Marketing Mix of Uber: 7P’s of Uber’s Service Mix
The twenty-first century has seen the rise of several disruptive services that disrupted established business markets. Uber is also one of the businesses that proved digital disruption could be the key to faster growth. The brand saw sharp growth based on innovation and grabbed a large market share in a short period. However, its rise caused trouble for the existing taxi services. Before Uber, the taxi industry was dotted by small and large brands and customers’ bargaining power was mostly low. You had to wait long to get a taxi and agree to the terms of the taxi driver. Lots of bargaining, high charges and then tips were driving costs high for the passengers. Uber was able to exploit these loopholes to grab a large market share faster. However, while Uber saw fast financial growth during the initial phase, later its ride got bumpy due to protests from several corners.
Traditional taxi services relied less on digital technology. Uber reduced the charges to grow demand and create higher customer satisfaction. Using this strategy, it immediately made its way to where all the opportunities and profits lay. It broke into a market where the customers had significant buying power but the market was underexploited. The other taxi services found themselves crumbling as they had been made to pay a hefty price for having ignored technology trends as well as the importance and bargaining power of customers. Uber jumped into the taxi services business with a strategy and made a strong impact right during the initial phase of the game.
The brand takes a small cut between 5 and 20% only and all it does is to connect the passenger with the taxi driver. So where is it creating value and how has it differentiated its service from the traditional brands? Where does the innovation lie and how has Uber marketed itself? Behind Uber’s rise, there is also the power of marketing?
Product –
Uber entered the market as a simple app to connect drivers and riders. However, with time it has enhanced and expanded its product/service mix. The product mix of Uber has variety. Some of them are meant to save you money and some to make an impression. There are a variety of rides to suit the needs of Uber customers. This product mix is attractive because of its quality. You do not have to make an early appointment, taxis are always available nearby. When one arrives, you just have to get in as the driver knows your destination You have paid already through the app. Whether it is early morning or late night, there is no need to make a reservation and all variety of rides are available from low cost to luxury. All types of rides are there to meet your needs.
Here is the product mix of Uber available in cities like Los Angeles.
Economy options:
Uber X – Uber X is a low-cost option for passengers looking for low-cost rides. It seats up to 4 people. It includes vehicles like Toyota Prius, Honda Accord, and Nissan Altima.
Uber Xl: This is also a low-cost option and can seat up to 6 people. It includes vehicles like Toyota Sienna, Honda Odyssey or Toyota Highlander.
Uber pool: Uber pool is the carpooling service of Uber. People can bring one other person with them which will save them on riding costs.
Uber Access: This service caters to the needs of the elderly, the people with disabilities and has wheelchair accessible vehicles ready to serve the passengers in need.
Uber Premium: The premium taxi services of Uber have a fleet of stylish vehicles to choose from. You can choose from UberSELECT, UberBLACK, UberSUV, and UberLUX.
Place –
Uber is present in 63 countries and around 700 cities, as of 2019. Five countries where the brand is most active and popular are the US, Brazil, China, Mexico, and India. However, since Uber has relied upon networking, it did not need too many offices. It has offices in key locations globally. It has its headquarters in San Francisco. Apart from that, it has offices in key locations like Manhattan and NewYork. In 2017, it employs 12000 people.
Price –
Uber’s concept of taxi services was mainly based on availability and affordability. However, apart from economy options it also makes premium options available on demand. The economy options are meant to save costs. Uber saves costs on infrastructure and passes the benefits to its customers. Its competitive pricing strategy has become major trouble for competitors.  Uber either calculates the prices upfront or right after the ride is over. In the case of upfront pricing, the prices are available to the customer before the ride begins. These costs depend on three factors that include a base rate, rate for estimated time and distance and the demand for rides in that area.  In some cities, prices are not available upfront. In their case, the passenger is charged either a minimum fare or a fare based on the trip’s time and distance.
Promotion –
Uber mainly promotes its business through its website and app. However, the brand has also created a lot of buzz through its differentiated services which generated a lot of publicity and word of mouth marketing. It remains in news regularly and apart from the news sites is also a subject of discussion in tech circles. It actively promotes itself on social media too. Uber promotes its brand on and its newest deals and discounts on Facebook too. Sometimes it addresses customer concerns too through social media. Uber has also faced a lot of criticism and protest over management and other practices. These things have mostly damaged its reputation in several markets, in some of which it is also facing legal action.
Physical evidence –
Uber has plush offices in cities like Manhattan and NewYork. Most of its business is carried out online through its app and website. Apart from that, the only physical evidence of its service is its taxis and taxi drivers.
Process –
When you have to hire a taxi, you just need to enter the necessary details in your app and the nearest taxi will come to pick you. You are given an upfront fare that you can pay through the app or to the driver. Either way, you can do it all seamlessly using the app. Just get into the taxi when it arrives and get down when you have reached your destination. Overall, Uber has resolved several complications from the entire process of renting a taxi. This was also a reason behind its superior growth and success. Undoubtedly, its service level can be better. Achieving superior operational flow is not sufficient now but integrating customer service into each process is essential for maximum satisfaction.
People –
In 2017, Uber has more than 12,000 people working for it including the satellite customer support and leasing agents. However, less than 40 percent of its entire workforce is female. Black and Hispanic employees are only 15 percent of the entire workforce. Around 80 percent of its employees are Asians and whites. Apart from it, Uber has created jobs for millions of taxi drivers too around the world. However, Uber has been unable to build a strong reputation in terms of HR. Otherwise, the level of success the company achieved in most markets would have been higher.
- Sources:
- https://uberestimator.com/cities
- https://www.recode.net/2017/3/28/15087184/uber-diversity-numbers-first-three-million