cab industry in inia from service marketing point of view

1. 1 | P a g e
CAB INDUSTRY INDIA
BY
ANUVESH MAHESHWARI
NIKHIL SHARMA
SHANTANU KALA
AAKASH SHARMA
RISHABH GOEL
STEPHENE PORTAL
INSTITUTE OF MANAGEMENT TECHNOLOGY
HYDERABAD
18 OCTOBER 2015

2. 2 | P a g e
Various Cab service Providers in India

3. 3 | P a g e
COPYRIGHT NOTICE
 Copyright © 2015 by IMT HYDERABAD
 All rights reserved. No part of this report may be reproduced in any form or
by any means without written permission from the publisher.

4. 4 | P a g e
FORWARDING LETTER
The process of analysing the data on CAB INDUSTRY -(more specifically in India)
has been greatly aided by use of advanced Excel add-ins' Microsoft power point and
by the use of pie-charts, clicked and internet images and bar graphs.

5. 5 | P a g e
PREFACE

6. 6 | P a g e
CONTENTS
Industry Analysis………………………………………………………..7-11
Typical Service Offering……………………………………………….12-17
Service Blue Print………………………………………………………18-19
Physical Evidence………………………………………………………20-20
Industry Section…………………………………………………………21-25
Statistical Analysis……………………………………………………..26-32

7. 7 | P a g e
INDUSTRY ANALYSIS
Current trends in cab industry-
Take a cab, don't buy a car' is urban India's newest trend, still nascent but likely to
get stronger, as both experts and auto companies think. Consumer and industry
implications may include a change in auto firm strategy, an even more rapid
scaling up of cab hailing services like Uber and Ola and India twist in the usual
story of rising incomes corresponding with rising car ownership.
Owning a car, a person would spend about Rs 23,000 a month on fuel and drivers
salary. Taking cabs to and from office costs him Rs 8,000 a month. Add to this the
cost of acquiring the asset — the car — maintaining it and paying for parking,
provided you find a parking space. For many urban Indians, especially in the top
three metros of Delhi, Mumbai and Bengaluru, the economics is compelling.

8. 8 | P a g e
Phase 1 – Inception
Fleet Ownership: Fleet fully owned by the company, with the drivers working as
salaried employees. Cars operate only on incoming bookings. Car loan EMIs and
high car maintenance costs. Revenues directly accrued to the company. While this
model facilitated rapid expansion, it also came at a huge cost. Caused high stress
levels in drivers and there were driver strikes that affected the service
Booking Model: Telephone calls only
Payment Model: Cash was the dominant model
Segmentation: The market only had one or two types of cars and per kilometer
charges were pretty similar
Pros & Cons: High control on service quality, but huge pressure on utilization rates
since there is only one source of incoming bookings
Phase 2 – Transformation
Fleet Ownership: Taxi For Sure and OLA started the fleet aggregation model
where small fleet owners or single car owners can put the company brand on the
car, and get registered with them. Cars are free to take up non-company rides, but
for every company-initiated ride, they pay the company a fixed percentage as
commission.
Booking Model: Telephone calls, Websites
Payment Model: Predominantly cash, In-cab POS terminal for credit / debit cards
Segmentation: Multiple segments opening up, with mid-sized sedans forming a big
chunk of the fleet
Pros & Cons: Asset light business with low capital expenditure. VCs loved this
model. Company did not own the utilization headache, but the quality of service to
end customer dropped because the company had no control on the cab availability
and service quality from the private fleets

