Introduction

Let me first describe What is Uber and how does it work. Uber is a technology
company that offers a free software-platform available on a mobile device for
those wishing to request a ride. It basically introduced the business concept of
booking a car on a smartphone, tracking the vehicle on a map as it approaches
your location, and then after the ride paying for the service directly to the driver
via your preloaded credit card without any awkward tipping required. A simple
experience and much more pleasant than stepping onto a busy street and
waving at oncoming traffic. Added to which, you select the kind of car you want
to travel in from uberX to UberLUX.
Ref:http://fletcher.tufts.edu/~/media/Fletcher/MIB/pdfs/B236%20Student%20Case
%20Studies/Uber%202014.pdf
Uber is still only the minor player in China, competing with the extremely strong
local competitor Didi Kuiadi that has around 80% of the market and gets
significant invest from sources close to the Chinese government.
Ref: http://www.businessinsider.in/Ubers-top-Chinese-rival-just-raised-3billion/articleshow/48887302.cms
Recently Uber secured a $200 million investment with Chinese Google
equivalent, Baidu and Ubers valuation has grown $22 billion in the past six
months; and currently stands at about $50 billion. In contrast, Didi Kuaidi has a
$15 billion valuation and is responsible for about 80% of ride bookings.
Ref: http://themarketmogul.com/didi-kuaidi-crushes-uber-in-the-chinese-market/

Source: reuters
Q1. Describe how Uber can segment the Chinese market, using the full
spectrum of segmentation variables. Which segments should Uber
target? Why?

Ans1.
Market segmentation is an integral part of a company's marketing strategy. It is
the process of breaking down a larger target market into smaller, more
homogeneous groups of customers that you can more efficiently market to. Both
consumer-oriented and business-oriented companies should segment customers
using one of several common approaches.
Uber provides ride booking services in different regions across various circles in
china. To our busy, modern, urban consumers who need to travel frequently and
relish the most comfortable experience of traveling, Uber is an on-the-go
traveling solution that provides a convenient, reliable and exclusive way help you
stay on top of all your tasks while still enjoying the taste of a luxurious lifestyle.
The consumer market for ride booking industry is majorly segmented as:
1. Geographic segmentation- China is a country of heterogeneous subcultures
with a broad spectrum of local cultures and dialects. Based on geographic
location, culture, and economic development, China has traditionally been
divided into a number of distinctive regions. People from various regions are
also known to differ in temperament, values, and life styles. China evidently
developed historically and culturally in a very different way than the western
societies. The Chinese consumer is different with a complex set of needs and
expectations. Firms need to take time to understand the consumer and what
they want.
a. China has over 600 cities, 22 provinces and is the third largest country
in the world. According to a Q1 report by Beijing research firm,
Analysys International, Didi Kuaidi had 78.3 percent of the Chinese
limousine market while Uber had 10.9 percent at the end of 2014.
b. Uber now operates in more than 10 cities, including Shanghai and
Guangzhou. The U.S. app plans to expand its service network to 50
cities within two years.
Ref:http://asia.nikkei.com/Business/Trends/Smartphone-based-serviceshave-cab-companies-worried
c. Uber has grown from 200,000 users in January to 4.6 million monthly
average users in June. Five of Uber's top 10 cities are in China, said a
spokesperson for the company.
Ref: http://www.cnbc.com/2015/09/15/what-stands-between-uber-andsuccess-in-china.html
d. Uber's three biggest cities are all in China. Guangzhou, Hangzhou, and
Chengdu.
e. After only nine months operating in Chengdu, Uber has 479 times the
number of trips it had in New York after the same time.
f. Potential market in Hangzhou is expanding rapidly, with the city adding
200,000 new residents every single week.
Ref: http://www.businessinsider.in/Heres-everything-you-need-to-knowabout-Ubers-plan-to-turn-China-into-its-biggestmarket/articleshow/47761330.cms

