2016

Frugal marketing strategies for taxi

aggregators

Manuj Dixit
Saurabh Singh
Kaushal Solanki
Mahika Bansal

11/9/2016
Index:
Abstract .2

Introduction 2

Literature review .5

Methodology ..9

Data analysis .14

Results ..19

Conclusion .20

References..21

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ABSTRACT
The taxi aggregator services have emerged as one of the quickest expanding and
impressive businesses in the Indian transportation sector. It acts as an interface
between the customers and drivers earning profit from both the sides. In this case
study, the app- based cab services have been researched for giving better frugal
strategies for taxi expansion in India and at the same time earning more profit.
The existing strategies have been discussed and a solution is selected based on
extensive surveying. After the study the basic parameters on which the existing
frugal strategies were preferentially ordered pertaining to different sets of
population.

INTRODUCTION
Taxicabs are hired vehicles by a single or multiple passengers for conveyance
between locations of their choice. The concept of taxi cabs has been there in India
since a long time. It dates back to 1911 when horse wagons were complemented
by the then cabs, i.e. the back and yellow Fiats. Their prevalence then, though
mostly in metro cities, can be judged by their recurring appearance in Indian
literature and films.
These black and yellow taxis are now being replaced by app-based taxis. Taxi
aggregators or app based taxis were introduced in India in 2000 with the advent
of Mega cabs followed by EasyCabs (2006), Savaari (2006), Meru (2007), Ola
(2010) and Uber (2013) and this industry has been booming since having covered
almost 5 % of the total taxis present in India and 6 % of total market revenue of
the estimated $ 9 billion till 2014. Their network is spread all over India, especially
in the metros and major cities. They generally dont own any vehicles but provide
a technical interface as an app between the drivers and the passengers.

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With the onset of so many taxi services, the competition has increased
tremendously and the standards have been raised. Several aggregators have lost
their position while some like Ola and Uber have established a stronghold in the
Indian market with constant evolution of technology and involving frugal
marketing strategies for promotions.

The term frugal (origin:Latin) means economic in expenditure and usage, entailing
less costs. The app-based taxis use many frugal techniques withstand the heat
and brunt of competition and make large sums of profits. Two such companies
who are leading the business are: Ola and Uber.

Ola and Uber, backed by global venture capitalists, are fast gaining supremacy
over other aggregators in the market with Ola raising upto $ 700 million and Uber
$ 1 billion. Even the unorganised taxi sector are not able to cope with the
incentives being provided to the drivers and the discounted luxurious rides for
passengers by these companies. Some of the economical or frugal marketing
strategies they practise:
Uber doesnt allow cash payment worldwide. But for India, they made an
exception and allowed credit cards, debit cards and even Paytm wallets as
an alternative.

From the fully owned fleet model, which incurred heavy capital
investments, these companies changed to fleet aggregation model, giving
the choice of freelancing to the drivers for a part of their income as
commission, thus getting low maintenance costs and higher profits.

The tie ups with other startups and brands like Paytm, Zomato, Mini
Cooper, Bookmyshow to name a few, have been quite instrumental in
promotions as well as other aspects for both the companies.

Ride sharing is definitely a very promising feature that allows the customers
to share the costs.

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 After the women safety issues came up in different areas, the inbuilt SOS
button in app and women-driven cabs became very important features for
the women passengers.

The provision of choices among vehicles, ranging from a sedan or a

hatchback to a Tata Indica or even an auto rickshaw proved to be quite a
success for both the companies.

The as-per-demand luxuries or premium services such as Rider Zero (secret

travelling) or UberGourmet (food delivered during the ride by the finest
chefs) also attracted several people.

They became available for consumers on special occasions like delivering

kites on Makar Sakranti, colors on Holi and cupcakes on Rakhi.

Ola and Uber team rather than spending on professional advertisements, focused
on building a good product, putting it out in the market and speaking about it in a
language that instantly built a connect with the consumers.

But, there are many challenges posed to these frugal strategies and thus these
have not been implemented efficiently. To name a few,
Skilled drivers with multilinguality are very hard to find who can give
passengers a comfortable experience and thus shortage of work
force is there.
The app based platforms need a good internet connection and
cannot be used by quite a lot of people due to lack of knowledge.
Unorganised sector provides cheap and easily accessible transport
facility.
Loyalty of both the customers and drivers is doubtful.
After Uber rape incident, security concerns have been raised .
Not easily available in all parts of the nation.

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Thus the taxi aggregator system has a large room for expansion and improvement
and the strategies need to be analysed on the basis of different parameters.

