Uber Gets Too Big Too Fast Case Study
Case Study Presentation
Uber, also referred to as Uber Technologies, is among the excellent innovation in the last decade. The company was founded in 2009, and it has tremendously grown to the list of highly valued start companies globally. The foundation of Uber was due to the innovative ideas of two friends, Garret Camp and Travis Kalanick. The company is founded on an interesting experience of two friends who were unable to find a cab, and they thought, “What if you could request a ride from your phone?” (Uber Technologies Inc, 2020). The simple idea was later implemented in San Francisco, United States, and now Uber has grown to a strong global brand in the transportation sector with its presence in almost all over the world.
In the wake of expanding to more foreign markets, Uber has diversified its product portfolio to include people transportation, linking shippers and freight carriers, and restaurant food delivery. In the provision of these services, the company created several segments, including Rides, Freight, Eats, ATG, and Other Technology Programs and Other Bets (CNN Business, 2020). The Rides segment deals with connecting customers with drivers who offer rides using a variety of vehicles from one destination to another. The freight segment entails connecting carriers with shippers using the company’s platform. The Eats segment permits customers to search for local restaurants where they can place their meal orders and have them delivered or pick up by themselves. Other Bets involve several investment offerings. The ATG and Other Technology segments mainly deal with ridesharing technology through commercialization and the development of autonomous vehicles. Uber, in 2019, went public and through Initial Public Offer (IPO) raised $8.1 billion, and this happened despite the continuous loss-making that the company has been experiencing over the years (Lee, 2020). This is illustrated by the company’s financial performance results from 2016 to 2019 (WSJ Markets, 2020). The ability of Uber to raise funds from the public is an indication that investor has faith in the company, and as such, it is likely to become a high-profit making company in the future.
Gaur (2013) defined stakeholders as the group or individuals who have an interest in the operations of the organization. The stakeholder can positively or adversely affect the operations of the company. The impacts of the stakeholders depend on their level of influence and power (Ilinova, Cherepovitsyn, & Evseev, 2018). Uber has several stakeholders, who can be categorized into four major groups: employees, customers, investors, and communities of interest. The four groups form the primary and relevant interested parties in the company’s operations.
-Drivers (Independent contractors)
|Owners and Investors
-Founders, for example, CEO
-Special interest groups
– Local communities
-Environment lobby groups
Source: Created by the Author/Learner
Uber employees, and more so drivers are treated like as suppliers. The drivers are classified as independent contractors because they use their resources to deliver services to consumers. Despite drivers being important stakeholders, the company’s corporate culture seems to create an internal conflict between the employees and the management. The company has mainly focused on earning revenues and charging affordable prices to the customers at the expense of the service provides, which are drivers. Since its foundation and particularly for the last five years, Uber has experienced increase in strikes, with drivers accusing management for ignoring their welfare, including offering them low rates, which sometimes are below minimum wage. For example, in 2019, the company recorded widespread strikes in the United Kingdom, United States and other countries, including Brazil and Australia, demanding for better pay and improved working conditions (Kollewe, 2019). Interviews with Uber drivers as the one adapted from the discussion of Thompson (2018) have confirmed that drivers work up to 21 hours a day to meet their earning target. This is happening when the company is reducing the drivers’ rates, leading to what was once referred to as “poverty pay” by the striking drivers in the United Kingdom. The drivers argued that it was unfair for the Uber CEO to continue making billions of drivers were working long hours and earning less (Kollewe, 2019). Uber employees’ issues extend to the company’s offices, where female workers frequently have complained of sexual harassment and gender discrimination. For example, Susan Fowler, the company’s former engineer, accused the management of allowing the culture of sexual harassment and gender discrimination to thrive (Levin, 2017). Fowler pointed out that even after reporting the incidents to the management, her complaints were dismissed and offenders were never punished (Fowler, 2017). In fact, she was threatened with firing if she dared to raise the concerns again. From the perspective of drivers and female workers, Uber is not meeting or addressing their interests despite being the important stakeholders. As service providers, Uber employees can affect quality of services provided to the customers, an aspect that the management should put into consideration. Uber office-based employees for the years 2018 and 2018 as well as the distribution of its employees based on gender for the years 2017, 2018, and 2019.