g. Passengers in China are taking 1 million trips per day. Uber is in 11

cities in China, but plans to launch in 50 more cities that have a
population of more than five million this year.
Ref: http://www.businessinsider.in/Ubers-growth-in-China-is-absolutelyinsane/articleshow/47636716.cms
h. Uber emphasis its global presence in marketing campaign. They can
offer best in call service to persons travelling abroad particularly US.
i. Chinas urban commuter market is unmatched, which is why both
companies are fighting so hard for it. The market alone is over twice
the total U.S. population and anticipating growth as Chinas middle
class is expected to see an influx of hundreds of millions of people over
the next decade.
Ref: Ref: http://abovethecrowd.com/2014/07/11/how-to-miss-by-a-milean-alternative-look-at-ubers-potential-market-size/

Source: Reuters
2. Demographics - It is one of the most common approaches to segmenting
markets in this strategy company simply divides the larger market into
groups based on several defined traits. Age, race, gender, marital status,
occupation, education and income are among the commonly considered
demographics segmentation traits.
a. Chinas population aged 60 and above are increasing rapidly and it is
expected that it will increase from 200 million in 2015 to over 300 million
by 2030. These people require more health related travel requirement
mostly emergency service.
Ref: http://www.brookings.edu/research/articles/2010/09/china-populationwang
b. The number of middle-income Chinese people account for 40 percent of
the total population and nation's urbanization drive will turn another 150
million farmers into city residents by the year 2020 and they require to
travel locally for different purpose.
Ref: Economic report of Social Sciences Academic Press (China) and
Shanghai Academy of Social Sciences. [China Daily]

c. Most Uber riders believe they are safer in an Uber than in a traditional
taxi. This sentiment is easy to understand. Because there is a record of
every ride, every rider, and every driver, you end up with a system that is
much more accountable than the prior taxi market (it also makes it super
easy to recover lost items).
d. Women working population also growing rapidly and they need safey and
security. Uber has the rating system that ensures poor drivers are
removed from the system. Many of the women I know have explicitly
stated that they feel dramatically safer in an Uber versus a taxi.
Ref: http://abovethecrowd.com/2014/07/11/how-to-miss-by-a-mile-analternative-look-at-ubers-potential-market-size/
e. There are many people who are looking after older parents and they have
insisted their parents to put Uber on their phones to have an alternative
to driving at night or in traffic. Convincing them to use Uber is much easier
a task than suggesting they call a taxi due to both convenience, ease of
use, and social acceptance.

Source: Reuters

3. Behavioral- Behavioral segmentation is based on user behaviors, including

patterns of use, price sensitivity, brand loyalty and benefits sought. On the
basis of behavioural segmentation uber can be classified as follows;
a. Chinese people are very particular about cleanness and punctuality. They
find Uber is different from other service providers. Cars are cleaner and
the driver is polite. Sometimes they even offer you tissues or a bottle of
water free of charge.
b. China has a huge population living in downtown and they are more
interested in low cost service. Uber fares in downtown Guangzhou are half
those charged by cabs, and 20% lower than rivals including Didi.
c. Uber drivers are also happy with the service. They currently earn more by
using Uber than other ride-hailing apps because the company offers prizes for
those who give more rides
f.

Uber is developing brand loyality as Uber fans counter that the service is
safe because they know the license plates of the vehicles that pick them
up and the mobile phone numbers of the drivers. "Such information would
prevent most Uber drivers from doing silly things. And that would make
Uber service at least safer than traditional taxes

