market mapping – beyondobvious.in

Ola and Uber: Unpacking the Ride-Hailing Crisis in India

We all were used to good comfortable rides in Ola & Uber. The convenience, safety, AC, comfort, etc. all in all it was a dream come true about 8~10 years back. Majority of customers shifted from extorting Auto-Rickshaws to these Cabs. As a cherry on top, you need not plan the trip or hold the taxi for day it was a point-to-point connectivity. This looked like and amazing Win-Win model for all, Drivers, Customers & the company. So, what has gone wrong in last 3~4 years that all the pieces of this amazing puzzle are falling apart.

Let’s deep dive to understand. For context let’s start from the very Start.

India was primarily an Auto commute economy, so majority of people used to use Auto rikshaw / Tuk Tuk as the means for last mile connectivity. For the more privileged or corporate people there was always some neighbouring travel agency, who took cab bookings. This was a very unorganised market, with lot of third-party transactions where reliability was always a problem. Then came the era of Radio Taxis (booking cabs on call centre). This was efficient but needed advance planning.

In this scenario emerged 2 companies who had a very organised structure and gave a very strong alternative to above options. Advantage they offered:

Clean Cabs with friendly driver.
You had a voice with cab and driver rating.
Point-to-Point connectivity, almost instantly.
All this at reasonable prices.

Indian consumers were elated that at last someone addressed their pain.

What was in it for Drivers:

Freedom from Job – Own business, they were now completely on their own. They could decide their daily income / time to work / take leaves whenever they needed.
Incentives and good strong income.
Respectable option to blue collar jobs and problems with those jobs. Overtime etc.

So, what was company gaining out of this:

They provided a platform to bridge the gap between customers and service providers and charged a fee for the same.

Prima Facie this looks very rosy, so where did the problems start. To know this let’s understand the business model of Ola and Uber.

Any platform needs 2 main constituents Customer and Seller. Now at the start you will have to lure both of them on your platforms. Why lure? Because there is already a system existent and you are proposing a new one, change needs a catalyst. So, these platform companies follow this broad business model:

Bait: So, to lure the customers and sellers, they throw the bait. Discounts, Incentives, high margins, etc. At this step all platform business lose cash (in financial terms this is called Cash Burn).
Network: In this step the current customers and sellers influence / aspire other customers and sellers. This is called customer acquisition strategy. At this step as well the cash burn is continuing.
Stabilising: Once there is good activity and strong customer base and sellers are added, what starts happening is old existing systems collapse and both customers and sellers rely more on this new system. You become addictive to this way and this becomes the new normal. This is the time of reduced incentives, reduced discounts, etc. but your comfort still pushes you to use this system.
Monetize: This is commercial step where the platform starts dictating the terms. Now you feel trapped but are left with no major choices as rest of the ecosystem is already dead. Now you remain stuck and platforms can now milk you for profits. They have supreme control on entire process. This is where comes Surge Pricing, all your home / office rides are costlier, odd times or odd locations pick up or drops become costlier. None of this extra income generated goes to driver (may be a small percentage) all is pocketed by platform.

Now that we understand the business model, you would have guessed what happened to Auto rikshaw and private travel agents and call cabs. They slowly died due to no business or joined the Ola Uber bandwagon. Customers shifted to Ola Uber as it was very convenient, book a cab from comfort of your home or Office and cab will be at your door steps in less than 10 Mins.

Now let’s see what went wrong in all this:

Many people under the influence of other drivers joined Ola and Uber even leaving their Jobs for extra money and independence. But once they started pushing down driver income what happened was Loans, Cabs, expenses all started creating issues for drivers & in this trouble COVID hit.
Due this autocratic behaviour of both, post COVID no major drivers joined them back.
Customers were already facing issues as now the cabs were not all clean, drivers were not all civilised, ACs were not working. Due to low income only bad cabs and bad drivers remained with Ola & Uber.
Now since Ola Uber had less drivers and for customers there was no major option demand was high – They could not focus on quality of cabs. Quality went spiralling down.
Drivers used to cancel rides / ask for cash / just did not turn up. Especially in North and South India.
This also hit the reliability of these cabs & customers started searching for alternatives. Price was still not an issue but reliability and service was becoming a pain.

In this some smart people started new ventures whether it is all electric taxis like BLU / GrEL / iNDrive etc, or some call centre kind of services like SAVAARI / Carbazar / BroomBoom etc. providing reliable and clean experience.