Source: (CNN Business , 2020)
Source: (Mazareanu, 2020)
Consumers as stakeholders might have low or high power depending the industry and the availability of product (Gaur, 2013). At Uber, customer have high power since they can easily switch the company competitors, who are offering similar transportation services. Uber consumers comprise mainly the individual customers and the businesses that might outsource the Uber services once in a while. Uber customers are spread all over the world with the latest data showing that the company has over 75 million users in over 600 cities in different 65 countries. The company largest market is in the United States, which accounts for about 41.8 million of the total users. The second-largest market is in Brazil and accounts for 17 million customers. London, in the United Kingdom, accounts for Uber’s largest in Europe (IqbaL, 2020). Uber has also penetrated the Asian market and, more so in India, where about 5 million consumers use Uber every week. Uber is slowly entering markets in Africa. In addition to individual customers, Uber also has businesses as consumers. For example, the Uber Freight segment is frequently used by companies where Uber connects shippers with carriers. The Uber of Business segment offers travel needs for company employees when companies outsource traveling services for their employees from Uber.
Despite Uber having many customers, there are cases where the company has been accused of mistreating its customers. Also, the negative public image due to poor public relations has resulted in customers abandoning the company services. For example, in 2017 the campaign #DeleteUber, which was spurred by the company decided to profit from the drivers’ strike, Uber saw many of its customers deleting their apps and switching to competitors such as Lyft. The campaign led to over 200,000 customers abandoning Uber services (Isaac, 2017). Although Uber might have been having good relations with customers, its public relations with other stakeholders such as drivers and regulators have led the consumers develop negative perception towards the company.
Uber owners are actually the founders, although after it went public, shareholders got in as investors as well as owners. The investors are highly interested in the company’s operations since they want to know whether the company is worth investing in (Ilinova, Cherepovitsyn, & Evseev, 2018). The earlier founders, Travis Kalanick and Garret Camp have 117,505,000 and 81,575,000 shares respectively. The current company CEO, Dara Khosrowshahi has 196, 000 shares. Some of the shareholders that become owners of the company through shares after IPO are Benchmark with 150, 079,000 shares, which are worth $11 million, Saudi Arabia’s Public Investment Fund with 72,963,000 shares, which accounts for 5.4 percent of the total company shares and worth $3.5 billion and SoftBank Vision Fund with 222,228,000 shares, which are worth $9 billion and accounts for 16. 3 percent (Mascarenhas & Wilhelm, 2019). There are also individual shareholders apart from institutional and mutual fund stakeholders. For example, according to the 2019 report presented by Klebnikov (2019), Matt Cohler is the largest individual shareholder with 150 million shares, which are $11 billion and account for 11 percent of the company’s total stake. With IPO, the co-founders no longer have much control in the company’s operations like before. However, they can exercise some control due to the high number of the share they own; their authority was reduced when Uber went public.
Source: (CNN Business, 2020)
Communities of Interests:
Uber community forms part of the largest shareholders since they include both direct and indirect shareholders. They range from the geographic regions where Uber has expanded its operations to regulators, schools, and philanthropies who are interested in the company’s sustainability practices. In the wake of COVID-19, Uber has been in the front-line supporting vulnerable populations and health workers (Uber, 2020). These two groups form part of the large community that is interested in the company’s corporate social responsibility activities. The company earn revenue from the society and as such it has been giving back to the same community through donations. Uber’s engagement in CSR is aimed at rebuilding the company’s image that has been destroyed in the past. The regulators are also interested in the company’s business practices, and particularly after the allegations that the company has been involved in the mistreatment of its employees. For example, Uber has faced difficulties in operating in certain economies such as Europe and particularly, United Kingdom for applying unethical business practices. The company license of operation was once revoked by the Transport Regulator London and accusing the company for not meeting the requirements of the private care hire operator (Browne, 2019). The schools are also important part for Uber since they help in developing the future employees that the company will need to run its operations in future. The philanthropies such environmental groups are also interested in Uber business practices to ensure that they are sustainable. Trade unions who represent the interests of the employees, including drivers, have a high interest in Uber’s operations in the bid to find the solution to the issues raised by employees and the company’s poor human resource policies.
