Case- Uber vs. Didi
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Uber uses different pricing models including flat fares and surge pricing that adjusts prices based on supply and demand, and has expanded into various delivery services; the ride-hailing market in China saw competition between Didi and Kuaidi that eventually merged as Didi outcompeted rivals; the document discusses questions about Uber's pricing models and strategies for balancing global standardization with local adaptation in different markets like China.
Case- Uber vs. Didi
- 2. How Does Uber Work? UBER RIDERS UBER DRIVERS
- 3. Pricing Model • Flat fares – charged for direct trips between specified locations at a fixed rate • Base fare plus fare-per-mile and fare-per-minute when the car is not in motion, similar to the way taxis calculate fares. • Surge pricing, the most controversial model, is designed to balance supply and demand in real time by adjusting prices accordingly.
- 4. Product Extension • UberRush • UberBoat • UberEat • UberKitties • UberChopper
- 5. The Ride-Hailing Market in China • Demand for Taxis Outruns Supply • The Rise of Ride-hailing Apps • Kuaidi , Didi , and Didi Kuaidi • Head-to-Head: Didi vs. Kuaidi • From Foes to Friends • The Race Between Uber and Didi • People’s Uber—a Localized Trial • Didi Kuaidi Responds—an Eye for an Eye • Uber’s Local Partner • Specialised vs. Inclusive Services
- 6. How attractive was the taxi industry (before uber and ride- hailing players entered the market)? • Ans:- Before Uber and other ride-hailing players entered the market, the taxi industry was an attractive industry for several reasons. • The taxi industry was a highly regulated industry with high barriers. • The taxi industry provided a necessary service for customers who needed transportation but didn't have access to a car or public transportation. • The taxi industry had a low level of technological disruption.
- 7. 2. What is uber's value innovation ? how did it create a blue ocean? • Ans: • Uber's value innovation is centered around its ability to disrupt the traditional taxi industry through its ride- hailing platform and innovative business model. • Uber's ride-hailing platform uses technology to match riders with nearby drivers and provide a more convenient, affordable, and reliable alternative to traditional taxis. • Uber has also focused on low cost by using dynamic pricing algorithms to adjust prices based on supply and demand.
- 8. Cont’d • Uber created a blue ocean by disrupting the traditional taxi industry through its innovative business model and use of technology. • Before Uber, the taxi industry was characterized by high prices, inconsistent service, and limited availability • By offering a differentiated value proposition that combined lower prices, higher quality service, and greater convenience, Uber was able to create a blue ocean in the ride-hailing market.
- 9. Q 3-How does creating and maintaining competitive advantages in a platform business like Uber's differ from a vertical chain business like a taxi company? Uber takes very small commission ranging between 5 to 20%. Cost leadership advantage is working in the favour of Uber. By adding convenience to the services, the brand has been able to generate a higher level of popularity and a better brand image. Technology-based differentiation. Customer convenience became a point of differentiation.
- 10. Question 4: What should Uber do regarding its surge pricing model? Would you keep the surge pricing model? Why/why not? • The surge pricing model is a dynamic pricing strategy that Uber uses to balance supply and demand during peak hours. • Being criticized by some riders as being unfair and unpredictable. • Some actions that can be taken by Uber to solve major problems associated with surge pricing includes: 1. Putting a cap on the surge multiplier: reasonable cap of 5X. 2. Reducing the frequency of price fluctuations. 3. Remarketing as “ reliable rides with shorter wait times during higher demand”.
- 11. 5 a.) Comparing the screenshots of Uber’s and Didi’s App interface, would you agree that Didi needs to be more focused on its servicing offerings, instead of over-diversification? Why/Why not?
- 13. • Initial Value Proposition • Uber China - Uber entered China and set out to provide an outstanding service experience and a variety of high-end vehicles as an important part of its service offerings. Uber targeted somewhat extreme customer segments (high end) because it did not want to cause trouble with Chinese taxi unions. • DiDi - Offers a simple ride service for groups of customers who rely on taxis because they do not have cars. Therefore, from the beginning, DiDi started by targeting the demand that could substitute taxis. These customer segments did not overlap with Uber. DiDi chose a strategic position focused on satisfying these customers’ needs. • DiDi in the coming years focused on the needs of the customers which proved to be the right decision as there was different kinds of needs in the Chinese mobility market unlike Uber. • Yes DiDi’s interface can be confusing but this strategy worked in DiDi’s favour.
- 14. b.) Would you agree with Uber’s argument that advanced booking model in the ride-hailing market? Why or why not? Advantages of advanced booking model: •Riders: can plan their trips in advance and ensure that they have a ride when they need it. •Drivers can also plan their schedule and workload better, leading to increased efficiency and reduced idle time. •The advanced booking model can help reduce surge pricing during peak hours, as riders can book their rides ahead of time. Disadvantages of advanced booking model •The advanced booking model may not be suitable for all riders, as some people prefer the flexibility of being able to request a ride on- demand. •It may also be challenging to predict the exact pick-up time, leading to inconvenience for riders if the ride arrives too early or too late. •The advanced booking model may not work well in markets with high demand fluctuations or where ride-hailing services are relatively new.
- 15. Q 6 How did Uber balance global standardization and local adaptation? What do you think about the initiatives/products Uber developed in China? ● Uber has successfully balanced global standardization and local adaptation by adopting a strategy of "think globally, act locally. ● Uber has adapted its services to local markets by tailoring its marketing, pricing, and service offerings to meet the needs of customers in different regions. ● In China, Uber faced fierce competition from local ride-hailing company Didi Chuxing. ● Overall, Uber's approach to balancing global standardization and local adaptation has been successful, as evidenced by its growth and success in various markets worldwide.