Question

Most firms cannot bring value to customers by themselves. How does Uber bring value to its customers?

Answer 1

Introduction

In micro economics, vast studies have been conducted to know, which model fits an industry best. It is an emerging trend and must therefore be carefully analyzed and implemented across each different levels respectively.

In this, it is important to realize that not one is applicable for every user but each service based industry usually focuses on the needs and wants of the consumers which then translates into creating an ecosystem which brings people together using a common app and the company enabling such a platform earns profits from the same.

This has been the usual trajectory of the companies engaged in trade over the internet across the years. Uber is no difference to the whole process respectively. It is important to realize however that the backbone of Uber are the people that run it which are the drivers the firm in itself is just delivering an app based service which is incomplete without active cab owners.

How does Uber bring value to its customers?

Uber is a service based product which adds value to the customer by allowing them transport facilities without actually having to buy a car themselves. The company understands that transportation is a big concern for most people and affordability would allow for the company to grow.

Further it is a major source of employment and has enabled people to earn way beyond they would get from driving taxis or becoming private drivers.

Thus, the model of the company is going asset light which is a new concept in microeconomics. The company in itself is tasked with managing only smooth running of the application and hiring cab owners who know of each and every norm which the service industry usually is expected to follow.

It brings value to the customers by acting as a medium to connect with cab owners who need to earn money for themselves. Thus this also highlights that without the cab owners the company in itself can give no service to the consumer and cannot add any value.

The value addition comes from the cab owners who act as a medium for the company to earn revenue through commissions on each ride which is conducted. While the main task of the company is to maintain a robust server which provides a platform to connect, in reality it is the cab owners that create true value and solve transportation problem of the customers respectively.

Please feel free to ask your doubts in the comments section if any.