Like in any other business, Uber does not operate in isolation, but in an environment that is full of other competitors. In Uber’s business context, competition is mainly witnessed within the entire transport sector, but given the size of the sector, the greatest competition for Uber comes from the taxi industry and more so from other taxi companies. The competition within the entire transportation sector arises from indirect competitors such as local taxis and public transport. Despite the competition, Uber has maintained the leading position in the industry with a market share of 67 percent in ridesharing transportation in the United States (Shaw, 2020). The company is estimated to have over 110 million users globally. Uber’s five major business rivals have been presented below:
Lyft initiated its operations in 2012, approximately three years after Uber had entered the industry. It was founded by Logan Green and John Zimmer and its headquarter is in San Francisco, California. Lyft has a significant market share in the United States, Puerto Rico, Canada and it is also operating in more than 644 cities around the world, including Indonesia, Malaysia, Singapore, Thailand and Philippines (Shaw, 2020). Lyft engage customers through its mobile app and company website where the customers can request for their ride. Lyft has been one of Uber’s fierce competitors, as illustrated by the 2019 report with Lyft having 28 percent market share in the United States.
Uber versus Lyft
Source: (XTB, 2019)
DiDi is a China-based ridesharing cab. It was founded in 2012 by Cheng Lee. It offers several services apart from ridesharing transport. For example, it offers fleet operations, charging electric vehicles, financing, lease sale, and maintenance of the automobile. DiDi has given Uber very strong competition in the Chinese market. It is estimated that the company completed over 10 billion trips per year by operating in approximately 400 cities (Shaw, 2020). The intense competition offered by DiDi in the Chinese Uber to change its strategy of penetrating the market and opted for a partnership with the competitor.
OLA Cabs is based in India and offer ridesharing transportation like Uber. It was founded in 2010 and provided a number of services, including allowing the customer to rent cabs on an hourly basis. Ola Cabs have proved a threat to Uber due to its success in entering foreign markets. For example, it has successfully the United Kingdom, New Zealand, and Australian, which are some of the markets dominated by Uber. So far, the company operates in more than 250 cities globally. The company’s 2018 reports indicate that it earned revenue if 310 million US dollars (Shaw, 2020). OLA Cabs success can be attributed to its patient in trying new service before it is introduced in the target market. For example, in 2014, the company tried auto-rickshaw in Bangalore, and upon its success, it was introduced in other cities in India.
Bolt, formerly known as Taxify, is rapidly increasing Uber’s competition in the international market. It is European based company, which was founded in 2013 and it has been expanding new markets at a very fast rate. For example, for the last six years, Bolt has explored new markets, including 34 countries and more than 150 cities in America, Europe and Africa (Shaw, 2020). While competing with Uber, Bolt uses pricing approach where it advances cheap prices to customers. Bolt is also improving its brands by building on the weakness of Uber. Despite charging customer less, Bolt also offers reasonable commissions to its drivers, unlike Uber. It seems Bolt is using the building on Uber’s weaknesses, and particularly Uber’s poor compensation of drivers to increase market share. Bolt so far has over 25 million users globally, and it has employed over half a million drivers. The 2018 annual reports show that the company had a revenue of 79.9 million euros.
Yandex makes the list of top five competitors of Uber. Yandex Taxi was founded in Russia and offers ridesharing and delivery of food services in Russia, the Middle East, Africa, and Eastern Europe. Currently, it stands as a major threat to Uber since it is the process of developing self-driving cars (Shaw, 2020). When compared to Ube, in terms of market share, Uber takes the lead. Yandex Taxi has approximately 36 million users who are serviced by over 700,000 drivers.
