1

POORNIMA UNIVERSITY
SEMINAR ON CONTEMPORARY ISSUES (S.O.C.I)

Comparative Study of OLA and UBER cabs

On the basis of Pricing Strategies

Submitted To: Mrs. Timsy Kakkar Ma’am

Submitted by: Rachita Jain

MBA (L)
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TABLE OF CONTENTS

PARTICULARS PAGE NUMBERS

1. INTRODUCTION 3-18

2. PRICING STRATEGY 19

3. SWOT ANALYSIS 20-21

4. OBJECTIVES 22

5. REVIEW OF LITERATURE 23-26

6. RESEARCH METHODOLOGY 27-29

7. DATA ANALYSIS 30-35

8. LIMITATIONS 36

9. RESULTS AND CONCLUSION 37

10.REFRENCES 38
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INTRODUCTION

Company registration number:-

U72900MH2010PTC240894, registered at Chandigarh.

Date of incorporation:-
3 december 2010

Prospective Financer:-
Tiger Global Management, Matrix Partners, Steadview Capital, Sequoia Capital, SoftBank
Internet and Media Inc.

EXECUTIVE SUMMARY
Company Vision
The vision behind Ola cabs is to provide hassle-free, reliable and technology-efficient car rental
service to Indians.

Revenue Model
Runs on pay for performance model. OLA charges a commission in whatever sales they make.
Also to get access to technology platform. OLA charge taxi owners a small fee.

Technology
One of his ambitions is to be able to deliver a cab within 20 minutes from the time of booking.
For this, the company is making use of data analytics, so that they can forecast demand for its
services on a daily basis. Based on this data analysis we intend to providing service within 20
minutes of booking. At present it is around 30-35 minutes.
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Target Market
Ola cabs is targeting three sectors of market that is providing services to customers for
outstation, city taxi and local rentals .These services are offered by making variation in fleet
those are luxary , sedan, hatchback and ola mini.

Financials
• Raised angel funding from a bunch of individual investors, including RehanYar Khan and
Anupam Mittal
• Series A funding from Tiger Global of over $ 5 million
• Series B round of funding led by Matrix Partners India for a big minority stake, with
participation from existing investor Tiger Global Management of $20 million
• Series C round of funding led by Hong Kong-based hedge fund manager Steadview Capital and
Silicon Valley-based Sequoia Capital of (Rs 250 crore ) $41.8 million.
• Series D round led by Japanese internet and telecom giant SoftBankof $210 million
• Series E or fifth round of institutional funding, it is back in the market to scoop between $300-
500 million more.
• Russian billionaire Yuri Milner’s DST Global and Singapore’s GIC has proposed to fund
around 2500 croreRs on 20th March 2015

Management
Olacabs, founded in January 2011 by two IIT Bombay alumni BhavishAggarwal and AnkitBhati
is India’s largest aggregator of car rentals and point-to-point cab services , hour-based rental
services or outstation travel. We’re a two-member team Ankit is the CTO and handles the
technical aspects, from building the website, building the backend platform, scaling servers etc.
BhavishAggarwal is the CEO and I handle the operator partnerships, sales and operations. And
yes, we are looking at hiring like- minded and passionate people for technology and product
development roles.Ola has also hired professionals for corporate affairs, public policy, marketing
and category management among others.

BUSINESS IDEA AND OPPURTUNITY

• Our market is large enough because India’s rate of vehicle ownership is low to 41 per 1000
people and ranks 128th worldwide
• The population of India is 1.2 billion which is large enough for our company to capture the
market.
• We believe that technology will help make this industry efficient and drastically improve the
consumer experience in years to come
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Unique offerings
• Facility of cashless payment by offering an in-app pre-paid wallet will allow customers to
recharge their account through a credit card • Auto bookings available on its platform in beta
mode across six cities in India
• ‘Ola Pink’, cabs driven by women drivers and is only for women passengers in Bangalore.
• It also started adding the conventional black & yellow cabs of Mumbai to its platform.
• The firm roped in Gurgaon-based background-verification firm AuthBridge to vet the drivers.
• Firm released an SOS button for customers, which, when activated, sends out all ride details in
real-time including GPS coordinates to pre-set friends and family members of the user via SMS
and e-mail.

