Assessment 3: International marketing strategy report

Answer

1. • Sustainability Issues in Relation to Uber’s Marketing Strategy in Asia Pacific

      

      

      

     Executive Summary

     This report analyzes sustainability issues in relation to ride sharing services, particularly, Ubers marketing strategy in Asia Pacific. The first section presents a background of Uber. It is an American firm operating in 93 countries and more than 900 cities. The brand enjoys a market leadership position globally because of its superior digital technological system. Its stakeholders have been supportive of the company’s growth. However, intensive competition and unsupportive government policies are threatening its sustainability in Asia Pacific. The market has shown prospects for growth in future. Therefore, with right segmenting, positioning, and marketing strategies, Uber will easily improve its competitiveness in this market. An analysis of Uber’s marketing mix shows that the company offers a variety of services to suit different customer needs. The company is digital thus maintains few physical offices around key markets. It uses geographical and penetration pricing strategies and word of mouth promotions. The firm has not invested in sustainability. It also has ethical issues such as mistreatment of drivers, claims of increased carbon emission due to high mobility, and claims of increased traffic around cities. It is recommended that Uber introduces sustainability reporting, and CSR. In addition, it needs to work with the governments in enacting favorable policies that support the growth of the industry.

      

      

     Sustainability Issues in Relation to Uber’s Marketing Strategy in Asia Pacific

     Introduction

     The World Trade Organization (WTO) and the World Bank have been on the forefront in analyzing and advising organizations on how best to conduct international marketing. In the most current report, the WTO identifies macro environmental factors that influence international and global marketing strategies (Negi, 2020). These factors range from political, social, economic, technological, legal, and environmental influences, abbreviated as PESTLE framework. These organizations emphasize the need for social responsibility and sustainable marketing as a strategic approach to achieving sustainable competitive advantage. According to Eckhardt et al. (2019), sustainable marketing is the strategic process of promoting socially and environmentally responsible practices, brand values, and products. Coincidentally, these reports have been produced at a time when the world is quickly adopting to the sharing economy model. In spite of its merits such as enabling rapid internationalization, the business model has been criticized for lack of sustainability. Guided by this understanding, this report analyzes sustainability issues in relation to Uber’s marketing strategy in Asia Pacific region.

     Background of Uber

     Uber is ride sharing company founded in 2009 in San Francisco. The company provides a range of services namely hiring of vehicles, delivering packages, transporting freight, and delivering food. In order to widen the scope of its services and tap into the diversity of its customer needs, Uber (2020) has designed its services with a focus on different customer segments. The most basic service is Uber X which includes using a standard car to provide customers with private rides. Its other service options include provision of luxury premium level cars, sports utility vehicles, motorcycles, and taxicabs. It also provides shared transport to riders travelling in the same direction. Furthermore, Uber provides convenient services to the elderly and people with physical disabilities with its Uber Access option. Phua (2020) adds that Uber has adapted its services to meet the specific needs of its customers across the international markets especially in Asia-Pacific where it provides motorized scooters, electric bicycles, and boat transportation in Istanbul and Croatia (Uber, 2020). Currently, Uber operates in 93 countries and 900 metropolitan areas around the globe.

     Specific to the Asia-Pacific region, Uber has it’s headquarter in Singapore. As much as the company has gained ground and a market leadership position in the American market, it continues to struggle to outdo local rivals in the Asia Pacific region (Ruehl, 2020). This is noted by the firm’s decision to sell its South East Asian business to a rival ride sharing company called Grab, and close 45 offices and lay off more than 3,000 employees globally, including Singapore. Despite these issues, Ruehl (2020) explains that Uber can capitalize on its technological systems, which are its key competency and its five primary stakeholder groups to achieve sustainable competitiveness across the extremely turbulent Asia Pacific market. Ma et al. (2018) identify Ubers key stakeholders as; riders, drivers, investors, employees, regulators, and providers of mobile operating systems.

     Market Analysis

     Uber’s Market Segmentation

     Segmentation is an important arsenal in Uber’s marketing strategy. It entails dividing the customer population based on shared characteristics to ease targeting and positioning of the ride sharing services. According to Dudovskiy (2018), Uber uses the multi-segmentation approach which enables it to target various customer segments by providing ride-sharing options in Asia-Pacific. They range from the most basic Uber X, Uber Pool, Uber IX, and Uber Access, and the premium Uber Black.

     Uber’s segments its customers based on their geographic location. The main target areas are urban regions with high population densities such as Hong Kong and Singapore. In terms of demographic attributes, Uber categorizes its customers in age groups consisting of 18 to 24 year olds, 25 to 44 years, and 45 to 65 years. The brand targets both male and female customers across different occupations ranging from professionals, senior citizens, handicapped, employees, and students. Uber’s behavioral segmentation consider the degree of loyalty, personality, user status, and customer expectations. Dudovskiy (2018) explains that the level of loyalty exhibited by the firms customers ranges from switchers, soft core to hard core customers. These customers expect a range of value propositions namely; convenience, luxury, and cost-efficiency. The personality traits of these customers range from easygoing, determined, and ambitious with user statuses ranging from first-time users to regular users. Psychographic segmentation of Uber’s customers in Asia-Pacific considers lifestyle and social class (Dudovskiy, 2018). The brand has options which serve the low, middle, and upper class social levels. Their lifestyle often ranges from explorers, mainstreamers, aspirers, and strugglers.