Uber customers are all over the world, and mainly in the regions where the company operates. However, the clients’ consumption levels vary based on factors such as region, age, and economic status. The clients comprises mainly frequent travelers, who can be either individuals or companies. They might include who whose license have been revoked for committing traffic offences or people who are yet to obtain driving license. Uber also targets customers with age range of 18 to 60 years who frequently attend football games, basketball games, baseball games, concerts and theatres. Uber is interested in the businesses that would like to outsource its services for their employees. The frequent nightclub and bar customers also tend to user Uber services more since they are unable to drive by themselves when they are under alcohol influence.Uber Distribution
Uber owns several cars, independent vehicles, and SUV’s (Uber Technologies Inc., 2020). The company has partnered with car manufacturing companies to customize its vehicles according to the company’s specifications. The company has started driving schools in different regions around the world where they operate. Uber aims to develop excellent driving skills by training drivers within its operational architecture. By doing so, Uber can be said to be equipping the sources of its future supply with right skills. The distribution presence of Uber is increasing rapidly due many potential drivers willing join the company. A sufficient workforce provides the company with strong distribution since the customers’ demands can be met immediately after requesting for Uber service. The company has accurate supply and as such, they are no shortages when it comes to addressing the customers travel needs. The innovative app used by the company in delivering services to customers is integrated, an as aspect that has been useful in retaining clients. The app has integrated all the company process, with the management and service provides being allowed to make quick decisions to address customers’ needs. Uber’s distribution strategy can be copied easily by the competitors, hence increasing the competition. For example, OLA Cabs in India has successful copied Uber distribution and it is using it to increase its market share not only in the home country but also in the foreign markets.
Uber advertisement approaches ranges from offline through the word of mouth to online through social media sites. The offline market is usually carried by customers through the word of mouth from the customers. The experience that customer derive through a click on the app, gives them a comfort service, and as a result they end sharing Uber services with their workmates, colleagues, friends, neighbors and relatives. Uber also undertake advertisement through promotional and referral programs. For example, Uber while entering the new markets, they tend to give customers free rides advance their service delivery experience to the potential customers. However, the free ride has become problematic, especially when the management use unfair practices to influence drives to offer free services to customers. Uber offline advertisement is also carried in and outside the company cars. For example, through Uber back seat video screens, the first customers to see additional services offered by the company (Hawkins, 2020). Uber cars are also fitted with tablets and small flyers inside showcasing the services offered by the company. Outside the car, the company uses stickers, cap wrapping, and car-top video screens.
Uber’s online advertisement is mainly carried through social media sites such as Facebook, Twitter, LinkedIn, Google, YouTube, and others. Through these platforms, Uber showcases to customers about the latest deal and offers in the market. For example, the company’s Facebook page has over 22 million followers. This makes it easy for Uber to introduce in new services to target market. The target market also spread the word about the new offers to their friends and workmates through sharing of posts. The social media platforms also allow the user to share both positive and negative views about the company’s services, allowing Uber to understand areas where it needs improvements to enhance the customer experience.
Uber was currently a publicly-traded company after the IPO in May 2019. Following the IPO, the company’s net worth has been boosted, and by May 2020, Uber value stands at $100 billion. In the first quarter of 2020 financial year, the company reported the revenue of $3.54 billion and a net loss of 2.9 billion (Kolodny, 2020). This is happening even after the company boosted its capital through initial public offer in 2019. The company’s woes of employer-employee conflict are still continuing with the management being sued by the drivers for failing to offer health benefits and other work-related protections. Uber has also laid down plans to reduce the number of drives as it sets itself to introduce electric cars (Kolodny, 2020). According to the company’s CEO, Khosrowshahi, the company’s actions to fire drivers are geared towards its profitability goals that are yet to be achieved.
Source: (Kolodny, 2020)
Uber offers a range of services to reduce the threats from the competitors. It has several business segments, with each segment contributing significant revenue to the company’s total revenue. The company generates revenue mainly from Ridesharing, Uber Eats, Freight and other segments. Ridesharing is a leading contributor with 67.5 percent of the company’s total revenue. Uber Eats and Freight segments each contribute 15.8 percent, while 1 percent comes from other business segments.