INDUSTRY SEGMENTATION AND TARGET MARKET

• The Indian radio taxi market alone is pegged anywhere between $6-$9 billion dollars by
different estimates, and is forecasted to grow at 17-20% annually.
• The organised taxi market constitutes only 4-5% of the market in terms of sheer number of
vehicles. The rest is by operators who own fleets of 2-50 cars and typically have a presence in 1
or 2 cities.

COMPETITIVE ANALYSIS
Starting Up: • Olacabs started its operations in 2010 from Mumbai under the name of ANI
Technologies Pvt. Ltd. • TaxiForSure.com started its operation in 2011 from Bangalore under the
name of Serendipity InfolabsPvt. Ltd. • Uber started its operations in India in 2013 starting from
Bangalore, but the parent company operates under Uber Technologies Inc, incorporated in the
state of Delaware, US

Unique Marketing Initiatives:

• OlaCabs provided a lot of promo codes on their website to give huge discounts in various
segments. They also started the trends of providing fixed rate drops to the airport when they
launch in a city
• OlaCabs provides cabs at INR 13 per kilometre whenever Auto Unions call a strike
• TaxiForSure provides promo codes on Tuesdays

FINANCIAL ANALYSIS OF MARKET

• For 2013-14, ANI Technologies, which runs Ola Cabs, reported a 50 per cent jump in net loss
at Rs 34.21 crore (Rs 342.1 million), against Rs 22.80 crore (Rs 228 million) in 2012-13,
according to filings with the Registrar of Companies
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• TaxiForSure, also facing a nationwide ban, has widened its loss, too. Infolabs, the holding
company for TaxiForSure, reported a loss of Rs 17.08 crore (Rs 170.8 million) for 2013-14,
compared with a profit of Rs 3.02 crore (Rs 30.2 million) the previous year.
• For 2013-14, Meru Cab Company, which runs Meru Cabs, reported its maiden profit, of Rs
3.55 crore (Rs 35.5 million).In 2012-13, it had recorded a loss of Rs 31.11 crore (Rs 311.1
million).As of March-end this year, the company’s accumulated loss stood at Rs 215.24 crore
(Rs 2.15 billion).
• The company, which claims to have the largest radio taxi network in India, had posted a net
profit of Rs 12.18 lakh (Rs 1.21 million) on revenue of Rs 39.55 crore (Rs 395.5 million) the
previous year.
• In terms of revenue, Ola Cabs, backed by private equity funds Tiger Global and Matrix
Partners, has reported solid growth.ItsRs 51-crore (Rs 510-million) revenue in 2013-14 was 219
per cent higher than Rs 16 crore (Rs 160 million) the previous financial year.
• There are 19 radio taxi operators in the country, including Mega Cabs, Easy Cabs, Meru Cabs
and Tab Cabs, according to the Association of Radio Taxis. These operators run about 25,000
cabs across India, generating combined revenue of Rs 70,000-80,000 a cab every month, the
association says.
• There are about 6,00,000 taxis in India, generating combined annual revenue of about Rs
11,000 crore (Rs 110 billion).

PRODUCT
Olacabs provides different types of cab service:
• Ola Prime —A business-class car service for luxury travel available in a few cities offering
bigger cars like Toyota Innova.
• Ola Sedan —A regular-class car service aimed at providing the customers a spacious car for
comfortable travel with cars like Toyota Etios.
• Ola Mini —An economic-class car service to serve customers looking for affordable personal
transportation with cars like Tata Indica.
• Ola Pink —A car service driven by a lady driver service lady travellers.
• Ola Auto —An auto service provided to the customers, removing the need for haggling the
price with the drivers.
Ola cab takes more than 150,000 bookings per day and commands 60 percent of the market share
in India as per the data of 2014.
PRICING Flat rate Non airport pickups and drops Standard Rate
Category Minimum bill Extra km charges Wait time charges
Sedan Rs 150 for first 8 km Rs 13 per Km Rs 2 per min
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Mini Rs 100 for first 6 km Rs 10 per Km Rs 2 per min

Prime Rate
Category Minimum bill Extra km charges Ride time charges(for entire ride)
Prime Rs 200 for first 5 km Rs 18 per Km Rs 2 per min
Standard Rate
Category Minimum bill Distance charges Wait time charges
Sedan Rs 600 for first 30 km Rs 16 per Km Rs 2 per min
Mini Rs 540 for first 30 km Rs 13 per Km Rs 2 per min
Prime Rate
Category Minimum bill Distance charges Ride time charges(for entire ride)
Prime Rs 800 for first 30 km Rs 18 per Km Rs 2 per min