Ref: http://www.chinadaily.com.cn/business/motoring/201507/06/content_21190822.htm
4. Psychographics- Psychographics or lifestyle segmentation has become
increasingly common as companies look to identify consumers based on
interests and activities in lieu of demographics.
Young generation are interested in adventure and keep on changing need. They
are interested in product diversification and always something new.
a. The Uber also classified the customers mainly on the basis of their level of
customization and the type of services they required. They have different
types of services for different types of customer, Everybody heard about
famous Uberx and UberBlack services.
Peoples Uber : Get a regular car with a regular driver each time you need
at the most affordable price in the city. This is a Chinese version of Uberx .
The car delivery is 13 Yuan, the trip will cost you 0.7 Yuan for 1 minute
UberXL: this is a local version UberSUV. Use it in case you travel in a big
company, which needs a car of a minivan size. The price for it is 2,5 Yuan
per km
UberBlack: It is a classic UberBlack service with luxury cars or commercial
vehicles, very qualified drivers. Minimum order for UberBlack in
Shijiazhuang: 30 Yuan, Cancellation fee 20 Yuan
UberENGLISH: A convenient way for tourists to call a taxi cab with with
english - speaking driver. Minimum order: 30 Yuan, Cancellation fee 20
Yuan.
b. All cars are with free wi-fi. You may pay for your drive by any credit card,
electronic currency and by cash.
c. UberCommute is designed to pair drivers with riders traveling along
similar routes. The basic vision is that a driver heading to work, or running
an errand, or otherwise traveling in a given direction will log into the app
and pick up a passenger heading the same way. In a first for a to-be global
product, Uber has chosen to develop and pilot UberCommute not in the
United States but in Chengdu, China, which it calls its biggest city.
Ref:http://www.slate.com/blogs/moneybox/2015/09/25/uber_makes_a_big_bet_on
_carpooling_with_ubercommute_in_chengdu_china.html
d. Payment methods are user friendly that suits all age groups. With Uber
you never need cash to affect a transaction. The service relies solely on
payment enabled through a smartphone application. This makes it much
easier to use on the spur of the moment. It also removes a time
consuming and unnecessary step from the previous process

Q2. Choose a segment and develop a marketing campaign that could be

used to encourage consumers to use Uber.
Ans2. China has over 600 cities, 22 provinces and is the third largest country in
the world. Focusing on China as a whole will likely lessen ones efforts and drain
resources. Therefore, segmenting the market and choosing the right segments
based on per capita income, region and consumer behaviour are of crucial
importance when targeting a country this size. Behavioral segment is the main
focus area where Uber will focus more.
a. To bring closeness with customer and investor Uber should try to build
image of local multinational i.e build UberChina as a brand. Didi has a
huge advantage with the Chinese government because its local, and with
this approach two companies will be on the same playing field.
b. Localize Uber by recruiting local staff, inviting Chinese capital investors,
aligning with Chinas government regulations.
c. To get a government faith and support Uber should go now for a strict
compliance strategy in China Unlike Ubers usual way of acting first and
(maybe) asking for permission later.
Ref: http://dvpb.net/tag/uber/
d. Uber will fully separate its China business from its other business by
setting up an own Uber China company, and is trying to work more closely
with local partners in order to get a better standing in the Chinese market.
It is a comply or die situation, and Uber is likely to go for the survival
option.
Ref: http://dvpb.net/tag/uber/
e. In the changing behavioural approach it is essential for developing new
service all the times . Uber service is thinking of all the fully-autonomous
vehicles that will roll through our streets in a couple of years. If you need a
car you just fire up your Uber app, and a couple of minutes later you will
get in a self-driving Uber car. No need anymore for Uber to sign up new
drivers and make sure that always enough of them are on the street.
Automatic algorithms can simply dispatch autonomous cars on the streets,
depending on actual and expected demand. And all 160,000-something
drivers of Uber can slowly be replaced with a safe and smart robot car
Everyone is happy
Ref: http://dvpb.net/tag/uber/
f.

