to training, and customer-friendly policies. Besides offering services of high quality, Uber uses a variety of features that make the product more attractive to customers, such as real-time details, scheduled rides, and split fares. The design of the apps is developed to enhance practicality. Such features as location determination, one-click payment, and real-time map make the app more user-friendly.
Place
Since entering the UAE market, Uber has been providing its services in the two largest cities of the country – Dubai and Abu Dhabi. Although these places offer the largest concentrations of people, including locals and foreigners, the coverage is the aspect in which Uber was losing to its major competitor Careem until the purchase of the latter. Uber is accessible through many channels, with the mobile app being the most popular and widely used.
Moreover, the company offers an application called Uber Lite that functions in the areas with low connectivity or when a customer has a limited storage memory on the phone. As Dubai is the city with a significant amount of foreign tourists and business visitors, Uber focuses on this population group to the maximum extent. That is why Uber has a specific location at Dubai International Airport, where the drivers can park, thus reducing waiting times.
Price
Although some of Uber products are unique, prices for ride-hailing can be compared with the traditional local taxi. Interestingly, taxi services in the UAE generally have lower tariffs, despite being less popular. Several factors allow Uber to put higher prices and still compete successfully in the UAE market. First of all, foreigners are already familiar with the brand, which increases their reliance on it. Secondly, the price for a particular ride is fixed right after the booking, and traffic jams cannot influence it, which is a critical factor both in Dubai and Abu Dhabi. Moreover, while launching in the country, Uber introduced a price penetration strategy, artificially lowering prices to attract new customers. It should be noted that Uber uses the system of surge pricing when tariffs vary according to the demand.
Promotion
Uber promotes its products through various media channels in the UAE. Although traditional media advertising is present in the company’s strategy, the majority of it is spread throughout various social media platforms and in-app advertisement targeting more specific audiences. Some percentage of rides are distributed through sales promotions that motivate competitors’ customers to switch to Uber. Another feature of Uber promotion is the use of branded cars, which increases brand recognition and awareness.
Uber Marketing Strategies in the UAE
Marketing strategy is a crucial aspect of business success in the free market, which can be described as a game plan for winning customers. Wensley (2016) summarizes the concept of marketing strategy as the set of actions designed to “recognize and achieve an economic advantage that endures” (p. 75). The approach of a particular business is reflected in the marketing mix of a brand, and the emphasis on its specific components.
The three strategies
The theory about the three marketing strategies categorizes the approaches businesses use to achieve a competitive advantage. Wesley (2016) presents Porter’s classification of strategies that include cost leadership, focus leadership, and differentiation leadership. Interestingly, Porter assumed that only one of the three approaches could be used by one company, but modern scholars argue the possibility of utilizing hybrid strategies (Wensley, 2016). Cost leadership implies providing the services at lower prices than the competitors do and thus, winning the advantage. Differentiation is based on the development of a complex system of products and services that aim at reaching maximum coverage. On the contrary, the focus strategy emphasizes the importance of accessing niche customers.
The case of Uber in UAE, as well as in the global market, cannot be described by the focus strategy, as the company strives to maximize coverage. Contrariwise, the variety of products, features, and price ranges proves that the company bases its marketing strategy on the principle of differentiation. Uber combines this strategy with cost leadership in many countries where traditional taxi services are more expensive, but the UAE market is an exception.
STP in marketing strategy
Another approach to marketing theory suggests that segmentation, targeting, and positioning (so-called STP) are the key elements of competition. According to Schlegelmilch (2018), segmentation of the market is the initial step of the strategy that implies the division of a population into narrowly targeted groups based on their geography, income, age, or lifestyle. Segmentation is an essential part of the differentiation strategy for Uber as it helps to develop various features to target different groups of consumers.
This approach is also used in the promotion process as these customer groups are accessed via different channels. The positioning of Uber in UAE creates a defined image of a brand that meets the various needs of customers. The key strengths identified by the company are variability, comfort, and mobility.
Experiential marketing strategy
The discussed above theories explain the main approaches to winning consumers in the market, but retaining existing customers helps to save costs on promotion. Experiential marketing, according to Zhang and Xu (2018), is “a successful business model where experience is everything and innovators… are sparing no effort to make customer experience as a company long-term competitive advantage” (p. 888).