     Market Trends/ Market Size, and Growth

     The Asia-Pacific market is composed of more than 4.4 billion customers. The increasing penetration of the internet, low cost smartphones, and the positive change in consumer behavior in favor of ride sharing services presents opportunities that could be capitalized by Uber. Even as analysts hold an optimistic view of the Asia-Pacific region, Phua (2020) reports that Uber is facing intensive rivalry from local ride sharing firms such as Grab which bought Uber’s assets in Southeast Asia in 2018. Uber currently serves 9 Asia-Pacific countries including Japan, India, and Australia. However, the strict regulations in these markets have resulted into laying off of more than 3,000 employees, and closure of 45 offices globally, including some in Singapore. The poor performance of the market is attributed to the Covid-19 pandemic (Phua, 2020). This critical analysis of the Asia-Pacific market justifies the massive potential for growth, yet the future of Uber in this market remains uncertain due to undermining factors such as intensive competition, and unfavorable regulatory framework especially in Hong Kong where ride-sharing is considered illegal.

     Target Market

     As noted in the Uber’s market segmentation strategy in Asia-Pacific region, the company targets are range of customers. The key focus is to get more people to experience the convenience of ride sharing services. To achieve this goal, the company targets its advertisements to non-users, first time users, regular users, and any potential users. Most of these customers are students, professionals, and employees seeking convenient mobility options. An analysis by Ruehl (2020) shows that the millennial youths represent a rapidly growing market segment in Asia-Pacific. Unlike the earlier generations, the millennial are highly mobile in search for experiences such as tourism, business, and higher education mostly across cities. Populous countries such as India and China are expected to contribute towards the realization of $200 billion revenues in the region by the end of fiscal 2020 (Ruehl, 2020). This data evidences the market potential of this region.

     Uber’s Marketing Mix Elements

     Uber’s marketing mix is composed of four elements; product, price, promotion, and place.

     Product

     Uber provides ride-hailing services. Customers use an application to book a ride and use cashless payment systems. Uber provides a range of services such as Uber X, XI, Pool, Go, Auto, Access, MOTO, premium, Rush, Easts.

     Place

     Uber is active in more than 900 cities. However, it does not have many offices. The head offices for the Asia-Pacific region are in Singapore, but the company might be moving to Hong Kong in 2022 (Phua, 2020). The business is more of a network thus, does not need physical offices in each country. Riders can simply download and use the app to access services.

     Price

     Uber uses the geographical pricing strategy. According to Depusoy, Del Rosario and Mercado (2018), Uber’s pricing is dependent on three factors; distance, demand in the city, estimated time for the ride, and a base rate. These factors contribute to a dynamic pricing strategy where the riders are charged based on economic principles of supply and demand. For instance, higher demand translates to lower supply thus higher prices. A critical analysis of the geographical pricing strategy further evidences that Uber uses economy pricing for some ride options, surge pricing, upfront pricing, and penetration pricing when internationalizing into new markets.

     Promotions

     Uber uses word of mouth advertising to create and sustain brand awareness. This promotional strategy has been complemented by social media which makes it easier for customers to share their experiences and make referrals (Depusoy et al. 2018). Other promotional strategies include heavy discounts and free rides for referrals, adapting their services to the locals such as celebrating Indian festivals by offering free pick-up and dropping services to attendees at Chinnaswamy Stadium in Bangalore.

     Economic, environmental and social/ethical implications of Uber’s marketing strategy

     Uber’s marketing strategy has not integrated sustainability marketing. Failure to consider this marketing strategy has created economic, environmental and ethical implications for the firm. For instance, Uber has been blamed for increased carbon emissions because of the increased mobility around cities, traffic congestion, and mistreatment of the drivers. As much as these factors have led to negative publicity, the company continues to increase its market share in Asia-Pacific region (Ruehl, 2020). However, to further increase its market share and profit margins, it is should consider the following recommendations.

     Recommendations

     For Uber’s senior management

     Uber’s senior management should consider the following recommendations. First, it should introduce sustainability marketing. This strategy entails using corporate social responsibility to increase the awareness of a brand. As the same time, the company has to associate itself with sustainable practices such as making efforts to reduce carbon emissions, engaging in discretionary duties, and giving back to the communities (Negi, 2020). Secondly, the management should strive for partnerships with public sectors. This way, the national governments in Asia-Pacific will feel like the brand is local and thus, offer more support to the company.

     For public policy makers/regulators

     Regulators should consider the option of working with the management of Uber and other ride sharing service providers to enact effective laws that will support economic growth in Asia-Pacific (Negi, 2020). Rather than introducing protectionism policies as noted in Hong Kong, the regulators could embrace the alternative of private-public partnerships to amend regulations to create a mutually beneficial environment for all stakeholders.

     Conclusion

     Uber was founded in 2009 in San Francisco and has internationalized into more than 900 cities globally. The company has managed to grow and penetrate new markets by segmenting, targeting and positioning itself effectively. The market trends in Asia-Pacific region shows better prospects especially from the millennial customers. However, an increase in rivalry threatens Ubers sustainability in the region. For these reasons, the company needs to embrace sustainability marketing while also working together with regulators to introduce favorable regulations to support growth.