Company should try and increase brand loyality among customers. They
should develop plan to address promotional offers given by competitors.
eg. Didi Kuaidi said it would give away about $161 million in free rides to
battle Uber.
Ref:http://www.businessinsider.in/Ubers-top-Chinese-rival-just-raised-3billion/articleshow/48887302.cms

g. Uber has taken steps to reform its marketing strategy in China they have
sets up local teams to localise logistics like language and support services.
This enables Uber to monitor the needs of consumers unique to the
Chinese market. For example, after consumer requests, Uber switched

from using Google maps to Baidu maps. Alipay was added for easier
payments, as many Chinese residents do not have credit cards..
h. Uber should develop partnering system with other small players in market.
Their next move is to invest $1 billion to further support its Chinese
expansion and potentially merge with another Chinese car service, Yidao
Yongche. This move with a native company could help Uber gain traction
to increase its market share.
Ref:
http://themarketmogul.com/didi-kuaidi-crushes-uber-in-the-chinesemarket/
i.

Uber, meanwhile, has taken a multimillion dollar investment from Chinese

search giant Baidu, and had integrated Baidu maps and other services into
its app. The company has also diversified in China by launching "People's
Uber" where drivers can offer "nonprofit" rides to passengers where only
the cost of gas and maintenance is covered.
Ref: http://www.cnbc.com/2015/09/15/what-stands-between-uber-and
-success-in-china.html

Tailoring a product to the consumer and offering something more specialized will
often lead to brand loyalty as consumers can identify strongly with something
more unique. In the competitive Chinese market it becomes even more
important, consumers will pay a premium for something which sets them apart.
The rise of consumer individualism in modern China demands for a more niche
and intelligent style of branding.
Promotional plan

It is found that the travelapp companies are providing almost same type of
services with few modifications. In present condition it is really important
to position your brand as best as possible and for this the best idea is to
promote the brand with best multimedia campaign and market
Communication. The objective of campaigns is to communicate the
customer various new plans, their features, and promotions. Uber has
developed the whole marketing communication around social issues. The
use of brand name "UberChina" in its tagline.
Local Communication Channels can be utilized for publicity and
advertising. Uber need follows a mass marketing strategy like all other
brands because this medium has highest reach in the country. To
communicate through channel. They can sponsors sports events, musical
programs, awards functions, involve celebrities in campaign etc.
Print Media is another low cost campaign approach through which
company can highlights key features of services and offers. Whenever a
new activities or services are added company should give full page ads in
the leading newspapers.

Q3. Propose three recommendations that Uber can implement in its

future marketing efforts. Your recommendations should take into
account the trends in the marketing environment and the companys
competitive advantage.
Ans3.
1. Uber should publically share society caring image for operating services of
People's Uber. They are loosing a lot of money because it uses regular
drivers and cars, and is made to appeal to China's socialist tradition by
having fares that only cover the driver's cost. It has no profit by design.
LinkedIn's Isabelle Roughol reports that Uber loses about three dollars for
every dollar it bills on People's Uber.
2. Main focus of Uber is to target new markets they have planned to launch
services in 45 more cities over the next year. Therefore they should
develop partnering with some local small company to have accurate
mapping and range of service in area.
3. Uber should offer attractive incentive scheme for drivers and marketing
person to enable them to work harder and gain market.
4. As we all know that China is so different from the rest of the world. They
are highly reluctant in accepting outside company in local market even the
government policies are not very supportive. Therefore company must be
developed and promoted as domestic organization. They should have
separate management and separate headquarters. Company should be a
truly Chinese, with Chinese investors and partners who know how to
interact with the government and who can help localize Uber for the
Chinese market.
5. There is a big legal concern that company should address immediately.
There is no insurance cover in case of accidents. If company can develop
some insurance plan it may help in gaining
confidence of local
government and customers.
Ref:
http://www.chinadaily.com.cn/business/motoring/201507/06/content_21190822_2.htm
6. To develop culture of continuous improvement, company can develop
feedback mechanism for drivers and customers. Customers rate the
drivers and service quality and drivers should also be given an opportunity
to rate customer.
7. Uber should not forget to emphasize its identity as an international
company at some point of time and highlight its competitive advantages.
As some users might not really need Uber in China, but would find Uber
very helpful when they travel abroad.
8. Company should explore aggressively about autonomous driving, they can
put a R&D center that can drive the future requirement of next generation
people.

