Uber In Comparison To the Traditional Taxi Method

UberIn Comparison To the Traditional Taxi Method

InstitutionAffiliation

Uberis a company based in San Francisco that uses an application on asmartphone to connect passengers with drivers. This company wasestablished in 2009 as a private held company by Travis Kalanick andGarret Camp. Using an application, the customers can request fordrivers and track their reservations. Uber services are available inseveral countries. There are people who still use the normal taxis,but there are others who prefer using Uber taxis. The main advantagethat using Uber has is that it is convenient for the users as theservices are available by just a button tap. This essay shall comparethe Uber services and the traditional cab services and the strategiesthat Uber uses.

Thestrategies used by Uber

Thereare various strategies that Uber uses to ensure that more peoplechose it over the traditional cab services. Technology is the mainboost for the uber business. The transaction is cashless whichcreates convenience for most people. At the end of the ride, areceipt is sent to the customer’s email address. Uber charges thecar owners 20% commission of what each customer pays.

Inmost places, you find that the charges are 30% lower than what thetaxis charge, and because people love discounts, they get moreclients compared to the taxis.

Onthe downside, the pricing is not pocket-friendly during busy hours.The company charges a bit higher when the demand is higher than theavailable cars for hire. The surcharge can even go to 8 times higherthan the normal charges. The company charges up to $63 for 0.73 miles(Chafkin 2014). This strategy has helped the company to boost itsearnings even though many customers complain about it. The dynamicsof the business dictate that where there is an option, for example,the taxis, one can always opt for it, but still people go for uber(Mohammed 2013).

Marketingstrategy

Thethree strategies that have worked to the advantage of Uber’smarketing team are referrals, event stunts and launch campaignswhenever it establishes itself in a new city. Whenever a customer issatisfied with the services they get, they tell their friends aboutit, and the word goes round. The uber drivers give a warm welcome tothe customer by offering them candy or a bottle of what. Of course,this strategy will draw more customers and retain the currentcustomers.

Anew user can get a referral code and whenever a new user signs upusing the referral code, both the new and original user can get anUber ride discount of 10%. Uber also takes advantage of events suchas birthday, valentine and offering lemonade stand services. Thecompany offers exceptional services. Whenever Uber goes to a newcity, the presence is advertised online, thereby creating thenecessary market base in that area.

Marketingresearch

Anybusiness can fail for not doing good research on the loops of thebusiness. The Uber team knows this too well and has analyzed themarket dynamics such that it knows what would work for the businessand what would be its end (Phillip 2014). For example, in thebusiness plan, every business should include marketing in itsstrategy. As discussed above, Uber does not entirely depend on theircustomers to be their marketing tool. The company through even stuntsand launch campaigns has an edge in the market. The media coveragethat this company has, has also worked to its advantage by giving itmore exposure.

ActionPrograms by Uber

Byconnecting riders to drivers through a smartphone application, citieshave become accessible. This application has also boosted businessfor the drivers and improved their lives. There are several programsthat Uber has used to make it customer friendly. One of theseprograms is the Uber credits program. Whenever a new user signs upusing the app from their smartphone, they get $5 discount for thefirst ride. There is also an affiliate program where the originalcustomer gets credits every time they refer another customer. Everymonth, the customer gets the Uber credits that can last a lifetimewithout expiring.

Thefirst thing that any customer who intends to make their budget forthe Uber car hire services needs to know is that the price varies. Inthe case that there are more customers and fewer drivers, thecustomer should know that they will dig dipper into their pockets. Asdiscussed above, one can pay up to $63 for 0.73 miles. These chargesare 5 times more than the normal charges.

Thecompany tells its customers that there is no need to tip the driverafter the ride. This information was not received well by thedrivers. They state that operating vehicles on Uber is moreefficient compared to operating vehicles in the traditional taximethod. The drivers are selected carefully and monitored to curbindiscipline. There is also the option of rating a driver after theride. The rating is on a scale of 1-5, and the customer can rate thedriver according to what they felt about the ride. This program makesthe company preferable as they use the ratings to improve theirservices.

Despitethe business looking attractive and convenient, it has not fallenshort of criticism. The criticism is mainly because of the surgesthat some customers feel that they are charged higher than the normaltaxi charges. Also, this company has been faced with lawsuits wheresome claim that it needs to fall under the tax regulation.

References

Berold,K. (2014) Introducing Uber. Finweek,52-53.

Chafkin,L., Christine. “Resistance is Futile.” Inc.1 Sep. 2014. Accessed at http://www.inc.com/magazine/201307/christine-lagorio/uber-the-car-service-explosive- growth.html

Mohamed,Rafi. “Uber’s “Price Gourging” is the Future of theBusiness.” Harvard Business Review. Harvard Business Publishing, 16, Dec. 2013. Web. 7 Nov. 2014.

Philp,B. (2014). UBBER MARKETING, UBER ANNOYING. CanadianBusiness,87(8), 26.