Best practices to build customer satisfaction in a service-oriented business

1. Understand the pain point-Put the customer first: Ensure that the customer is at the centre of
every initiative and his/her experience is delivered to the best of your ability
2. Offer a seamless experience- From the time a customer reaches out to you till he receives his
invoice, makes the payment and shares feedback, the experience should be seamless. For us,
consistency in communication across our web, SMS and e-mail applications helps us achieve
this.
3.Take care of your other stakeholders- In our case, the drivers and operators are our
stakeholders and they play a critical role in determining the overall experience.
4. Always action feedback- Slip-ups will happen occasionally. Be quick to accept, resolve and
ensure it never repeats again.

FINANCIAL PLAN FUNDING

• Series A funding from Tiger Global of over $ 5 million
• Series B round of funding led by Matrix Partners India for a big minority stake, with
participation from existing investor Tiger Global Management of $20 million
• Series C round of funding led by Hong Kong-based hedge fund manager Steadview Capital and
Silicon Valley-based Sequoia Capital of (Rs 250 crore ) $41.8 million.
• Series D round led by Japanese internet and telecom giant SoftBankof $210 million
• Series E or fifth round of institutional funding, it is back in the market to scoop between $300-
500 million more.
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• Russian billionaire Yuri Milner’s DST Global and Singapore’s GIC has proposed to fund
around 2500 crore Rs on 20th March 2015

REVENUE
• ANI Technologies, which runs Ola Cabs, reported a 50 per cent jump in net loss at Rs 34.21
crore, against Rs 22.80 crore in 2012-13, according to filings with the Registrar of Companies
(RoC).
• Ola Cabs, backed by private equity funds Tiger Global and Matrix Partners, has reported solid
growth. Its Rs 51-crore revenue in 2013-14 was 219 per cent higher than Rs 16 crore the
previous financial year
• The Ola Cab is owned by the driver. For every ride that he makes, he takes the ride value from
the customer. Twenty per cent of the total ride value comes to Ola as commission.
• There is a lot of discounting offered by multiple players on multiple levels. We’ve refrained
from doing this. Occasionally, we take this route (discounting) but those are very limited period
offers. For us, we believe that our drivers are our customers. We need to be serving them and as
entrepreneurs, they need to sustain for themselves.
• Ola Mini (that offers as low as Rs 10 per kilometer) was tested intensively. The revenue the
driver earns by reducing the fare from Rs 13 to 10, is overall about 35-40 per cent more than
what he was getting earlier. This makes it very rich and exciting for all the drivers.

CRITICAL RISKS & PROBLEM

1. Fix your location tracking- The drivers are unable to reach the pick-up point based on the
GPS/ location from the app. Many drivers have complained that they don't get a clear location or
a route map on the apps.
2. Penalize errant drivers- Ola give them a bonus for being online for a certain time daily or
weekly. Therefore, many of the drivers keep their apps turned on even when they are unavailable
to respond to a request. Some drivers refuse to show up when they realize that the destination is
not very attractive to them.
3. Set an example on the roads- While there has been much discussion on improving security /
transparency through better verification of drivers, an equally important expectation from Ola is
that they would follow safe traffic practices. No mobile phone while driving, following speed
limits, obeying traffic lights, using a seat belt, using turn indicators while shifting lanes / turning.
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Market Segments

1. INDIAN MARKET POTENTIAL-

i) Higher population - 65% below the age of 35

ii) Mobile Internet users -67% mobile penetration.

2. MARKET DYNAMICS- With Ola micro and mini, it is cheaper for a customer to take a
cab than own a car.

COSTUMERS SELF OWNED CARS CABS

Cost of Car 4.85 lacs 0

Loan, Insurance & Taxes (3 1.26 lacs 0

yr period)

Maintenance Cost (3 yr 4500 INR 0

period)
Miscellaneous Cost 50,000 INR 0

Registration (3 yr period) 72,000 INR 0

Cost of running (3 yr 1.21 Lac 4.32 Lac

period)
Resale value (after 3 years) 2.35 lac 0

Total Cost incurred 6.18 lac 5.2 lac

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Value Capture

• Sets pricing structure for rides.