These above options are helpful for preplanned activities. As far as instant cab bookings are concerned the piece of convenience is still on OLA Uber side. But customers are now smart and they are picking and choosing service providers.

So, what could have these Ride Hailing platforms done better, I suppose:

This business depends on both the consumer and cab drivers. So, to sustain they should find a Win-Win solution. They need to be customer centric while having a strong eye to vehicle owners’ profitability. A transparent charging mechanism could be a great start.
As platform fees – they should charge fixed fees per trip to vehicle owners. To monetize they can go with slab wise incentive on monthly revenue generated by Cab owners.
They need to make cab drivers accountable for cancelling the rides and also take that ownership. It cant happen that you take 25~30% of the charges and 0% of accountability.
Focus should be on Cabs Quality, cleanliness, safety, driver etiquettes, availability & no cancellations. Customers need a reliable solution and this should take care of that.

So as a wrap up following seem to be primary reasons why I think Ola Uber are having a tough time:

Unreliable & Unclean cabs deteriorating the overall experience.
Autocratic behaviour and monopolistic push towards drivers.
Utter negligence to the Quality.
Transparent pricing, better quality of cars and service could turn the tables back in there favour

If you feel there could be more ways or ideas that could make this better for us do feel free to share your views or ideas in comment box below. Also if you have any suggestions / comments do share..

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4P’s Analysis: iPhone – Apple

In the mobile world iPhone launch has been the pivotal moment. The phones world is divided in 2 era’s – before iPhone and After iPhone. Just imagine the first gen phones they looked like a silver brick with buttons on it and then came the iPhone. What we did with those bricks was to do voice calls, a few games, and a calendar. What we do now is host of activities. It has changed the way we access the world and the whole overload of information on it. There are more than 3 billion iPhones sold since its launch.

It’s not that no one had tried earlier, there was IBM with their Simon Device – Touch screen, email, To-Do, Fax, etc. but again the design was more like a brick and weight as well.

Just check out the following video to understand the few following things:

Steve Jobs introducing the iPhone at MacWorld 2007:

Product: He introduces iPhone as 3 in 1 – a iPod + Phone + Internet Communicator.

Positioning: Smart and user-friendly design & Comparison between prevalent phones.

Promotion: Look at the way he sets the tone and then announces and ten launches the Product.

To get a bit more in specific details:

Product:

Innovation is one word that defines the Product strategy for iPhone. Apple invests a lot in R&D. This keeps them always ahead of the game in comparison with the competitors. iphone has always been the leader in its segment whether you talk about the touch screen or single slide button to silent a phone or a very high security on data. It has always been a strategy for the designers to bring out a very attractive feature that consumers have never dreamed about. This novelty value helps apple to attract and retain their customers. The loyalty of customers is so strong that you would see a mile long lines outside the mall to buy the new iphone on the launch of it.

Normally the Business schools teach you to find a problem that is pestering the customers, then find a solution to resolve this and Viola you are in business. But iPhone has always launched products which customers were not even expecting. No customer thought of a Touch Screen phone / iPod (instead of Walkman) / iMac.

These were absolute revolutionary products.

Promotion:

The promotion strategy as well is quite different, you would not see a common advertisement like its competitors. Apple focuses on a certain feature in a phone and keeps promoting the same. If you see the recent billboards – it pushes the idea that the images captured from iPhone are professional level. In-fact you do not see an iPhone on the hoarding. Earlier they had promoted the voice command “SIRI” or the email function a few years back. They have always refrained from bombarding ads / celebrity endorsements / high budget ad spends, etc.

In short Apple has always based their promotion strategy on “Focus on Value” rather than the product itself. They always advertised a feature (value). Another aspect they use for their promotion is voice of the customer. Their customers are their strongest Brand Ambassadors. Apple has one of the highest brand loyalties from existing customers, if you love Apple products there is a very small chance that you will leave the brand for other. This is enhanced now by many companies, remember the launch of FB Metaverse. Apple is also working on something similar – to keep the customers engaged in the ecosystem that these big brands create. This opens a plethora of possibilities and revenue streams for such organizations.