Marketing Research Problem -

To determine the effectiveness of current frugal marketing strategies employed
by taxi aggregators in Indian market.

LITERATURE REVIEW:
Since the core objective of this case study is to figure out frugal marketing
strategies that can be adopted by taxi aggregators to facilitate customer
acquisition and retention and hence capture the market share, the motivation to
throw light on this topic comes majorly from the cut-throat competition between
some giant taxi aggregators in India like Ola cabs and Uber. Ola had started its
business in India well before Uber entered the market and this is why Uber
initially was on a slow wicket in India but being globally renowned, some of its
marketing strategies turned the things around. Initially, Uber was finding it
difficult to enhance its customer base and reach out to the last man in the line
because its mode of payments was not much appreciated by a particular group of
Indian customers. Just after the realization they brought out the change and
introduced cash payments which worked significantly well. Also, the measure to
provide an incentive to drivers based on customer experience and number of
rides turned the Uber around. Moreover, it has been reported that Uber is
incredibly strict about driver ratings and it uses 5-point customer rating system
which is vigorously implemented by the company and drivers getting consistently
low ratings are panelized and logged off the system. This made a significant
impact on customers experience with drivers and delay in pick-ups were reduced
to a large extent.
Ola has spread its wings to 102 cities in India while Uber is currently present in
just 26 cities but that is Ubers business strategy as it focusses on growing deeper
into the markets of high volume. It suggests that there is a profound difference
between the strategies of both dominant players of cab services and right from its
inception Uber tends to provide premium services (UberEats- Food Service,

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UberLUX- Luxury cars, Free Wi-Fi etc.) concentrating on its core business by
means of technology to win customers whereas Ola always focused on getting
more riders to use their services by getting more taxis, cars and even auto-
rikshaws on their platform.

.
Ola started its first- ever nationwide marketing campaign titled Chalo Niklo and
it was being run across radio, TV and outdoor with special focus on social media
platforms like facebook and twitter. Chalo Niklo promoted that customers can get
a taxi, cab or auto with just one touch on their smartphone, when there is an
immediate need to leave and the campaign simply highlighted this very insight
capturing the fact that need to leave can arise anytime. On the other hand Uber
relies on the experiential marketing. For instance, they started off with Rider
Zero campaign, where they tried to rope in celebrities from various cities to use
their services for the first time and in this way they were able to reach out to
millions of followers since celebrities helped in creating substantial buzz around
the services through social media. Then, targeting the corporate, they tried
referral marketing where they promised credits for every colleague one refers.
Moreover, Ola being an India based start-up takes a lead in launching some tactics
which suit best with the Indian scenario. For instance, understanding the
comparatively low smartphone penetration in India they created an option of
booking cabs through their call centers and in this area Uber still lags. Also, Ola
was the first to come up with mobile applications based on local languages for the
drivers who were not comfortable with the traditional English app of Uber.
Besides, for attractive prices Ola used smaller hatchbacks which turned out as an
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instant hit with a large set of customers and since such hatchbacks happened to
be a larger portion of the Indian market this model also helped them to bring a lot
of drivers onto the platform. On the other hand, Uber started off with entirely
different strategy and entered the market by providing premium cars in order to
attract consumers at a higher price which was not successful. In this way, though
Ola is leading in India by having relatively higher market share, Uber is catching
very fast with its innovative marketing strategies and aggressive expansions into
newer cities.

In a bid to figure out the exact positions of the two competitors in market a
mobile app intelligence company called 7ParkData came up with some interesting
data in October 2015. It had released a chart which compares the weekly active
users (WAU) of Uber and Ola cabs, as a percentage of smartphone users in India
(panel) during 2014-2015. According to the chart, In May 2014, it was found that
both the competitors were neck to neck in terms of Weekly Active Users. In
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November 2014, Weekly Active Users for Uber lingered around 1.4% but Ola in
this period started picking up the pace and its WAU registered around 2%. While
in December itself Uber somehow managed to catch up Ola and they both
registered around 3.5% WAU (percentage of panel).
However, with the beginning of 2015, Uber faced a drastic drop in its WAU which
lead to the wide gap between the two. And by the end of the October 2015 it was
Ola which turned out to be the winner with 8.93% WAU (percentage of panel)
while Uber ended up registering just 5.75% WAU.

