Question

Please identify an existing start-up business/ new venture and assess their product/ service and pricing strategies.

Product/ Service Strategy: The uniqueness of Product/ Services What value the product offer to consumers? Assess the appropriateness of the product to the chosen target market Pricing Strategy Identify the pricing strategy and assess the appropriateness of the strategy to the chosen target market

Answer 1

Uber was founded in 2009, it started as a transportation network company where they used licensed taxi services to give ridesharing services. The idea was to combine technology with transportation. You could order a cab by downloading an app or sending a text message. The cab would arrive in a few minutes and drop you to your destination at half the price of the local cab. The customer can also track the cab while it is dropping you to your destination.

Uber has become widely accepted among the consumers as it filled need gap existing in the passenger transport service for a quick, efficient, reliable, safe and fast pick up and drop.

It was achieved by following the need gap and filling it with a combination of following 6 measures:

• Identifying customers needs: Uber utilized the inefficiencies and inadequacies of the existing taxi service which was expensive and accessible only to the elite class. The reinvented the model by giving quick and efficient picks and drop service in a few minutes by placing an order on the mobile app. The client could travel at 1/3^rd the price. They allowed customers to pay by various ways, cash, cards, wallets etc. The customers could track the ride while it was on its way. The cabs were clean, efficient and had multiple payment options.
• Creating benefits for drivers: They created jobs for drivers who were finding it difficult to sustain due to the downtrend in luxury car and cab rental services. The made the drivers entrepreneurs and allowed them the luxury to earn more for more rides. The drivers were connected directly to the customer via the app.
• Early adopter: They were the first organization to use technology and transportation to maximize customer movement in an efficient and fast manner. The organization started operations in San Francisco, which is technology hub and most people needed to move fast, and would be happy to use a technology friendly service. They promoted the service by giving free rides and promoting tech events.
• Word of mouth: The early users found it convenient and easy option to existing inefficient and failing taxi services. They were also happy with the free rides and the events sponsored by them. They grew with word of mouth advertising and got the reputation of being a quick, reliable service at low costs. The ease of pressing a button and getting a cab at your doorstep was the unique and simple solution to address the transportation needs.
• Price surges: They used the opportunity of a crisis or excess demand by increasing the prices at peak times or during an emergency, like a thunderstorm when the customer is just interested in reaching his or her destination safely and swiftly, the price was not a consideration. The Uber used these points to increase prices according to demand-supply formula. Though the price increased, they would still be economical compared to conventional taxi services. They also made it a point to inform about surge prior to the client making a booking.
• Efficient services: They introduced efficient and cost-effective transportation, which was a good change from the expensive and inaccessible taxi services. They would reach your doorstep just by placing an order on the app and there were no unpleasant surprises on the fares as they were pre-informed before the ride.

To sum it up they have a simple cost effective service with minimal advertising to give maximum benefit to the driver and the customer. There strategy of penetration pricing and providing low-cost taxi service affordable, efficient and convenient is a huge hit in the target segment.