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MOHIT CHETWANI - PGP34326
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NIHAR AGARWAL - PGP34328
UBER REPORT: FEASABILITY NITHIN KUMAR N - PGP34329
India market insight
There are few markets in the world that are as exciting and promising as India. But the Indian
landscape can be equally challenging and riddled with idiosyncrasies. Price competitiveness,
geography, demography and psychography are some of the important aspects that greatly
influences the ease of doing business in the country. One such factor that needs an in-depth
analysis is the characteristic of the city in which the business is to be done.
In the last decade, the contours of ‘urban India’ have changed and blotted outside its
well-known ‘metro’ cities. Businesses have opened their eyes to the fact that there is more to
India than Delhi and Mumbai. India is urbanizing rapidly; the percentage of urban migration has
seen a 4-fold increase. This is the market that companies like Uber can tap into as these markets
are underserved and holds huge potential. This report shall focus on the characteristics of
theTier2 & 3 cities and the factors that might influence the growth of cab service business in
these cities.
In the new emerging India, the growth opportunities in these cities (that have remained an
untapped asset of the country for long) is primarily due to the gigantic gap between availability
and demand. The growth of these two tiers gestures towards a positive sign for the nation with
their efforts to deviate the pressure on the metros which are dwindling under the burden of
space, time and infrastructure. In a recent study of Top 10 emerging business destinations in
India, conducted by Cushman & Wakefield, global real estate solution providers, the growth in
Tier II and Tier III cities is aided by 'the increasing disposable income of the people that has
created immense opportunities for companies like cab service providers looking out for new
markets to grow'. The study also mentions that companies being drawn to these cities are being
enticed due to the 'availability of talent pool at a lower cost, reasonable real estate prices and a
'conducive business environment' created by State and local governments.
Source: inrnews.com
Characteristic of tier 2 & 3 cities
Mode of transport:
The major transportation service providers in the tier 2,3 cities are through public busses and
autorickshaw. These are the major competitors to the cab service providers. The major
challenge is the fact that the public transportation is cheap and auto-rickshaws run on a shared
fare basis thereby reducing the per head transportation cost. This is a characteristic and obstacle
of the tier 2, 3 cities that needs to be overcome by cab service providers to make any meaningful
inroads into this market.
Demography:
24% of the Indian population is of the age between 12-25 and 32 % in the age bracket of 25-37.
This provides a huge market which is tech savvy and can be potential customers with promotion
of the cab service. It also provides a large working population that can be employed by the
company at relatively cheaper rate in comparison to the Tier 1 cities
Real Estate:
Due to these cities being in their nascent stage of their infrastructure development cycle, the real
estate boom is yet to take place and real estate prices are relatively lower. This provides the
businesses with ample space to set up their offices at relatively low price.
Psychographics:
The family and businesses are close knit and these cities are still holding the essence of older
India and at the same time progressed into the new modern era. This provides Uber with the
opportunity to tap into family transportation market which may be missing in the Tier 1 cities.
Learnings from Uber India Story:
In august 2013, When uber entered the Indian market it wasn’t quite a startup behemoth that it is
now, however it was young and hungry. After operating in 19 countries around the world, Uber
set his eyes on India – “a market that had the potential to become one of the biggest in the
world.” Since the first ride in Bangalore, Uber now serves 27 more cities in the country, and have
400,000 driver partners. Undoubtedly, Uber wasn't the first in India to offer cab services through
an application. In 2013, Ola entered the market with its on-demand model. However, being in
Bangalore, it felt like the cab revolution arrived with Uber.
Success parameters/factors:
Clients were at first reserved in through the guarantee of top of the line autos for stunning
charges. Uber's money related muscle, propped by VC dollars, proved to be useful. Individuals
raved about getting rides in Audis at the cost of an auto.
Thereafter, Uber started offering referral discount codes, which gained the attention of the urban
India. Individuals got free rides if they convince their friends to sign up, and Facebook feeds and
Twitter timelines were filled with shared codes, all wanting to transform into free rides. Soon the
words spread, and Uber grew.
Challenges faced:
When uber launched UberMOTO - bike taxi service, in Bangalore, required it to be on toes.
Within a few hours, Ola launched its own bike taxis in the city. However, things were still fine
until Karnataka government declared out that bike taxis weren’t covered under the law in the
state, and the government issued a diktat asking bike taxis to be called off the streets. While Ola
complied, Uber did something that exemplified its hard-to-kill nature. Uber then rebranded its
bike taxis as bike shares and stopped earning money from those rides. As a result, Ola’s bikes sat
in garages, Uber’s bikes were out on the roads, increasing market share, if no money.
However, India is still one of few countries in the world where Uber isn’t the market leader.
Also, Karnataka’s government have been a constant thorn for Uber, firstly by pulling up cab
aggregators for running without licenses, and then by being unhappy with its surged pricing. As a
result, Uber was nearly banned in Karnataka, however it managed to get its compliances at the
last minute. After Karnataka’s government Delhi followed the lead, when the CM personally
tweeted that the cab aggregators wouldn’t be allowed to charge surge prices. Uber dilly-dallied,
got nearly banned, but ended up toeing the government’s line. Sometimes even the driver
partners have turned against it. Yet it marches on, and in fact it is now the most valuable start up
in the world.
Marketing Analysis & Growth Potential
There are 100+ Tier-3 cities in India, which are defined as having population lesser than 1 lakh.
Which gives a potential target population of more than 10 million. But as far as demand is
concerned, not all entire population of the towns can be targeted. It is anchored around the
following levers:
3. Technology adoption
4. Road infrastructure
5. Availability of drivers
Technology adoption: Smartphone and internet penetration in India has drastically improved in
past 2 years thanks to the data revolution that India is undergoing. While general population has
become more tech savvy in terms of social media usage and online shopping, usage of app-based
cab services still requires a bit more of internet engagement. Such engagement is mostly driven
by young and educated target population stationed in Tier-1 and 2 cities. And such masses are
actually moving to Tier 1 and metro cities for education and employment. Converting relatively
lesser tech savvy family customers residing in Tier-3 cities would be not as difficult as Metro,
Tier-1 and Tier-2 cities.
Driver availability:
Cab aggregators like Ola and Uber have been struggling to keep up with the market demand with
required amount of driver supply. As we move from metros to Tier-1, Tier-2 and further, Tier-3
cities, business volumes and average ride amount keeps on falling. Which results in lesser
lucrative business opportunities for drivers. This will restrict the drivers’ willingness to come
onboard in Tier-3 cities.
Road infrastructure:
Indian roads face severe overloading and hence, the quality of roads is substandard in most of
the parts of the country. Inadequate road maintenance only adds up to the problem. Although
Uber provides the value proposition of a comfortable air-conditioned rides to the masses, the
substandard roads act as headwinds for the value proposition and thus restrict the attractiveness
of the service
https://techstory.in/bookcab-635425/
GetMeCab – They operate in 100+ Indian cities and they provided exceptional services for
the outstation travels, they allow their customers to choose the type and model of the car as per
their needs, customer can choose the
car based upon the price that he/she
wants to pay as every model has a
different price which gives a lot of
flexibility to the customer. As different
customers have different type of
requirements while some need a car
with good boot space, some other customer might need a tempo traveler having a capacity of 11
suitable for a complete family outing. The major advantage that they offer to their customers is
the option of paying only for one-way trip instead of burdening them with a two-way fare like
most of the big cab aggregators.
Our Recommendation:
We suggest that the market is ripe for expansion into Tier2,3 cities however the following factors
needs to be taken into consideration: