Product Description

Product Characteristics

Careem

Careem is an online payment, delivery, and transport business. Careem provides an

online application to allow people to connect with riders and drivers. The application works in a

way that the driver can locate the rider, and move to the rider’s location using the shortest path.

The cost of the ride is calculated using the time and distance traveled and is displayed on the

application. The Careem app provides a universal experience all through but the services differ

depending on the location of the user. For example, there are Economy, Dubai Taxi, and

Business First Class services, which all depend on the user’s preferences (Admin, 2019). In other

locations like Karachi, there are Rickshaws and Bikes, which are not available in other markets

like Dubai. The Careem application rewards users’ loyalty points, which can be redeemed for

free rides or donated to initiatives that help the underprivileged.

Uber

Uber is a transportation company that uses an application that can be downloaded for the

Appstore of Google Store and connects drivers to riders. The application hires independent

drivers and the company’s main product is linking drivers with passengers, who pay a certain

fee, based on the ride. Uber offers other services such as a lease or rental cars through third-party

companies such as Fair, Get Around, and Hertz (Contributor, 2019). The Uber application works

on a dynamic pricing model, in which the prices are determined based on the destination and the

current demand. In some areas, Uber offers electric buses and bikes as well as other autonomous

driving projects.
 Uber and Careem Product Life Cycle

Uber was the first to launch its services in the UAE market before Careem. Uber later

acquired Careem in a $3.1 billion deal in January. During the first phase of the product life cycle,

the companies gave huge incentives to drivers and discounts to clients to penetrate the market.

The companies spent heavily on advertising to gain a large market share and be known by

customers (Singla, 2019). During the second phase, the company continued making losses as

they spent hugely on advertisements and giving discounts and incentives. The second phase

attracted more customers as they considered products that are less priced and quality. The

companies are now approaching the maturity phase. There is slowed growth, competition, and

low new customer acquisition and there are loyal customers of the brand. The amount spent

during the introductory and growth stages has resulted in brand value for the two companies.
 Demand Forecast

Demand forecasting is helpful to Careem and Uber as it will tell the estimated returns the

companies will make from their businesses in the future. Using data from Markets (2021), the

demand for Uber and Careem is more than 50% in terms of market revenue in 2020. In 2021, the

demand increased by 16.30%, which is 66.3%. using QM software, we can predict the demand

for Careem and Uber for the next period.

The forecast for the demand for Careem and Uber for the next year is 58.15%, in terms of market

revenue.

Break-Even

Break-even is a point where the total revenues and expenses are equal. The breakeven of Careem

and Uber will show the point where the companies made zero profit, and is important as it shows

when the company stopped making losses. In 2015, Careem raised a profit of $60 million, used

$250 million to invest in the MENA region in 2013 (Arnold, 2016). Using the data, the break-

even of Careem can be estimated using the QM application as shown below;

From the analysis, the break-even of Careem is $1200 million.

The breakeven of Uber can be estimated using the same method. The operating expenses

for the company in 2022 were $31.288b, while the revenues were 8.838b (Uber Technologies

Operating Expenses 2017-2022 | UBER, n.d.). The breakeven point in QM software is shown below
From the analysis, the break-even point for Uber is $35.13billion.
References

Admin. (2019, June 24). Careem Tech profile: Creating the customer experience. Careem Blog.

Retrieved December 3, 2022, from https://blog.careem.com/en/careem-tech-profile-

creating-customer-experience/

Arnold, T. (2016, September 27). Ride-hailing company Careem says profitability in sight. U.S.

https://www.reuters.com/article/us-careem-investors-idUSKCN11X1SH

Contributor, T. (2019, December 30). Uber. WhatIs.com.

https://www.techtarget.com/whatis/definition/Uber

Markets, R. A. (2021, October 13). Global On-Demand Transportation Market (2021 to 2029) -

Featuring Uber, Lyft and Careem Among Others. GlobeNewswire News Room.

https://www.globenewswire.com/news-release/2021/10/13/2313330/28124/en/Global-

On-Demand-Transportation-Market-2021-to-2029-Featuring-Uber-Lyft-and-Careem-

Among-Others.html

Singla, R. (2019, June 6). My two cents on Product Life Cycle in Ride-Hailing Business.

https://www.linkedin.com/pulse/my-two-cents-product-life-cycle-ride-hailing-business-

rahul-singla

Uber Technologies Operating Expenses 2017-2022 | UBER. (n.d.). MacroTrends.

https://www.macrotrends.net/stocks/charts/UBER/uber-technologies/operating-expenses