Source: (Craft, 2020)
Uber enjoys a relatively large market compared to competitors, but despite that, the company has been making losses. The company’s market share has been decreasing, and particularly in the United States market. Uber is losing its market to Lyft, the major competitor. In 2017, the company enjoyed the market shared of 74 percent, and in 2020 it has decreased to 71 percent (Mazareanu, 2020). However, Uber has an additional advantage over Lyft, since the latter operates only in North America while Uber is global.
Source: (Mazareanu, 2020)
Uber has been facing criticisms for treating drivers as independent contractors rather than employees. The management approach in dealing with the drivers’ issue is negatively affecting the company’s public image. The drivers are treated as contractors who should meet their operational costs, and they are not entitled to certain employee benefits such as health insurance covers, pension benefits, and leave and holiday pay. The drivers are also sometimes compensated below the minimum wage. Uber has faced several legal actions.
In the wake of public criticism, Uber is facing serious marketing communication problems. The campaign delete Uber in 2017 had adverse effects on the company that led to the drop in the company’s brand equity and drop in the market share. The company is yet to overcome the bad reputation that was created by the campaign. Uber’s bad reputation is further worsened by its treatment of employees, including drivers and female staff. For example, the driver has engaged in serious strikes and demonstrations demanding better pay and good working conditions. Uber tried to rebuild its reputation through-half billion marketing campaign, but the results show that it has not yet paid off (Siddiqui, 2019).
As Uber continues to rebuild its image, the media is interested in its news more than ever. The media are following every bit about the company’s leadership issues and court battles. As woes continue to increase, Uber lacks effective communication approach that it can use get rid about its negative brand image. Both existing and potential and existing customers have heard about Uber’s reputation, and they might not want to purchase services from the company that applies unethical trade practices. Uber has failed to use appropriate marketing communication to counteract its bad image from the side of the public that is media through sensational storylines, viral videos, and tweets (Brown, 2018). All weaknesses, including lack of respect to law and unethical standards about Uber, have been exposed. For example, Uber was found to have been using deceit technology to defeat authorities. With this, Uber’s weak public image has continued to make it hard for the marketing campaigns to prove to a potential target market that they are the best service providers. With negative public relations, it has become a challenge for Uber to win the new markets. The company is also losing its market share in major markets such as North America, London, Australia, India, and China.
Uber is currently facing a marketing problem due to the existing bad reputation it has in the market. Uber’s bad PR is caused by drivers’ misbehavior and inexistence of ethical standards. This paper aims to explain the marketing tools that will help Uber solve this harmful PR problem. Three marketing tools, namely SWOT analysis, pricing strategy, and promotion campaign strategies will be used to provide Uber’s executive management with the best recommendations on how to easily fix and recover from the bad PR effects. The paper will recommend that Uber capitalizes on its strengths to convince the world market that it is still the best company in the cab industry. Also, the paper will recommend that Uber explores and exploits all potential opportunities into the market to steer growth and to improve its customer relationships. In the paper too, Uber will be advised to address all sexual harassment and bad PR scandals, which are contributing to its loss-making and customer disconnection to the firm. Also, the paper will recommend that Uber develop proper relations with its employees to prevent them from shifting to competitor firms like Lyft, for this is the surest strategy of ensuring employee and customer retention.Marketing Tools Useful in Solving Uber’s Bad Reputation
Uber can easily fix its reputation. Despite Uber being subject to a greater spotlight and scrutiny for misbehavior and lack of ethical standards, the strength of its brand can help it recover swiftly from the negative PR if the problem is well-addressed (Zhuo, 2015). Uber’s negative PR comes in the form of viral videos, tweets, and sensational story-lines, with the company being accused of sexual harassment, insensitivity and opportunism, a culture of sexism, and bad leadership from the top (Isaac, 2017). Uber’s fast growth and position in the taxicab industry gives it substantial leverage to bounce back from negative PR and reclaim its top spot in the market once it responds to its ongoing PR concerns appropriately. Uber’s new CEO, Dara Khosrowshahi, steps to manage the PR crisis troubling the company’s reputation all over the world (Vanessa, 2019). For Uber to restore its public reputation, it would need to launch new, unique and advanced SWOT strategies, pricing strategies, and market promotion campaign strategies.