9. 9 | P a g e
Phase 3 – Growth
Fleet Ownership: Hybrid model where part of the fleet is owned by the company
and part of the fleet is from an aggregation model
Booking Model: Telephone calls, Websites, Mobile App
Payment Model: Cash, In-cab POS terminal for credit / debit cards, Mobile App
Segmentation: Segments expansion, including launch of hatchback cabs at a lower
price point – such as OLA Mini and Uber X
What role does technology play in the industry?
Although the radio and mobile taxi segment constitutes only 5 per cent of the
Indian taxi market, the segment is witnessing a significant growth with competition
hitting up and new players and technology making an entry every now and then.
“The radio taxi segment posted a 35 per cent compounded annual growth rate in
the last five years. The segment has four or five big players (Meru, Ola, Easy Cabs
and Book my cab) and similar number of medium players. The younger generation
prefers radio taxi and cashless transactions. Some companies like Ola and Meru
have launched low-cost services. There are companies like Taxi for sure which has
signed up normal taxis under its umbrella. Leading companies don’t own taxis but
provide software and trained driver-owners with KYC safeguards. How do they
ensure safety? They ensure that the partner driver who is using the software should
pass the stringent compliance check of his personal and professional papers. Each
and every ride is tracked and all the records are maintained meticulously. Some of
the advantages of technology in this industry are as follows.
The mobile app – The app shows the available cabs nearby and allots a cab,
which is closest to the customer and provides with navigation to reach the
customer without having all for directions. Customers can also book a cab later by
setting the date and time. Location Based Tracking Technology.

10. 10 | P a g e
GPS- GPS enabled on the taxi will help in getting the latest co-ordinates of the
taxi that can help a long way to improving accuracy for better scheduling. Even the
customers should be provided with an interface to track latest location update of
the taxi by means of an application either through web interface or mobile based so
that the customers can get the actual position of the car and there by making up for
alternate plans if there is a delay.
Scheduling based on Live Traffic Feed -With the advent in technology, live
traffic information integrated with data from the GPS on current location can be
provided as inputs to a scheduling algorithm that should automatically pick the
taxi that is either nearest or quicker to reach the pickup point.
Competitor analysis of cab industry
Ola Cabs has the highest share of voice at 46%.The negative sentiment among
customers is high for Meru and Easy Cabs,Uber has the largest fan base on
Facebook, is due to its international presence. Fan size of Uber is 170 times that of
Easy Cabs .Ola is the most followed radio taxi service provider on Twitter.Males
are more likely to talk about cabs than female Youths tend to talk more about taxi
services as compared to elder age group.

11. 11 | P a g e
As per our analysis , cab industry would be slightly near to airlines industry, As the
tangible factor that includes in cab services is car, which been used to take you from
point A to point B , whereas the intangible factor is that you don’t own that car, it’s
just a medium to deliver you the service.
CAB
INDUSTRY

12. 12 | P a g e
TYPICAL SERVICE OFFERING
Customer expectations of service in the cab industry-
Customer expectations are beliefs about service delivery that serve as standards or
reference points against which performance is judged. Customer expectations is
critical to services marketers because customers compare their perceptions of
performance with these reference points when evaluating service quality, thorough
knowledge. Further it can be classified as
 Ideal expectation or desire - 'Everyone says that Uber cabs are as good as
cabs in USA and I want to book cab for going to the airport'
 Normative 'should' expectations - 'As expensive this cab is, it ought to have
quick cab service.
 Experience based norms - 'Most of the time Uber is on time but when there
is traffic they usually make a col.
 Acceptable expectations - 'I expect Uber to at least be on time and not get
puncture'
 Minimum tolerable Expectations - 'I expect non ac and not so comfortable,
but have booked because the price is too low'

13. 13 | P a g e
Bundles of benefits do the customers typically receive in cab industry-
Let’s understand this through a story as bundle of benefits received by customer are
credits, gifts, love, care and emotions.
Pradeep Chopra, Co-founder & CEO of Digital Vidya booked a cab for his wife
and daughter who were going to a birthday party. He made a booking with Ola Cabs,
which is a Mumbai based company and is considered to be one of the most popular
Indian radio taxi service providers, by 11 AM for 5:15 PM departure.
At 4:50 PM, his wife called her saying that she received a call from Ola Cabs
personnel’s about the cancelation of the cab due to unavailability. At this point when
he was about to enter a meeting, he found himself in a situation of searching for
more options rather than concentrating on his meeting and work.
While he was trying to find out other options, he received a message from Ola Cabs
about the details of the driver of the cab. However, he soon realized after having a
word with the driver that since the cab was 40 Kms away from his home, so it would
be of no use. After putting a lot of efforts finding for other options, he realized that
his 6 year old daughter will be missing the much awaited birthday party of her friend.
When he reached home, he listened to the complete experience of his wife about Ola
Cab’s personnel’s and decided to leave a detailed review about his bad experience
next day.
He dropped a tweet about his experience on services offered by Ola Cabs, which
forced the company to respond immediately.
Following was the tweet made by him:
In response to the tweet, Ola Cabs replied with the following apology immediately
and asked for the details of the order:

14. 14 | P a g e
While sharing his order details, he clearly mentioned that nothing can be done to
control the damage now.
Ola Cabs mentioned that they will call him the next day and as per this commitment,
Pradeep received a call from one of the Senior Customer Relationship Manager at
Ola Cabs. The representative from the company listened the whole experience of
Pradeep calmly and apologized once again. The representative also mentioned that
he listened to the whole conversation which Pradeep’s wife had with Ola Cab’s
personnel’s and without any defence apologized for the incorrect allotment of the
cab. The representative assured that they will not let this experience repeat and will
do something to make up for their mistake; however, it didn’t affect Pradeep as the
party was already missed by his daughter.
After explaining the whole of the situation to the representative of the company he
was bit relieved; however, did not change his mind about dropping a detailed review
and his bad experience with Ola Cabs.
After the long hectic day and complete narration of his bad experience to the
company representative, Pradeep went back home and was pleasantly surprised to
know that his daughter was happy with the gift she received from Ola Cabs. It was
a cake box and, carried the following message

15. 15 | P a g e
This message touched him and he finally decided to forgive Ola Cabs after seeing
the smile on the face of his kid. And obviously he also dropped an idea of leaving a
bad and detailed review about the company.
Hence, a frustrated client was successfully turned into a Brand Advocate for Ola
Cabs
Five-Service Quality dimensions apply to the firms in this Industry
SERVQUAL is a service quality framework, developed in the eighties by
Zeithaml, Parasuraman & Berry, aiming at measuring the scale of Quality in the
service sectors.
The five SERVQUAL dimensions are: R-A-T-E-R:
 RESPONSIVENESS - Willingness to help customers and provide prompt
service
 ASSURANCE - Knowledge and courtesy of employees and their ability to
convey trust and confidence

16. 16 | P a g e
 TANGIBLES - Appearance of physical facilities, equipment, personnel, and
communication materials
 EMPATHY - Caring, individualized attention the firm provides its customers
 RELIABILITY - Ability to perform the promised service dependably and
accurately
According to a survey where 30 respondents were taken into consideration for me
the dimensions where analyzed as
Dimensions 1 2 3 4 5 Total
Reliability 1 3 6 15 5 30
Responsive 1 2 12 12 3 30
Assurance 0 3 12 12 3 30
Empathy 1 2 10 13 4 30
Tangible 0 3 13 12 2 30
Overall
Quality
0 1 8 18 3 30

17. 17 | P a g e
 Service Quality Gap
 Expected vs perceived : since most of the respondent has given four rating we say
that cab industry is good at service quality gap
 Service Standard Gap
 Organization’s Understanding of Expectations vs Organization’s Service
Standards: Cab industry is providing good Standard Service all the employees
having uniforms.
Customer Envolvement-
Customer involvement helps in providing a constant flow of innovative products
which is crucial for industry growth. The product of cab industry have high
involvement of the customer. The customers get involved in the buying process right
from pre purchase to post purchase.
Pre-purchase: The customer get involved right from the moment when there is a
need to travel. The first involvement is when the customer try to book a cab. This
also includes searching for a cab service provider for that customers is fully involved
in the collection of information about the service provider in terms of quality, price
and safety.
Purchase: The second involvement of a customer is during a ride where the
customer try to evaluate perceived quality with the expected one.
Post-purchase: The third involvement comes in terms of feedback. The feedback is
in form of review and rating. This involvement can inspire the innovation process of
the firm.
Pre-Purchase
Purchase
Post-Purchase