• Surge pricing
Pricing and • Costumer pays with cash/debit cards/credit
Payemts: cards/ola digital wallet

• Ola earns between 10%-15% depending on the

Revenue city.
Generation:

• Invest in R&D
• Managing employees salaries.
Expenses: • Maintaining infrastructure across 102 cities.
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Uber’s a ride-sharing company. It has disrupted the taxi industry by using technology to allow
people with cars and spare times to drive people who don’t want to drive but who have money.

Basically every city had two or three taxi companies, but because of the way they operated they
could not scale beyond a limited geographical area. Uber changed all that and that’s what we are
going to look at now.

How Uber Works

Uber is an on-demand transportation service which has brought a revolution in the taxi industry
all across the world. The business model of Uber has made it possible for people to simply tap
their smartphone and have a cab arrive at their location in the minimum possible time, leaving a
lot of budding startups yearning for an App like Uber.

Uber is one of those few tech companies in the world that has been valued over $70 Billion.
Uber has already received an equity funding of $22.2B and is present in 633 cities worldwide.
These facts surely show the trust of investors in Uber’s business model and make it easy for us to
imagine how much revenue Uber will be making once it attains liquidity.
In this post, we’ve have highlighted some unknown facts and figures about Uber along with a
detailed explanation about the model by which Uber earns money and does business. Uber’s
customer segments, value propositions, key problems, solutions, cost structure and revenue
model have also been discussed. For budding entrepreneurs, we have catered to the rise of ‘uber
for x’ startups and what you should be looking for in this space.

Uber Founders, Funding received and Timeline:

Founders: Travis Kalanick and Garrett Camp.
Company Headquarters: San Francisco, California, United States.
Funding received by Uber: $22.2 Billion. (as of December 2017).
Company Valuation: Over $70 Billion.
Number of Users: More than 50 Million.
Number of registered drivers: Approximately 7 Million (as of November 2017).
Average number of daily Uber Trips: 1 Million
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Cost Structure
There are the huge costs for the platform development, hosting etc, There are the salaries for the
software engineers, the sales, and marketing teams and the country and city managers. And then
there are the driver payments. Nicely Uber gets paid upfront and keeps the money for a few days
before having to pay the drivers (as a consequence of ensuring that payments are valid)

Key Partners
The main one is the drivers who own all their cars. That saves Uber from having a contract with
a leasing company for hundreds of thousands of cars. It has the payment processors and the map
data providers.

Often missed are the local authorities. In many cities, there are legal actions against Uber as taxi
company fight to protect their businesses and persuade the ‘authorities’ to erect barriers to entry
against Uber. This is often characterized as adversarial but in the longer scale of things
regulation is seen as important and Uber will need to resolve these issues. So they are long term
partners, even if they are not right now

Key Activities
A key part of Uber’s business model is then developing the platform, continually adding value to
ensure user adoption and retention and optimizing it algorithms.

It also has to do significant marketing on a global and a local lever to driver passenger adoption
and ensure an adequate supply of drivers. Churn apparently is a problem.

Uber still has the same problem as traditional taxi companies. It serves lots on unconnected
geographical markets. Singapore, London, Frankfurt. Each has specific attributes and
requirements and so marketing to users in each city, and ensuring that there is the right level of
driver support for the user growth is critical for meeting its value proposition.

Key Resources
Uber has three key resources without which the whole thing falls apart. First, it has the platform.
This connects Uber to drivers and passengers and both to each other.

That’s a necessary but not sufficient requirement. Then it has the algorithms that do the heavy
lifting (sorry couldn’t resist that). These are the pricing and routing algorithms. The pricing
algorithms are used to balance supply and demand in the market and help ensure that there is
always enough capacity available to meet demand – fulfilling its core value proposition.
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The routing algorithm then focuses on ensuring that the customer wait time is as short as possible
and by implication reduces the deadhead time for drivers as they are either waiting for, or driving
to a new job.

Uber’s Revenue Generation Model:

If you have ever travelled in a taxi, you might have paid the driver in cash at the end of your
journey. The cash collected by each journey is the only source of revenue for a traditional cab
company. Uber is no different. Neither does Uber have a different revenue model than the one
mention above nor does it have any other source of revenue as of now. But just imagine 1
million rides a day. It will help you calculate those big numbers that Uber earns. Let’s dig a little
deeper to understand Uber’s source of income.
What has made Uber so successful is the fact that the revenue model of Uber is as unique as their
business model. It can be explained as:
1. Different cab models to cater to everyone:
Uber has not limited itself to a particular segment of cars or to a particular segment of people.
There is Uber X, Uber Black for those who love to travel in a black car, Uber Taxi for those
looking for cost-efficient solutions and Uber SUV for those who want luxury.