Using SWOT analysis, Uber needs to analyze its strengths, weaknesses, opportunities, and threats in the market.
Strong brand recognition: Since its establishment, Uber has maintained strong brand recognition in the ride-hailing market in more than 50 countries (Umar, 2019). Thus, Uber needs to use this global brand recognition to convince customers that it is still the best company in the industry. To achieve this, the CEO and top management should venture more on brand value framework and incorporate this with new technological features.
Dynamic pricing strategy: Uber remains versatile in its pricing strategy. However, Uber’s strategy “Higher the Demand; Higher the Price” has attracted negative PR from the target market (Bhasin, 2019). Although this policy continues to benefit its drivers, it is unfair to the customers. Therefore, Uber needs to capitalize on its pricing strategy by coming up with a system in which both drivers and customers are happy. This would help retain customers and prevent them from shifting to its competitors like Lyft and Yandex Taxi.
Adaptive nature: Uber’s adaptive nature has contributed significantly to its global growth and expansion. Its expansion globally has exposed it to diverse cultures and nationalities. Uber needs to capitalize on this strength and launch smart marketing through which negative PR can be combated across these countries (Umar, 2019). For example, Uber uses social media platforms such as Twitter, Facebook, and Instagram, Uber needs to let its worldwide customers know of its promos, deals, and any other updates. Also, Uber needs to use these online platforms to respond to customer complaints; this would help end its bad reputation.
Global market leader: Uber remains to be the market leader, extending its transportation services in more than 65 countries and over 785 cities (Bhasin, 2019). In the U.S., Uber enjoys a 69% market share in the industry. Uber should not sleep on this strong brand identity; it should instead address matters that attract negative PR from the target market and embrace a culture that upholds ethical standards and professionalism by its workers.
Multiple scandals: Uber’s brand has endured negative PR over various controversies and scandals. An excellent example of such scandals is sexual harassment to customers by Uber drivers; such attacks have adversely affected its reputation (Faiz, 2019). Another controversial scandal at Uber has been arising when its drivers call for a striker against its low wages and lack of transparency. As a result, Uber’s brand image has continued to create mistrust among drivers and customers. To fix this scandal, Uber needs to improve the pay percentage to drivers, ensure the utmost transparency in its IPO, and deregister drivers who practice sexual harassment over customers.
Public backlash: Uber has been facing a public backlash over its strategic decision to charge high prices during weekends and night hours (Heartofcodes, 2018). For example, during Hurricane Sandy, Uber charged high rates for rides on customers. Uber needs to revise this policy and do the reverse. By giving price-cut offers to customers, Uber will attract positive PR and end this backlash with the public whose impact is adversely felt in the company’s IPO.
Substantial losses: Since 2009, Uber has been experiencing significant losses, especially when it hikes its ride charges. To the executive management, this must be a significant concern, and the best strategies need to be taken to contain this unfortunate trend (Heartofcodes, 2018). The most important strategy to use here is beating the growing competition in the market. Thus, Uber needs to provide bonuses to drivers and give its customers discounts. This would not only help Uber remain competitive but also improve its image to the public.
Accountability and performance: Cab customers only want to use organized cab services, which Uber competitors have failed to offer. Only Uber does this. Uber should then exploit this golden opportunity by offering its rider services based on accountability and quality performance (Umar, 2019). To achieve this, Uber needs to let its riders control their data and also to track its drivers’ performance. By using these two strategies, Uber would easily contain the multiple cases of sexual misconduct reported by customers against its drivers while tracking customers’ views on their ride experience.
Market expansion and profitability: Uber’s strengths indicate that it has a perfect opportunity to expand in the market and make more profits (Heartofcodes, 2018). However, with the ongoing negative image in public, this might be impossible. To expand and improve profitability, Uber needs to value drivers as much as riders. Uber has bad employee relations, a key factor behind its huge losses. Poaching drivers from competitors like Lyft is not the solution, and the solution is to value drivers, give them high commissions, and ensure their employee satisfaction (Umar, 2019). This would help Uber grow fast into the world market for negative PR would also end.