18. 18 | P a g e
SERVICE BLUEPRINT
1. Meru Cabs blueprint

19. 19 | P a g e
We can identify 2 moments of truth during the service delivery process.
The first one is when the customer place the order:
- Either the customer calls the customer service. In this case his/her appreciation
will be based on the quality of the call, that is to say: reachability of the
customer service, waiting time to get someone on the phone, employee’s
diligence
- Or the customer uses the website/mobile app to book a taxi, so his/her
appreciation will be based on: interface user-friendliness, interface
ergonomics, accuracy of the given information, options available
The second moment of truth starts when the customer meets the driver and gets in
the taxi and ends when he gets out.
During this time, several criteria will influence customer’s appreciation: driver’s
diligence, driver’s way of driving, quality of the vehicle, traffic conditions,
2. Blueprinting Services: a picture or map that accurately portrays the service
system.
Advantages:
- Distinguish “frontstage” and “backstage”
- Clarify interactions and support by backstage activities and systems
- Identify potential failure point
So, globally speaking, blueprinting a service is valuable for several reasons: service
innovation, diagnosing operational issues, making structural changes.

20. 20 | P a g e
PHYSICAL EVIDENCE
1. In the cab industry the servicescape has two roles. The first one is to make it
very easy ordering a cab when using the website or the mobile app. The
second role is to make customer’s journey comfortable.
Overall, the role of the servicescape is to give a good and serious impression
of the company.
2. The influence of the servicescape in the cab industry upon the service
delivery process can be divided into two parts. The first part is the quality of
the website/mobile app which allows the customer to order a cab at the time
he wants and with all the options he may require.
The second part consists in the quality of the vehicle in which the customer
is to get in, and the cab driver’s outfit, during the journey.
3. Service companies need to manage well their servicescape since it can
deeply impact customers’ satisfaction and service productivity. So
servicescape enables service companies to design the physical evidences in a
way that gives customers an unique experience of the service they provide.
In addition, servicescape can also caters to employees’ needs, if so, their
productivity will be enhanced, leading to two competitive advantages.

21. 21 | P a g e
INDUSTRY SECTION
SWOT Analysis & Future Holds-
Strengths
First Mover advantage: The industry enjoys advantage of first mover in terms of
technology i.e. e-billing, easy of booking track and notifiable features etc. For
example: Uber is now providing cabs with Wi-Fi facility.
24*7 Service: The industry provide 24*7 service to its customer wherein the
customer can get a ride any day and anytime by booking a cab from anywhere
because the driver works on day and night shift and also the bookings are directly
send to drivers.
Weaknesses
Safety: The industry cannot insure safety against drive as the intentions and
emotions cannot be controlled. Despite of regulations formed by government it is
difficult for cab providers to insure 100% safety guarantee against drive.
Promised time: Many service provider fail to deliver the cab in a promised time
which makes the customer dissatisfied and have to wait.
Drivers Loyalty: The drivers are not loyal towards a particular service provider.
They tends to shift frequently depending upon the benefits provided by the provider.
As drivers do not have to make much investment for joining a particular provider
and there is easy entry and exit of drivers.

22. 22 | P a g e
Opportunity
Increasing internet penetration: The radio cab business has observed a tremendous
year-on-year growth rate of 10% over the last two years and has emerged as one of
the fastest growing businesses with several private operators entering the market.
Though the radio cab business started about eight years ago, the service gained
popularity only about three years ago when a handful of key operators such as Easy
Cabs, Meru Cabs, and Mega Cabs entered the market. These players have a
collective market share of 70%.
Ownership Model: The genesis of the modern radio cab industry was in the
ownership model. In this model, the radio cab operator owns his fleet, and the driver
pays a pre-decided subscription fee of Rs 900-1300 per day or 20-30% of his fares.
A full time driver who works for 26 days a month usually makes Rs 15,000-20,000
per month. Over the last three-four years, cab operators have provided drivers with
the option of owning the cabs in two to four years by paying the equated monthly
instalments (EMIs) for the cabs in addition to the subscription charge.
Increase in Demand: There is increase in demand in the metros and large cities as
executives, tourists and affluent Indians opt for travelling in well-maintained cabs.
These customers want to have a reliable transportation source which is also safe,
especially those who want transport at odd hours of the day at railway stations or
airport. These companies have leased a fleet of cars to help their employees commute
from their homes to the workplace and back. Seeing this trend, market players are
entering into strategic tie-ups with corporate. For instance, Meru Cabs, that had
started its operations on a pure B2C (business-to-consumer) model has recently
entered into strategic tie-ups with three firms in Delhi.
Support from the automobile sector: Automobile industry allowed the operators to
reduce the operating costs. Automakers, such as Maruti Suzuki, offers discounts on
some of its models for taxi operators. Some automakers, such as Toyota, has come
up with a compressed natural gas (CNG) based variant of its multi-utility vehicle,
Innova, whose running cost is one-third of that of the petrol version.
Threats