Ref: https://inc42.com/buzz/ola-vs-uber/

In order to figure out our own frugal marketing strategies, we took the
aforementioned strategies used by Ola and Uber in India as a reference and tried
to give a multidimensional touch by considering the variation in taste of the
customers in accordance with their gender, employment status and age. For

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instance, through survey we tried to know that how likely people would prefer
separate cab services for women, keeping safety of women in mind. Because we
comprehend that such a strategy might help in bringing more women onto the
platform by germinating a sense of secured safety in them while traveling by cabs.
Moreover, through survey, we also tried to decipher that how likely people
appreciate sharing rides with other. Because we perceive that sharing of rides
among working professionals would help both the company and customers. On
the customer part it may happen that professionals heading towards same
workplace share the ride to reduce the per capita cost of travelling and at the
same time on the company part it may be beneficial in a way that, by providing
satisfactory services company can make an attempt to retain these working
professionals as a large set of customers, since they have to travel almost on the
regular basis, thereby boosting the retention of large number of customers for
the company.

METHADOLOGY
Research Design
Research design is the blue print or a map that any researcher has to follow in order
to complete his research (in this case, the case study) effectively and efficiently.
Research design in this case study involved the following components which will
explained discussed later in the study.
The information needed / The PROBLEM DEFINITION.
TO DETERMINE THE EFFECTIVENESS OF CURRENT FRUGAL
MARKETING STRATERGIES EMPLOYED BY TAXI AGGREGATORS IN
INDIAN MARKET.

Deciding whether the design of the case study is to be EXPLORATORY,

DESCRIPTIVE OR CAUSAL.
THE DESIGN OF THE CASE STUDY IS DESCRIPTIVE
As we are deciding upon the best techniques for the Indian market
from few already evolved strategies and few of them obtained from the
viewpoints of the respondents
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 Deciding the sequence of techniques of understanding/ or MEASUREMENT.
The techniques of measurement were decided to be NOMINAL and the
scale used in the study is the 7 point Likert Semantic Differential Stapel
scale

Constructing a QUESTIONNAIRE for data collection.

An online questionnaire was designed and released on majority of all
the social networking website and applications like whatsapp, facebook
and slack all credits to www.typeform.com.

Specifying the SAMPLING PROCESS and the SAMPLE SIZE.

The sampling process technique used in the study is SIMPLE RANDOM
SAMPLING TECHNIQUE and the sample size was set to 220.
Developing a plan for QUANTITATIVE DATA ANALYSIS.
Data collected from the questionnaire were exported to a Microsoft
excel file and the data were sorted according to the requirements of the
analysis and finally the sorted data was exported to a software known
by the name as SPSS where the sorted data was coded and it was
analyzed using various techniques provided by the software
Results obtained by the software were noted and inferences were
drawn to create a final output and references were noted in APA style
format.

Sampling
The main objective of this case study is to extract information about innovation
strategies of taxi aggregators from a set of population. A population is an aggregate
of all the data sets that share some common attribute
The target population for this case study was the people from different developed
cities and IIT colleges of age group of around 18-32 years (studying or the working
class) because this study demanded inputs from wide variety of public who knew
about taxi aggregator services and the services they provide and what they lack.

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The Sampling frame in this study was majorly the list of students provided by the
IIT and people from cities like Ujjain, Vadodara and Mumbai.
The Sample size due to time restrictions, restrictions due to studies and form
completion rates were limited to 222 respondents although the aimed sample size
for any market research survey is generally 500.
The Sampling technique used in this case study would be SIMPLE RANDOM
SAMPLING TECHNIQUE, that is people were randomly chosen from the given list of
students of the college and from cities like Ujjain, Vadodara and Mumbai and the
designed questionnaire was forwarded to them via email or social media websites
and the chosen population was asked to fill the response form so that their
perspective can be noted down and analyzed and a suitable conclusion can be
drawn.
The case study examines 2 conditions wherein the questionnaire was asked to fill
by the population and the responses were divided 2 cases that is, MALE AND
FEMALE and the total of 222 responses were considered for analysis of a particular
hypothesis
And secondly, the population was segregated into stratum namely STUDENT AND
WORKING POPULATION and the same procedure was done on this categorization.

