Is Uber well performing?

Uber is known as a transportation company, whose mobile application is able to connect consumers with drivers who are willing to provide rides. Established in 2009, Uber has experienced fantastic growth and is considered as an element transforming the taxi business in United States. In 2015, it was reported that the enterprise value stood at $50 billion and the company become a “market-marketing” business model that has been emulated by other start-ups.

In order to respond to the above question, a menu of marketing metrics will be utilised to evaluate Uber’s marketing mix performance. According to a research of Minz and Currim, it is dependent upon types of marketing activities to choose marketing and financial metric use. Uber followed a distinct range of marketing activities, and among them, Uber was concentrating on “price promotion ” and “new product development”. Thus, some metrics, which will be analysed, include belief in or attitude toward the new product concept, promotional sales, market share, and financial metrics (Mintz & Currim 2013).

Belief in or attitude toward the new product concept

According to Kotler, product concept is described as “an elaborated version of the idea expressed in meaningful consumer terms” (Saxena 2009). With its vision, Uber creates value for everyone who desires to travel from point A to point B.

“Transportation to be as reliable as running water for everyone, in every city in the world”- Uber CEO Travis Kalanick

It also supplied a range of services such as Uber-Moto, Uber Go, Uber Pool or Uber X, which is designed to satisfy many diverse customers’ needs such as a luxury ride, a cost-effective ride, ride sharing, reliable services.

Creating value for a large audience with different services and price has assisted Uber to attract more and more customers. A recent survey conducted by Pew Research Centre   revealed about usage and users’ attitudes towards Uber. Regarding usage, the majority of American adults have heard of Uber, but they have not used it. While the number of adults, who have not heard of it, is more than who have used.

pi_2016-05-19_sharing-economy_2-013

Despite of this low usage, Uber still received tons of positive attitudes towards it. The result showed that, 86% of ride-hailing users agreed Uber save their users time and stressBesides, 80% of believe that these services provide good jobs for people who want flexible working hour.  And the majority of users also think Uber is less expensive than taking a taxi and more reliable than taking a taxi or public transportation. 

pi_2016-05-19_sharing-economy_2-08

Promotional sales

Uber developed a big diversity of marketing program for enhancing a base of loyal customers. Some top methods are free rides, discounted rides and referral benefits. In order to conduct these method, Uber’s spending on promotions, prices cuts, sales and marketings reaching levels that its main competitors may not be match. In the first half of 2015, Uber’s promotions and price cuts were $72 million, driver incentives grew to $130 million, and sales and marketing reached $295 million.

Instead of spending huge expenditure on promotion, the Uber team would prioritise to build a good product and convince the customers to attempt its product once. For example In India, Uber has never huge digital spent on large media or traditional mass marketing methods like TV, Print & OOH. It always keeps a basic rule that the marketing campaigns are as simple as possible.

Market share

In a survey of senior marketing managers, many managers agreed that market share can be a “very useful” measure and be a leading indicator of future success  (Bendle and Bagga, 2016). The following diagram showed that Uber has gradually accounted for a critical part in the US transportation market share. This increase can be a promise for Uber’s future profits increase. Moreover, Uber was making big expansion in other countries such as China, India, etc. It has been present in more than 500 cities in the world and that number will not stop there.

screen-shot-2015-04-09-at-12-53-51-am

Financial Metrics

The company was extremely keen to keep its financial information a secret. However, a leaked document showed that Uber was suffering a great loss in the period from 2012 to 2014. In 2015, its loss could be at least $2 million before interest, taxes, depreciation and amortisations. Although Uber said that it yielded profitability in US, Uber is not globally profitably. Both its losses and revenue have increased since the corporation’s global ambitions have enlarged.

In conclusion, the simplicity of Uber promotional methods has assisted Uber to achieve customers’ belief and most customers have had a positive attitude towards its services. However, if Uber has just pursued to expand its market share globally, it could face a huge risk (such as low financial performance). It is found that more managers thought it was more important to prioritise maximising market share than to developing profitability (Bendle and Bagga, 2016). Uber could belong to this situation. It should be noted that Market share should be an intermediate measure rather than ultimate objective.

Name: Phoebe Phung

ID number: 215010538

Reference

Bendle, NT & Bagga, CK 2016, The Metrics That Marketers Muddle, MIT Sloan Management Review, 57, 73.

Bender, A 2015, Uber’s Astounding Rise: Overtaking Taxis In Key Markets, Forbes, retrieved 23 September 2016, http://www.forbes.com/sites/andrewbender/2015/04/10/ubers-astounding-rise-overtaking-taxis-in-key-markets/2/#b86edd21dda0

Christensen, CM, Raynor, ME & McDonald, R 2015, What is Disruptive Innovation, Harvard Business Review, retrieved 25 September 2016, <https://hbr.org/2015/12/what-is-disruptive-innovation>

Mintz, O, & Currim, I 2013, ‘What Drives Managerial Use of Marketing and Financial Metrics and Does Metric Use Affect Performance of Marketing-Mix Activities?’, Journal Of Marketing, 77, 2, pp. 17-40, Business Source Complete, EBSCOhost, retreived 24 September 2016

Newcomer, E 2016, Uber loses at least 1-2 billion in first half of 2016, Bloomberg Technology, retrieved 24 September 2016, http://www.bloomberg.com/news/articles/2016-08-25/uber-loses-at-least-1-2-billion-in-first-half-of-2016

Saxena, R 2009, Marketing Management, 4rd edn, Tata McGraw-Hill, New Delhi.

Smith, A 2016, On-demand: Ride-hailing apps, Pew Research Center, retrieved 23 September 2016, http://www.pewinternet.org/2016/05/19/on-demand-ride-hailing-apps/

 

 

 

 

 

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