Positioning:

iPhone launched when Blackberry (BB) was the darling with all the corporates. BB provided the corporate employees with the email on the go. The sync with the handheld was the most amazing feature for which BB was a sole strong option. The BB positioning was for age group of 30-55 years. This went on for several years and then BB ventured to target the younger generation for their product. On the wake of this iPhone launched and they exactly nailed this shortcoming from BB. As a device the appeal of BB was not as unique and strong as was with iPhone.

According to Rubicon Consulting – around 2012, 3 Million iPhones activated by AT&T in US and around half of those customers were below 30 years of age. When they had strongly captured this blue ocean for BB, they went for the BB strong turf & launched the iPhone that can sync with MS Outlook on a PC. This move targeted to penetrate the core customer base of BB and today BB is seen nowhere while Apple holds around 15~20% market share of the global smart phone market

Do read this article for more details on market shares of the mobile market.

Pricing:

Apple has always used premium pricing strategy. Skimming Strategy – Pricing the product high, sacrificing mass sales for profitability. This helps keep high profits but also risks pirated products. To ensure the piracy problem Apple added a novelty value / pride of ownership angle. This has widely helped them to keep prices consistently high.

There had been legal battles that Apple purposely slows down older UI to push people to buy new variants of the iPhone but today we will park this strategy aside and focus on current scenario.

Apple has also successfully used the Decoy Pricing strategy. While launching the models keep the mid-level model at such a price that it makes the top end look value buy. Thus, the anticipation is to trick the customer mind into buying the expensive version and yet feeling he has got the value.

For more details on Pricing strategy read the following article:

To conclude, I would say that Apple has a revolutionary product, and they use aggressive pricing, smart positioning, and conservative promotion strategy.

4P’s Analysis: Model S – TESLA

What kind of a persona are you? Flaunting your possessions or silent and heavy, who does the possessions do the talking? Well CAR is one of the tools that does exactly that. Define the owners persona.

Do you love the BMW / Merc? Or Are you the quintessential “Kitna Deti Hain?” guy? Or Are you more of a value for money kind? Or maybe the Environment Savior? This is where the concepts of Marketing like Target Marketing, Product, Promotion, Positioning, Price etc. comes into picture.

Let us just analyse the Tesla Model S for the Marketing concepts mentioned above.

So what is the Target market for a Tesla Model S. It’s a young & mid aged crowd of 26 to 50 years, great job and a good family income of approx. 90 to 100K USD per annum. People who needed a Luxury vehicle & have around 2 to 4 hours’ drive time each day. They wanted this long rides to be luxurious and enjoyable.

Tesla positioned the Model S, as a vehicle with Style, comfort, luxury, safety and reliability. They have developed a product that addresses, both the wants and needs of its customers. Their target customers wanted a stylised car with comfort and safety. They also needed the car to be luxurious and reliable. So Tesla has positioned themselves in both segments the Luxurious and Electric Cars, with the kind of features it offers.

So looking at the Product offering with Model S. It offers following – 3 battery pack options – 40 kWH, 50 kWh, 85 kWH, drive range of more than 300 miles on single charge, Top speed of 125 miles, 0 – 60 in 5.6 Seconds, 17” LCD touch screen to control the entire vehicles, navigation, communication, cabin controls, vehicle data, etc. Steering mounted controls that seamlessly integrate with the above features. The ease of plug and charge with 120V wall sockets is also an appealing product feature.

This huge list of features, at a price point of slight more than USD 60K makes Model S a steal compared with its competitors. So similar to Model S is a Lexus GS which is just below the USD 60K mark, Mercedes Benz hybrid S400 is priced at USD 90K+ & Porsche Cayenne S Hybrid is priced at USD 65K. So all in all it an be said that Tesla is calling the pricing shots in its segments and competitors have to align themselves to the Tesla Pricing strategy.

Click here to know more on : Tesla’s Product Specs / Features:

When last year Tesla mentioned that they are in no hurry to launch in India, it makes one thing very clear, that they have also chosen there locations very smartly. Tesla has launched their operations primarily in US, Europe & China. It shows that it is aware that for EV’s to be sold, what is important is the strong and reliable power grid and experimenting rich people. They are in no hurry to push their product in wider areas and then get in trouble for service. This appeals a strong Place strategy similar to their Promotion strategy.

