Project Marketing Harvard Case Solution & Analysis

Mode of Entry

Uber is a taxi service provider hence it can look for different ways to take an entry into Nepal. Below a few mode of entry are presented revealing how it can promote its service in the foreign land. On most of the previous occasions Uber has just entered into the market without much stricter opposition from the local government. However, the situation would be different and difficult in Nepal.

Licensing

Uber can opt to promote their product through the licencing of their service to the third party. The company can provide the licensee the right to use technology, trademarks, and patents and complete knowledge of the brand.  The company allows the licensee to have complete authority to decide about the suitable place to target the market. The Uber head office would enjoy the fees or royalty coming from the sales of services in Nepal. The other advantage that licensing will give to Uber is that, the company just needs to worry about a constant flow of income generation. Apart from that, it doesn’t need to worry about the operations of the firm until the franchise is making profits.

Though, licensing allows other rivals to get inspired but with idea and adoption of the same business model by launching their own taxi-service providers would make it difficult for rivals to have accomplished. The plagiarism of the business model by the rivals is one of the negatives overlooked by the company operating in other parts of the world. The other reason contributing to its difficulty is that anyone can breach the company’s data and use it for their greater interests.

Direct Investment

The other option that Uber can go for is opting for direct investment into Nepal. The company has the privilege of investing maximum amount of capital plus greater managerial skills. Uber can build a new building or can acquire an already established buildings to set their business. As all of the investment would come from Uber rather than any other partner.It would also have to design different strategies to control and operate the business. As Uber is now an international brand, many of Nepalese would have a high demand for the taxi-service, generating higher income. This type of investment would allow Uber to easily get the office location in the city-centre or downtown wherever they want, because acquiring companies in foreign countries is the most efficient way to enter the market.

Analysing the two modes of entry; after analysing the positives of direct investment, it would be better to invest on its own into this developing nation. Comparing that with the licencing, direct investor has the complete authority over the operations and business dealings of Uber. Also, as Uber is an international company, Nepal government won’t create difficulties in building the business. As there isn’t competition as yet, by bringing in heavy investment they could make sure that they are having a larger market share with a good competitive advantage.(yourarticle library, n.d.)

Marketing Strategy

The Uber marketing strategy revolves around different segments within the country:

Target Market

The median age of Nepalese people is 24-25 years. This means that there are a lot of young adults and youth that can avail the services of Uber whenever they want to hangout to some place. Uber should mainly focus on the population with the age of 18-29 years i.e. the main target segment for Uber should be teens, adolescents and young adults.The youth visits different places and not everyone can afford their own vehicles. Secondly, Uber gives them an option to pool in and the bill can be distributed amongst the friends. Young adults who enjoys eating together or going to the long festival season, will get attracted by the services offered by Uber. Now, if Uber can offer different and unique Uber services to the youth of Nepal, it can do wonders for the company. The different service offerings includes; Uber X, Uber Auto, Uber-Moto, Uber pool and Uber Go. The best part about the services is that they are extremely cheaper as compared to the local transportation facilities. As most of the young population aren’t employed and they are students, many of them can avail the services of going to their educational institute by pooling in. The best way to reach this target market segment is through television advertisement. A better option can be posting ads on web or on the Facebook.

Expected numbers

According to the data, out of the total population of 29.8 million about 21.52% population lies in the 15-29 age bracket which is also our target market, calculated to be around 7.4 million. Dividing them further, there are a total of 3.2 million men between the ages of 15-29 and remaining are women. Now if we estimate our probable passengers. The youth dependence ration is 52.5% which means majority of the youth are dependent on others. The financial dependency is of utmost importance to Uber. If we have taken the dependence ratio to decide about the probable young customers, which is around 3.7 million and reflects that the probable passengers are 13% of the total population, which has been calculated using the dependency ratio. Exhibit 5 shows the expected number of young customers. Let’s suppose the minimum distance covered by the targeted population is 1 km and according to our pricing strategy 1 km fare is 65(NC). This gives the revenue of 242,413,535 (NC). Converting it to the 113 USD/NCR rate will give us the revenue of $2,145,253. As it is known that Uber takes 20% commission from all the sales, if 20% is taken out of the total revenue, Uber will be left with $429,051 in total earnings. Exhibit 5 shows the proper calculations.

Competition and competitive strategies

Currently, Uber has the direct competition from Eddy cab and Kawa Rides. Eddy cab has been the first one to cater Nepali market with taxi service. However, it doesn’t work in as efficient way as it was expected by the locals. On the other hand Kawa rides are planning to put in 1200 cars on the road for taxi services. (Khatiwada, 2018)[1]

As far as Uber is concerned, it needs to use its high brand power to convince and attract the customers. The company doesn’t have to do a lot of hard work. By using the direct investment mode of entry; it can have a large amount of capital through which it can run its huge ad campaigns to attract the young population of Indonesia. With high-tech gadgets and navigation system Uber can easily take over the current local competitors especially Eddy cab who does seem to have problems with its system.

If Uber can plan to pay good commission to all of its drivers then there is no point that they will opt to go for other ride hailing companies. Again, they can attract good drivers with nice ad campaigns to be running mostly on the television. By offering them good bonuses, the drivers working in the rival groups may come to Uber,being attracted by the better payment options. By doing this, Uber can have an upper hand over Kaw a Rides as well.

Exhibits

Exhibit 1

COUNTRY SCREENING

 


Exhibit 2

Economic Overview

GDP$79.19 billion
GDP growth7.9%
GDP-per capita$2700(2017)- $2500(2016)
Labour force- by occupationAgriculture-69% services-19%
Population below poverty line25.2%
Labour force16.81 million
Population29,717,587 (July 2018 est.)
Unemployment rate3% (2017) – 3.2%(2016)

Exhibit 3

Exhibit 4

Uber Pricing strategy

DistanceFares(NC)
Base fare20
Minimum cost50
1 km65
1.5 km100
1.75 km120
Cancellation fee65

Exhibit 5

expected customer and sales
population           29,835,512
youth 25%              7,458,878
50% young users              3,729,439
% of total population13%
 1km travelling revenue         242,413,535
$/NCR rate                          113
revenue in $$ $          2,145,253
Uber profit margin20%
 total profit  $              429,051

 

[1]Provides a list and information about different ride hailing services working across Nepal......

 

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