Utilize digitalization: The world market is increasingly becoming digital. Although Uber has created the Uber mobile app, it needs to invest more in creating a rating platform through which customer data or reviews are not manipulated (Umar, 2019). Manipulation of customer reviews by Uber has been common, and this attracts negative PR to the company. Through the Uber App, Uber should motivate its users to interact and share their experiences using Uber freely; this positive use of technology would help Uber increase customer base, profitability, and loyalty, where there is no negative attack over its services (Claudia, 2018).
Employee and customer retention: Uber’s key stakeholders are customers and drivers. Surprisingly, the ongoing negative PR against Uber is being led by these two key stakeholders to the company (Faiz, 2019). Uber does not give drivers technical support and has also been reluctant to pay them a better commission for their services. On the other hand, Uber rides have been reporting cases of sexual harassment by Uber drivers. As a result, employee and customer retention is a big headache for Uber (Lazzaro, 2016). Uber needs to improve its driver-company relations by increasing commission margin and helping them secure lower insurance premiums; this alone would ensure employee satisfaction. Also, Uber needs to protect customers’ privacy and charge riders reasonably; this would help in customer retention. As a result, the negative PR would lack power for those who lead it have has their problems been addressed by the management (Lazzaro, 2016).
Lawsuits: At least 300,000 drivers have file cases against Uber of its minimum wage policy. Some drivers have labeled Uber’s wage policy as “unfair” and not considerate of employee welfare (Heartofcodes, 2018). Although these cases have been settled in courts, they have already threatened Uber’s reputation in public. Thus, Uber needs to revise its wage policy, adjust its income claims, and offer a tiered system that spurs drivers to take on more rides per day (Umar, 2019). This will end disappointment among drivers, which would, in turn, correct its public image all over the world.
Stiff competition: Uber’s strongest competitor is Lyft. Uber’s strategic approach to poaching Lyft drivers has sparked heated online discussions by the public, damaging Uber’s reputation severely (Lazzaro, 2016). This strategic approach of trying to undermine Lyft has been unethical and cost Uber its competitive advantage in the market. Uber instead needs to treat its drivers better, and this would be the surest strategy for keeping the best drivers into the company and maintain its strong brand position in the market.
Uber’s one pricing strategy, which has attracted a lot of controversies, is price discrimination – having the guts to charge different prices to rides that they think are able and willing to pay that price (Agarwal, 2016). However, the outcomes of this strategy have been adverse to Uber’s public image and competitive force in the market. In such events, customers have chosen to turn to Lyft, Juno, or other cab service firms. If Uber continues to use such discriminative policies, its reputation in the market will never improve (Agarwal, 2016). For Uber to eliminate this negative PR, the management needs to set and use the following pricing strategies:
Promotional pricing: Promotional pricing strategy entails providing discounts to customers on a certain product or service (Guido, 2019). Uber needs to adopt this strategy, especially when offering its customers with coupons that entitle them to a certain percentage of the service or the product. For example, under Uber Eats, the company should adopt the pricing strategy of “Buy One Get One Free,” this would attract more customers to purchase the good. Also, Uber needs to consider this pricing strategy during an extended holiday, for example, Memorial Day Weekend, where it lowers Uber ride prices to enable their customers to travel cheaply and explore the world. This would incentivize Uber’s customers to act now and grab the offer; this would help Uber improve its public image too.
Competitive and psychological pricing: Psychological pricing is a strategy used by marketers in encouraging customers to respond to its product or service based on emotional impulses and not on logical impulses (Scott, 2019). For example, in Uber, the company needs to introduce strategies like, for the past five rides whose cost is at least $100, these customers would pay only 80% for their sixth ride. Another psychological pricing strategy for Uber is allowing customers to pay $99 instead of $100; this would attract more consumers and help Uber enlarge its market base. Demand for Uber services will hence increase by creating an illusion of enhanced consumer value.