2. Surge Pricing Technology:

Variation in cab fares according to situation is an important aspect of Uber’s business model.
Whenever the demand increases, per mile prices are automatically increased. The new price
depends on the number of available drivers and the number of requests made by people who
want to travel. Uber has applied for a price surge technology patent in the US.

3. Other Uber rides:

Uber has come a long way from cabs. It now offers boats, helicopters as well as some other
transportation means on demand. Uber recently launched a motorcycle-pickup service in Paris, a
delivery service in San Francisco, and an ice-cream-truck-delivery service in a few cities too.
However, these means are available in selected geographical locations but it has led Uber to add
new streams of revenue into its business model.

Salient Features of Uber

 With Uber, A user can tap his smart phone and call a cab at his location.
 The driver has the option to accept or reject a ride.
 If driver accepts the ride, driver details are sent to the customer along with ETA.
 The customer can track the driver as he arrives to his location.
 The driver can also track the exact location of the customer and reach his exact location.
 The payment procedure is handled by Uber.
 In some countries like India, Uber has even started accepting cash payments which are paid
directly to the driver.
 Uber business model had a rating system in place for drivers right from beginning, where a
customer can rate the driver after his ride.
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Value Propositions

Customers:
 No need to wait for a taxi for long times.
 Free rides on certain occasions and discounts from time to time.
 Prices lesser than the normal taxi fares.
 Uber’s tagline says – Your personal driver. It lets customers travel in style.
 Fixed prices for common places like Airport etc.

Drivers:
 Additional source of income.
 Flexible working schedules. Can work part time or simply whenever they like.
 Easy payment procedure.
 Those who love to drive can earn money while pursuing their hobby.
 Uber pays drivers to be online, even if they don’t get any request.

Customer Segments
Customers for Uber are those who:
 Do not own a car.
 Do not want to drive themselves to a party or function.
 Like to travel in style and want to be treated as a VIP.
 Want a cost-efficient cab at their doorstep.

Uber has such a vast customer segment that it has got something on offer for everyone. From
Uber Taxis to Uber Black and from Uber X to Uber SUV, the company has got a vast range for
its customers to make a choice.

Uber serves professionals as they hire an Uber cab to and fro work. For this Uber did few tie-ups
with corporates in the beginning and does so when it launches in a new city in a new country.
Apart from professionals, Uber tries to touch hearts of people by offering special services like:

Uber for Kids: A special service from Uber dedicated for parents who want their kids to reach
home from school in an Uber cab.

Uber for Senior Citizens: Another special service from Uber where it targets senior citizens. As
per the statistics, Senior citizens make for upto 30% to 40% of total rides in many cities. This
made Uber have some special features for seniors and hence attract more senior citizens on the
platform.

All this might raise another question in your mind. The question about how does Uber find them
or how does it market out to its target audience? We extended our research beyond Uber business
model and came up with an entire growth model of Uber and some insights about how you can
build an Uber like App.
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Growth Model: How Uber finds customers

In less than 6 years, Uber has managed to become the best example of a city-by-city mobile
service company roll-out. Many generic pointers that I talked about in this Blog Post regarding
scaling User Acquisition efforts for On Demand platforms borrows elements right from Uber’s
playbook.
Let’s try to decode Uber’s Playbook and how it plays out as it launches in a new city or a
country:
The underlying principle here is that for every city it launches, it faces the same chicken and egg
problem. The advantages that Uber has as compared to new startups in this space are:
1. Lot of money to incentivize both drivers and customers.0
2. Rock solid processes or playbooks that have evolved through experience launching Uber in 311
cities till date.
3. Already known brand that gets early curious adopters.
Everything starts with a small city launch team. Every city has a general manager who heads the
customer acquisition as well as driver acquisition. The first cabs to come on board are generally
professional drivers who are already associated with local taxi companies and have their own
cars.
First customers come from various local advertising channels like FM radio, newspapers, online
advertising etc. Uber is such a large name that people are already waiting for the cab company to
start services in their city.