Such an approach is the key to getting a stable source of profit, so it became a recent trend, especially in a shared economy. The planning is based on the psychology of consumers aimed at pleasing their needs and providing a pleasant personal experience. Such an approach requires continuous research of customers’ shifting preferences, which became possible with modern technologies that gather the various types of data on consumer behavior.
Such a strategy emphasizes product as the most essential of four ‘Ps’. Place, price, and promotion help to attract the customers, but products and services that provide pleasant experience make them stay. To retain customers, Uber has developed a service that is comfortable, easy, and understandable in use. Moreover, the company controls the quality of the services provided by the drivers by strict selection standards and complex training. Another feature that has become popular in a shared economy is online feedback that establishes contact with customers, helps to learn about their preferences, and motivates drivers to keep the proper level of service quality.
Assessment and Recommendations for Uber Marketing Mix in the UAE
In general, the marketing strategy of Uber in the UAE market relies on providing a wide variety of services for people from different income groups. Despite higher prices than offered by traditional taxis, people tend to choose Uber for its user-friendly features and high quality. As a representative of a shared economy, Uber focuses on the experiential marketing strategy that helps to keep customers. Morgan, Whitler, Feng, and Chari (2018) emphasize the role of “customer centricity and engagement” as a key trend in modern marketing (p. 4). That is why the recommendations for Uber include focusing on this approach.
Product
Product variety and quality is the most developed aspect of Uber marketing strategy that can be explained by the emphasis on consumer experience. The range of products in Abu Dhabi and Dubai includes such services as UberCHOPPER or UberOne, which are rare in many other places. The key recommendation for the brand is to continue to study consumers’ demand in order to introduce new services on time. The most effective approach to such research is the use of digital technologies that help to collect and analyze data on consumer behaviors and preferences on various platforms, such as Google search or social media.
Place
The coverage of Uber services in UAE is limited to Abu Dhabi and Dubai, although such large cities as Al Ain or Ajman have a significant demand for such services. It should be mentioned that in those cities where Uber operates, the accessibility to the services is its considerable competitive advantage. The need for rides is generally satisfied with short waiting times and the specific Uber spots like the one at Dubai International Airport. It is recommended to add more locations across the country to increase coverage and brand awareness. However, with the latest purchase of its competitor Careem, it may be unlikely that Uber will reach those markets.
Price
Although Uber used a price penetration strategy to enter the UAE market, cost leadership is not fundamental to the company’s marketing strategy. Uber uses a variety of payment methods, including cash, which is popular in this region, to give the customers maximum flexibility. The services also offer the opportunity to split the fare or provide tips to the driver. Although there is the VIP status that is assigned to loyal customers who take ten or more rides a month, not everyone knows about it. Promotion focused on the benefits and discounts available in this status would motivate people to take more trips to reach it.
Promotion
The promotion strategy of Uber is based on modern trends such as digital marketing technologies, search engine optimization, and blogging. It is recommended to continue working with influencers who create content that targets their audience. In addition to experiential strategy, customers can be attracted to make return purchases through sales promotions, notifications with updates, and news. The emphasis on cooperation with large businesses that would use Uber for their commercial purposes would provide a stable and loyal customer group.
Summary and Conclusion
Unlike in many countries, Uber faced significant competition after entering the UAE market. However, the company’s marketing strategy oriented on product quality and variety proved to be successful and gave a competitive advantage. Experiential marketing helps to retain loyal customers along with acquiring the new ones. Differentiation strategy and proper market segmentation allow Uber to compete with companies that offer lower prices. When assisted with digital marketing techniques and social media presence, Uber maximizes its reach to customers in the UAE.
References
Baker, M. J. (2016). The marketing mix. In M. J. Baker & S. Hart (Eds.), The marketing book (pp. 247-259). London, UK: Routledge.
Morgan, N. A., Whitler, K. A., Feng, H., & Chari, S. (2018). Research in marketing strategy. Journal of the Academy of Marketing Science, 47(1), 4-29. Web.
Schlegelmilch, B. B. (2018). Global marketing strategy An executive digest. Cham, Switzerland: Springer International Publishing.
Wensley, R. (2016). The basics of marketing strategy. In M. J. Baker & S. Hart (Eds.), The marketing book (pp. 75-107). London, UK: Routledge.
Zhang, H., & Xu, J. (2018). Research on design strategy of experience marketing in shared economy. 2018 IEEE International Conference on Applied System Invention (ICASI), 888-891. Web.