Questionnaire

1. Gender
A. Male
B. Female
C. Other

2. Employment status
A. Student
B. Retired
C. Homemaker

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 D. Working professional
E. Other

3. Where have heard of cab brands?

A. Newspaper
B. Social media
C. Through reference
D. On-road presence
E. Other

4. How often do you travel in cabs?

A. Daily
B. Weekly
C. Once in a month
D. Occasionally

5. How would you rate the importance of following attributes while choosing
your cab brand
Friendly service ( UI of cabs, fast arrival)
1 2 3 4 5 6 7

Value for money

1 2 3 4 5 6 7

Higher accessibility in the area

1 2 3 4 5 6 7

Experience with driver

1 2 3 4 5 6 7

Car brand
1 2 3 4 5 6 7

6. Would you be willing to an extra amount for premium services?

A. Yes
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 B. No
C. Maybe

7. Which method would you prefer for booking the cab

A. Through mobileapp
B. Through phone call
C. By sending SMS

8. Would you like to appreciate sharing your ride with others?

1 2 3 4 5 6 7

9. How likely would you agree with the introduction of separate cab service for
women?
1 2 3 4 5 6 7

Scaling and measurement

Measurement simply refers to assigning value or a symbol to an object and
Scaling refers to formation of that continuum upon which measured objects are
placed so as that a well-defined conclusion may be derived.
If we have a clear understanding is to what kind of information we really need to
extract from the respondents then the concept of scaling and measurement comes
into play. Scaling is a vital tool in designing any instrument of measurement so as
to fulfil the objectives of their research in the most accurate manner.
The scales of measurement that formed the basis of this study were
Nominal
Likert Scale
Nominal:
In this method of scaling, number or symbols are assigned to objects or people
according to a predefined order just to classify the objects. Nominal scale in our
case study was used to classify the gender and employment status.
Likert Scale:
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Majority of the questionnaire questions used a very popular scale known as the 7
point Likert Semantic Differential Stapel scale with values ranging from 0 up to
7, with 0 assigned as the value NOT AT ALL IMPORTANT and 7 assigned as a value
EXTREMELY IMPORTANT.
The reason a 7 point scale was chosen in the study was because of the value 4 that
acted as a neutral point in the scale so that a respondent having a balanced view
does not have to forcefully incline on one side of the scale.

DATA ANALYSIS
Demographics of Population
The demographic study of 222 respondents is shown with the help of 3-D pie
charts. Since the users of taxi aggregators are mostly students and working
professionals, we have focused primarily on them while collecting our responses.
To differentiate between choices of both genders, we have conducted separate
studies on the basis of gender too. We have also asked information about their
travel frequency which plays important role in the study as how frequent do they
travel and how it plays important role in their demands for services and their
expectations from taxi aggregators.

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Our study has a major chunk of respondents who travel occasionally (66.22%) in
cabs while there are also people (around 18.02%) who travel at least once in a
month.

Research Question/Hypothesis
1) The major research question at this point is the difference in choices or
viewpoints of male and female about frugal services offered by taxi aggregators. A
detailed analysis of this research question can be done by Parametric Tests i.e.
(t-tests of two independent samples which are male and female).

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Here,
Null hypothesis (H0): 1=2
Alternate hypothesis (H1): 12
The two populations (male and female) are sampled and means and variances are
calculated on the basis of size on N1 and N2.
Assuming same variances, pooled variance is calculated as follows:

The standard deviation is estimated as follows:

The t-value is calculated as follows:

Attributes Mean
Male Female t test probability
Accessibility 5.81 5.97 .365
Experience with 5.07 5.59 .006
Driver
Car Brand 4.36 4.23 .485
Sharing rides with 4.89 3.65 .000
others
Separate rides for 4.63 5.55 .000
women
Value for Money 5.94 6.02 .607
Friendly Service 5.79 5.55 .156

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 MEAN vs ATTRIBUTES
7

3
MEAN

0
Accessibility Experience Car Brand Sharing Separate Value for Friendly
with Driver rides with rides for Money Service
others women

ATTRIBUTES
Male Female

2 ) Another, research question we will consider at this point is the difference in

choices or viewpoints of students and working professionals about frugal services
offered by taxi aggregators. A detailed analysis of this research question can be
done by Parametric Tests i.e. (t-tests of two independent samples which are
students and working professionals).
Here,
Null hypothesis (H0): 1=2
Alternate hypothesis (H1): 12
The two populations (students and working professionals) are sampled and
means and variances are calculated on the basis of size on N1 and N2 as described
in previous research question. The table for t-test probability will be-
Attributes Mean
Student Working t test probability
Professional
Accessibility 5.86 5.94 .685
Experience with 5.20 5.56 .108
Driver

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 Car Brand 4.18 4.77 .007
Sharing rides with 4.53 3.92 .026
others
Separate rides for 4.84 5.54 .022
women
Value for Money 6.00 5.88 .512
Friendly Service 5.65 5.85 .320