Value-based pricing: Value-based pricing refers to the approach of setting a price based on how much the customer believes your service is worth (Scott, 2019). For Uber, this strategy is suitable because of the external pressure caused to the company by an increase in competition and economic recessions, which are affecting the customers’ ability to call for Uber ride. Uber would rely on this strategy based on its strong brand awareness in the market, for it is still the best company in the industry. Thus, Uber needs to increase its charges but ensure high-end rider services and experiences are experienced by its customers. Again, Uber should address the issue of sexual harassment by hiring ethical drivers, and this would enable riders’ rate its services high hence attracting more customers who prefer paying high for quality rider experiences.
Price skimming: Price skimming entails setting rates high when a new brand is being rolled out into the market (Claudia, 2018). While Uber continues to face competition from Lyft, price skimming would help the company maintain and retain customers in the market. Through the introduction of new techs or features into its Uber and Uber Eats apps, Uber will be offering the same service in a more cohesive and user-friendly platform compared to its competitors. Through price skimming, Uber needs to gradually drop its prices like, for example, during holidays, by lowering prices for its rides; Uber would attract and retain price-sensitive customers. However, this strategy should be fairly applied to all customers.Promotion Campaign Strategy
Uber’s promotional campaign strategies are being thwarted by its PR issues in the world market (Bhasin, 2019). In the past, Uber has applied strategic promotion solutions by specific marketing communication activities, targeting diverse publics, and with distinct objectives. To promote positive PR, which would make customers more comfortable using Uber services and products, the management needs to implement the following promotion campaign strategies:
Social media promotion: Uber’s market success is primarily based on technology (Bhasin, 2019). Thus, Uber needs to make use of social media sites like Google+ and Facebook in promoting its services and products in a more relaxed environment. Uber needs to invest more on its current Twitter, Facebook, and Instagram channels in promoting its products. This is the best platform in which Uber will receive both positive and negative feedback from users for response (Claudia, 2018). By this doing, Uber will be in a position to market and promote the only services and products being demanded by customers in the market.
Customer referral incentive program: Uber needs to invest more in creating a referral platform where its customers are rewarded on referring new customers (Bhasin, 2019). In this promotional strategy, Uber needs to enlist cash rewards, big discounts, and free rides and products to those users who refer their friends using a link to install the Uber App and book a ride with the company. This promotion strategy would enable Uber increase the number of customers and also in mitigating the negative public image it currently faces in the market (Scott, 2019). The more Uber enrolls more users, the more Uber improves profitability; this strategy cannot be ignored.
Branded promotional gifts: Uber needs to invest more on branded promotional gifts. Currently, Uber drivers hands out simple business cards to the customers (Scott, 2019). However, business cards are not enough in promoting Uber goods and services. The company needs to expand this strategy by issuing both existing and target customers with t-shirts and caps printed with the Uber logo. This would make people want to be associated with Uber, attracting them to install Uber apps and start enjoying Uber services; this would improve Uber’s brand reputation, profitability, and competitiveness into the market (Bhasin, 2019).
Use of after-service customer surveys: Uber needs to design a system that automatically pops up in a customer’s smartphone screen immediately he/she alights at the destination they ordered to be dropped by the cab drivers, for example (Heartofcodes, 2018). In this platform, customers would be required to rate the experience being droved by Uber and the driver in charge from one to five stars. Also, this promotional campaign needs to leave a room whereby customers can write any other information they want the company to address (Guido, 2019). By thus doing, Uber will promote its services while at the same time working on the concerns raised by customers to prevent its reputation in the market.
Uber has proved capable of reacting well under challenging situations. In the case of negative PR, Uber needs to focus on goodwill marketing, value drivers as much as riders, and let riders control their data. Based on the analysis, Uber needs to rebuild work ethics and values, change the performance review system by integrating internal driver review systems with those of users, create new formal promotion strategies, clearly address customer concerns, rebuild its organizational culture, and ensure transparency in all its operations. By this doing, Uber will surely gain an edge in terms of competition, customer loyalty, attraction and retention, and profitability. As a result, bad PR will become an issue of the past; and the company will continue enjoying success, sustainability, growth consistency, and profitability in the industry where it operates.
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