4 step model about how Uber works

 Step 1 (Request a cab): The first step in the business model of uber is about creating a demand.
People have a smart phone app which lets them request a cab instantly or schedule it for some
time later.
 Step 2 (Matching): As soon as the request is made, a notification about your details is sent to
the nearest driver. Cab driver has the option to accept or reject the ride. In case he rejects,
notification is sent to another driver in that area.
 Step 3 (Ride): Customer can track the cab when it is arriving and the ETA is also shown to the
customer. The meter starts as soon as the customer sits in the cab which can be tracked through
the customer side app as well. Friendly drivers make sure that the ride is comfortable for the
passenger.
 Step 4 (Payment & Rating): Once the ride is over, customer gets an option to rate the driver.
Rating system is an important part of Uber’s business model as it lets a person know about the
driver before booking a ride and helps him trust the driver.

How and Why Uber became so successful:

Uber’s business and revenue model just can’t be stated as complete if this widely asked question
about Uber’s successful journey is not answered. There were certain factors that led to Uber’s
success. Here’s a brief journey that Uber went through when it launched. Similar journey can be
followed by any startup which aims to make it as big as uber.
The problem with local Taxis
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Earlier, people had to stand on the street side and wave their hand in order to signal a taxi to stop.
The wait time, the inconvenience and high rates were a problem for everyone. Quite a few taxis
were available and drivers / taxi companies used to charge whatever they thought was right.
There was no control on prices and people were left with no other option. Apart from this, the
situation was worse during the peak hours as it was quite hard to find an empty cab.

The launch of Uber

Uber recognized the ongoing problem in regard to booking a taxi and gave a technological
solution through a mobile app. The solution to book a cab by tapping a smartphone brought a
revolution in the taxi industry. Uber app was officially launched in 2010 and soon became
popular due to the value it provided to people.

The early adopters

It is quite difficult to market a newly launched product or service in any geographical area. What
gave uber the edge is that it launched in San Francisco, a city which is home to tech savvy
people. The first drivers on the platform came through cold calling. Many of them were
professional drivers with other cab companies or were self employed as a taxi driver.
To get their first customers, Uber took to social media and other mass marketing means. It
offered discounts, free rides and rates that were too less as compared to other cab services in the
city. The first customers for Uber were those who enthusiastically wanted to try the new service.
Uber offered rides from club venues to user’s doorstep so the party people were amazed. It
offered rides to the corporate sector who worked in offices helping them to save time.

Word of Mouth advertising

Whosoever took a ride in Uber was baffled by the first hand experience. This made the early
users to become regular customers and they also helped spread the name by word of mouth
advertising. This word of mouth advertising was one of the major driving force

Main Growth opportunities tapped by Uber

1. Party people who go to clubs, parties or events.
2. Business Travellers and Tourists.
3. Cab at doorstep in bad weather conditions.
4. City’s Nightlife.

Problems Uber still faces

Lawsuits: Uber has pending lawsuits in courts of New York and San Francisco. According to
Uber, all drivers working for it are its partners while the court says that they are employees. Uber
is not the only company facing such a problem but in fact almost all companies who hire 1099
workforce are under the scanner.

Chicken & Egg problem (New city Launch): Uber faces the chicken and egg problem
whenever it launches in a new city. Acquisition of customers as well as partnering with new
drivers is not an easy task. To solve this problem, a marketing team starts working in the new
city by reaching out to professional drivers. Soon, online and offline marketing is initiated.
Discounts are always the main USP to woo customers in the starting stage. Read – How to solve
the chicken and egg problem.
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Trust and Safety Issues: There have been cases where Uber drivers have acted rude to
passengers. Some cases where Uber drivers have outraged the modesty of female passengers
have come to the limelight. This is a big challenge for Uber. Although the company takes all
steps such as police verification of drivers and their ID details but still such cases cannot be ruled
out completely.

Takeaways from Uber Business Model

 Go for less ownership model. Uber does not own any cab but still provides over 1 million rides a
day through its partner network.
 Choose an industry. Think about the most common problem it has. Find a solution and disrupt
the existing model through technological infrastructure. That is what Uber did in the cab
industry.
 Treat your initial users as kings. They are really important for the growth of your business.
 Expand step by step. Do not add everything in your business model in the first go. Uber started
with cabs but now even has boats, helicopters, bikes and other means.
 Opportunity won’t come to you. You have to look for them. Uber created an opportunity by
offering discounted rides for particular events / party venues and hence got its first customers.
 Treat your workforce an important part of your business. Uber calls its drivers as partners and
gives them a decent 80% of the total fare.
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OLA VS UBER