23. 23 | P a g e
Customer Experience: Analysis of the customer experience posts on social media
sites such as Facebook and Twitter has revealed that customers are not happy with
older fleets being used for the service.
Customer Loyalty: With more players entering the market, customer loyalty is
emerging as a key area of concern for the operators. To provide a better service
experience, operators have started cab booking through iOS or Android app. Such
initiatives further increase the outreach to customers. Uber also offers the option of
splitting fares among people. However, all these initiatives are still to gain traction.
Low Economies of Business: Another challenge that operators face is the economies
of business in India given the low per kilometre fares. International player such as
Uber finds the margin to be lower in India when compared to cities like San
Francisco or New York and hence, has to make big investments to sustain
themselves in India. To cater to the cheaper taxi demand, operators have launched
hatchback versions that are nearly 20% cheaper than the regular cabs. For instance,
Meru launched Genie in Hyderabad in December’13 and subsequently in Bangalore.

24. 24 | P a g e
Person/Company planning to enter this industry-
The biggest challenge is the customer’s experience of a cab service. As we all know
the technology has been evolving at a very faster rate and now technology is so
advanced that everyone has access to everything these days so customer can post
their experience on social media sites such as Facebook and Twitter. And it has been
observed that customers are not happy with older fleets being used for the service.
With more players entering into the market, customer loyalty is emerging as a key
area of concern for the cab service providers. To provide a better service experience,
operators have started cab booking through iOS or Android app. Such initiatives
further increase the outreach to customers.
Though regulatory barriers are low, a new company entering the market has to make
huge investments in vehicles, technology, telecom equipment, training programs for
drivers, call centres and parking lots. In metro cities such as Delhi, Mumbai, and
Bangalore, where the charges are high, parking a fleet of 15,000 cars in airports and
malls is an expensive proposition.
Another challenge that operators face is the economies of business in India given the
low per kilometre fares. To cater to the cheaper taxi demand, operators have
launched hatchback versions that are nearly 20% cheaper than the regular cabs. For
instance, Meru launched Genie in Hyderabad in December’13 and subsequently in
Bangalore.
The market does not look crowded at a first glance. However, only a few of the new
entrants have achieved modest scale or sizable funding till date. Though it’s difficult
to capture 100% of the taxi market all across India by these players, the taxi market
is maturing rapidly. The business as such is low margin and operationally intensive.
Adding to this, the regulated and political environment of the business coupled with
an uneducated labour force makes it a difficult venture. Hence, despite being an
attractive space, this is one of those businesses that one should enter with caution.

25. 25 | P a g e
Prevailing practices of the industry in terms-
Pricing-
The basic pricing structure of cab services include-:
● Flag down Fare (Minimum amount for first kilometres)
● Amount for every subsequent kilometres
● Waiting Charge
● Night Charge/Surge Charge
Promotion Strategies-
● Cab operators also provide a free ride to their new customers
● Cab operators have tied up with many e-commerce portals which on every
purchase provide a discounted or a free cab ride.
● Cab Operators
Managing supply and demand-
● Cabs are booked by customers through mobile apps or by call. Then the cab which
is nearest to customer’s pickup location is send to pickup customer.
● The GPS Tracker itself tracks the cab which is near to them how much time will
the cab take to reach them with the estimate time of arrival, estimate trip cost, driver
and car details etc.

26. 26 | P a g e
STATISTICAL ANALYSIS

27. 27 | P a g e
UBER COVERAGE
OLA COVERAGE

28. 28 | P a g e
TFS COVERAGE

29. 29 | P a g e

30. 30 | P a g e

31. 31 | P a g e

32. 32 | P a g e

33. 33 | P a g e
THANK YOU..!!