MEAN vs ATTRIBUTES
7

4
MEAN

0
Accessibility Experience Car Brand Sharing rides Separate rides Value for Friendly Service
with Driver with others for women Money
ATTRIBUTES

Student Working Professional

By Pearson correlation test, coefficients are tabulated as follows to find the

strength and direction of correlation between the independent and dependent
variables:
Dependent Parameters Independent variables
Gender Employment
Correlation Coefficients

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 Friendly service -0.096 0.067
Value for money 0.035 -0.044
Higher accessibility 0.061 0.027
Experience with driver 0.184 0.108
Car brand -0.047 0.179
Cost for premium 0.002 0.018
services
Sharing -0.360 -0.149
Women separate cab 0.238 0.153

Results
For Hypothesis Test- 1
(Independent Samples- Male/ Female)
Significance level for test is below 0.05

Attributes t- test probability Null Hypothesis

(Accepted/ Rejected)
Accessibility .365 Accepted
Experience with .006 Rejected
Driver
Car Brand .485 Accepted
Sharing rides with .000 Rejected
others
Separate rides for .000 Rejected
woman
Value for Money .607 Accepted
Friendly Services .156 Accepted

For Hypothesis Test-2

(Independent Samples- Students/ Working Professionals)
Significance level for the test is below 0.05

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 Attributes t- test probability Null Hypothesis
(Accepted/ Rejected)
Accessibility 0.685 Accepted
Experience with 0.108 Accepted
Driver
Car Brand .007 Rejected
Sharing rides with .026 Rejected
others
Separate rides for .022 Rejected
woman
Value for Money .512 Accepted
Friendly Service .320 Accepted

Conclusion
Since the first hypothesis test primarily deals with the consensus of male and
female on various attributes that are being considered. Therefore on the basis of
t test probability value we can draw an inference that there is profound
difference between their choices when it comes to attributes like experience
with driver, sharing rides with others and separate rides for women as the
obtained t test probability is past the acceptance level and hence null hypothesis
is rejected for all the three cases.
From the second hypothesis test deals with the consensus of students and
working professional on various considered attributes. Therefore, again on the
basis of t- test probability value we can conclude that there is large difference
between the choices of students and working professionals when it comes to
attributes like car brand, Sharing rides with others and separate rides for woman
as the obtained t-test probability is past the acceptance value and hence the null
hypothesis is rejected for all the aforementioned attributes.
From Pearson Correlation Test, It can be inferred that:

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1. Females prefer these parameters for their choosing their ideal cab service in
the descending order:
Separate cabs for women>experience with driver> higher accessibility> value for
money> car brand> friendly service> sharing of rides.
Males have the reverse order for the same but the behaviour towards paying for
premium services is gender independent.
2. Working class population has the following preference order:
Car brand> separate cabs for women> experience with driver> friendly service>
higher accessibility>cost for premium service> value for money> sharing.
Definitely frugal innovations are attractive to the price conscious Indian
market but choices of different classes of population are quite different
when it comes to parameters they keep in mind while searching for their
ideal cab service. Services like sharing of cabs are not important for females
and working class of population. There is a demand for separate woman cab
service among females but not many are willing to pay for the premium
services like security provided to them. Experience with driver interestingly
is important issue for both gender. Therefore, proper training of driver in
language, soft skills and technical know-how holds paramount importance.
Also, user friendly interface for app-platform which runs at low internet
connections attracted more customers in all categories of population.

References
1. Joshi, R., & Mehta, M. (2015, January/February). RADIO TAXI INDUSTRY:
CURRENT SCENARIO, INDUSTRY FORCES AND CHALLENGES IN INDIA.
International Journal of Research in Management& Social Science, 3(1(II)), 95-100.
Retrieved November 9, 2016.
2. RADIO TAXI INDUSTRY IN INDIA. (n.d.). Retrieved November 9, 2016, from
http://www.isb.edu/ctlc/meru-cabs-case/radio-taxi-industry-in-India
3. U. (2014, November 25). The Evolution Of The Indian Taxi Market - Comparing The
Biggies. Retrieved November 9, 2016, from https://inc42.com/features/evolution-indian-
taxi-market-comparison/

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 4. Das, G. (2015, August 30). Taxi Wars. Retrieved November 9, 2016, from
http://www.businesstoday.in/magazine/cover-story/india-taxi-market-war-heats-up-ola-
cabs-uber-strategy-leaders/story/222542.html
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Retrieved November 9, 2016, from http://hooklineandclincher.in/uber-marketing-
strategy-india/

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