9. With the advent of fast internet services and increasing number of smart
phones, company should focus on advanced value added services like tour
packages, Messages on special moments like birthday, marriage
anniversary etc.
10.Company can come up with monthly card to attract regular travellers
(Office going ,businessman) also give promotional offer to encourage
group bookings or shared services.
11.China rural market is huge (as per world bank report 47 % population
living in rural area of china) and it is still untapped. Uber can explore
possibility of starting low cost services in those area to gain competitive
advantage and increase brand loyality.

At its core, Uber seeks to match passengers to drivers. The platform is able to
track a users GPS coordinates, even if the user does not know where she is, and
within minutes, an Uber driver will arrive. The user is able to track the arrival of
her ride, and receives a text message confirming when the Uber driver is
arriving. From the drivers end, the driver is able to hit a button on his own app
that says Arriving Now which sends the text message. The driver is never given
the users phone number directly, but is able to contact the user if he is unable
to find the user. UberX typically costs less than a normal taxi in most markets.iv
However, in times of high demand, like New Years Eve and snowstorms, surge
pricing kicks in, and rates become anywhere from 1.5 8 times as high.
Ref:
http://fletcher.tufts.edu/~/media/Fletcher/MIB/pdfs/B236%20Student
%20Case%20Studies/Uber%202014.pdf

The market segments covered by both companies operational models are

becoming clearer Didi-Kuaidi specializes in taxi-hailing, chauffeur service,
carpooling and bus service and its goal is to create a one-stop-shop style smart
commuting platform, while Uber China says it isnt thinking of entering the
driver-hire or bus segments for now.
Ref: http://www.chinatravelnews.com/article/94751

a.

Both Uber and Didi Kuaidi, with cash in their coffers to spare, have
been aggressively offering bonuses to Chinese drivers to get them on
board. This has led some drivers to game the system with fake rides,
and rings of scammers using specialized software to automatically rack
up trips have even reportedly cropped up. Both companies say theyre
working hard to crack down on the racket, either freezing fraudsters
accounts or demanding they pay a penalty. Uber is still behind. Few
Internet companies tend to succeed in the country, in large part

because the government prefers local players it can more strictly

watch over
Ref:http://www.slate.com/blogs/moneybox/2015/09/25/uber_makes_a_b
ig_bet_on_carpooling_with_ubercommute_in_chengdu_china.html
1. All the Uber drivers are local and they know every corner of the city.
Maintenance costs are reduced to minimum, thats why Uber can
keep their prices really cheap. And you may start using the service
immediately - just download the Uber app for your iPhone or
Android smartphone from Google Play or App Store and enjoy your
freedom. If your phone is driven by Windows mobile you can use
Uber app for this platform as well.
1.
As Uber tries to expand its business in China, Didi seems to
always be one step ahead. The Chinese company is available in
over 80 cities as compared to Ubers 16, and it raised $2 billion this
summer while Uber is just now reportedly closing in on a $1 billion
investment for UberChina. Didis company is also much larger that
UberChina with 4,000 employees (not including drivers) to
UberChinas 200.
Ref: http://fortune.com/2015/09/03/uber-china-rival-fight/
As competition intensifies, fares and services are constantly
changing. Different taxi apps demand different fees, which change
depending on the city and also vary weekly. Users enter a
destination into the app and choose a vehicle, with choices
including taxis, ordinary cars, luxury cars and other models. The
screen then shows the name and license number of the car that will
arrive as well as an estimated fare. The user receives a call from the
driver after clicking the OK button and they decide on a meeting
point. The ride fare is displayed on the app after arrival and paid via
smartphone.
A company may have customers with a similar demographic
makeup but distinct behavioral tendencies. Some may use the
product daily, while others use it weekly or monthly. Higher-income
earners may have more interest in higher-quality models versus
low-cost models. This may prompt the provider to target higher-end
products and services to one group and more value-oriented
offerings to lower-income or budget-conscious customers.