Tesla is not a mass market car and thus they refrain from Television promotion, the promotion has been more to the target market with print media like in magazines – Business Week, Forbes, etc. Also they have promoted their brand with a message “We do not inherit EARTH from our ancestor, we borrow it from our children.” Pushing the envelop of being a environment caring company. Apart from advertising Tesla also arranges to that their vehicles on a documentary road trips – to make the cars feel more popular. This is a quite innovative and efficient promotion strategy.

Tesla has a heavy trust on Social Media Marketing. Elon is master at this tactics of attracting & building the audience, may it be smoking weed or breaking the glass of his launch cars, he does that with such fluency and then you are glued to his rebellious personality.

Elon Musk: Leveraging the Social Media to effortlessly promote TESLA

On Typical basis – Tesla is taking the Technology sales approach than the product sales approach. You see the launches are similar to Apple iPhone launches / Windows launches. They are not taking the typical Automotive launch / Marketing approaches at all.

We are all aware that the traditional marketing campaigns are going nowhere now and for Technology Products (non-mass products – to start with) will only dent your pockets without the traction on sales.

Refer another nice article on: Tesla Marketing Strategy

So to conclude this article, In mere 16 years what Tesla has achieved against its well established competitors on there own turf is absolutely appreciable. They have been making great headway in the field with strong out of the box marketing and product strategies.

They are disrupting not only the Automotive Market but also the whole value chain & reinventing the process making it more interactive than unilateral.

If you have liked this post do check another similar one:

5 Ways to achieve good Customer Intimacy

This article is a continuation of the earlier article in below link: https://beyondobvious.in/the-success-mantra-s-m/

“Your customer doesn’t care how much you know until they know how much you care” – Damon Richards.

Above words are old but the relevance, not diminished even a bit. Rather the importance has grown over the years. Today we not only talk about customer delight / customer satisfaction we talk about customer intimacy.

The word intimacy can arise some strange feelings but nevertheless has become a most popularly used jargon.

This phrase is fast becoming popular in the organizations and for quite obvious reasons. But, how do you actually achieve it, how do you make customer interested in you, so much so that – we can call it intimate. Not literally.

Well find below 5 ways that this can be addressed with:

1. KNOWING:

In today’s world knowledge is the key. You have to know in and out of the customer organization: the environment within, decision makers, catalysts, influencers.

The only way to achieve this is talk to a lot of people and on lot of different topics, official, unofficial, at times personal. This collection of information should give you three or four major links to work on.

It’s just like all sales people talking to your kids when you go for shopping.

2. MAPPING:

Map each person you had talked to from operator level to all the way to the top person. Find out the people with whom you can easily gel with, People having similar interests, living in nearby localities, friend of friends, etc. Build on this relation – Genuinely.

3. BUILDING:

This is the most important step. Try with at least 5 different people at different hierarchy in customer organization. You may lose in some and win some.

Visit them often, inquire genuinely about their kids / parents. Share your experiences about a good destination to picnic / a great movie to watch / good course for their kids. Remember important days like Birthdays / Anniversary and wish them. Wish them on their festivals. In short – Build on the acquaintance to bond it to relationship.

4. STRENGTHENING:

This entire exercise will be a futile and counterproductive if the effort is not genuine.

I have seen many sales people, start this activity with enthusiasm and then leave it in the middle or are not genuine enough.

This will not help if you focus on just getting information, you will have to build the relation before. The tree has to grow to yield fruits.

You can be assured that you have a healthy relation – when you start receiving wishes from your customers, when they open up topics of discussion that you like. When they start being informal to you in meetings, when they make space for you in their schedule without appointment.

This is last but one step to achieving Customer Intimacy.

5. INTIMACY:

This is actually more of an implementation step. When you have genuinely done the earlier 4 Steps, you will be in supreme command at the customer. The information will flow to you rather than you following up on the same.

People will call you to give you important bits of information like changes in organizations, change in company policy, future challenges, aggressive competition proposal, end customer issues, etc.

You will have the liberty to pull the person any time to the side and ask those critical questions on which you can actually leverage the crucial decisions.

These steps should help you have a lot of important information, considerably easily & lightning fast.

Achieving a good intimacy with customer is no rocket science; it’s just simple man management. Where people mess up is, they want the information too early or they do not seem genuine and in both these cases lose is for long term.

Next step to customer intimacy is having sensory intelligence. click the link to know about 5 ways to build sensory intelligence: https://beyondobvious.in/5-ways-to-build-a-strong-sensory-intelligence/

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