Parameter OLA UBER

No. of Cars 350,000+ 250,000

No of Rides per day 7,500 2,00,000

Funding $900 million (VCs) $1 billion

(Uber Technologies)

Reach 102 cities 26 cities

Cash Payment Yes Yes

Advance Booking Yes Yes

Cancellation Fee No Yes

Surge pricing Yes Yes

International Presence Launching soon Yes

(Tie-ups with Didi in China
and Lyft in US)

3-wheeler (auto rickshaws) Yes No

Payment options Ola money Paytm

(Can’t be used for other (people use it regularly)
payments)
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PRICING STRATEGY

Uber Ola

PROVIDES PER HOUR FIXED PROVIDES PER DAY RENT

RENT

A DRIVER HAS TO TAKE ATLEAST 1 ADRIVER HAS TO TAKE ATLEAST 7

RIDE RIDES IN TWLEVE HOURS
EVERY TWO HOURS

NO RIDE IS TO BE REJECTED NO RIDE IS TO BE REJECTED

No Fine For Rejection But Guaranteed Rs. 250

Scheme For those Hours Fined for each Ride Cancelled
Collapses by The Driver.
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SWOT ANALYSIS OF OLA CABS

SWOT Analysis

1. First mover advantage as a taxi aggregator in India

2. Acquisition of Taxi For Sure made it No. 1 in India
3. Top of the mind service
4. High awareness due to aggressive TV, online and print media marketing
5.Huge customer base & due to network effect it is increasing
6. Rapid expansion and online application
Strengths 7. Multiple rounds of VC investments have made the brand financially strong

1. Drivers are the face of the company and hence their misbehavior directly
affects the brand image
2. While the demand is huge, amount of cash burning is huge and
Weaknesses monetization is very difficult

1. Unorganized market is huge (~90%) and hence potential is high

2.Increasing internet penetration & smart phone users
3. Rising disposable income
4. Shifting of consumers towards convenience creates huge demand
Opportunities 5. Acquisition of smaller players

1. Rising competition
2. Uber has deep pocket and hence can burn cash heavily
3. Presence of many national players
4. Absence of clear government regulations in developing countries
5. Future is unclear due to lack of regulations and Customer loyalty is less in
Threats this industry

Competition

1. Uber Cabs
2. Meru cabs (India)
Competitors 3. Easy cabs.
 21

SWOT ANALYSIS OF UBER CABS

SWOT Analysis

1. Global player with presence in over 50 countries and 200 cities

2. Serves as a market place and hence fixed investment is less
3. Gained a premium brand image especially in developing countries
4. Enhanced user experience & higher customer satisfaction
5. First mover advantage globally
6. Supreme technology with less bugs compared to its competitors
7. High awareness due to excellent advertising and marketing
Strengths 8. Deep pockets & hence can burn cash heavily to acquire market share

1. Drivers are the face of the company and hence their misbehavior directly
affects the brand image
2. While the demand is huge, amount of cash burning is huge and
Weaknesses monetization is very difficult currently

1. Unorganized market is huge in developing countries and hence huge

potential is there
2. Increasing internet penetration & smart phone users
3. Rising disposable income
Opportunities 4. Shifting of consumers towards convenience creates huge demand

1. Rising competition
2. Presence of many national players
3. Absence of clear government regulations in developing countries
4. Future is unclear due to lack of regulations
Threats 5. Customer loyalty is less in this industry

Competition

1. Lyft
2. OLA
3. Curb
Competitors 4. Sidecar
 22

OBJECTIVES OF THE STUDY

1. To compare the pricing strategies on both the cab service providers.-

The pricing policies that both the giant taxi services providers have considered to increase the
market share are to be studied in this project. The pricing policies play an important role in any
company to establish itself in the market.

2. To compare the net worth of both the companies.-

To study the net value in the existing economy and the capital share they both have secured in
the market.
 23

REVIEW OF LITERATURE

1. Ruchi and Dr Ashish in their study have suggested that “India’s major attractiveness
lies in its market size and increased purchasing power resulting in uplifting lifestyles.
On the other hand Indian consumers are smart, very demanding and highly price-
sensitive with no brand loyalty; managing such market is not an easy task. Companies
need to constantly be on their toes and keep designing new packages and offers to
allure the customers for long which at times result in a lot of cash burn. Therefore, it
would not be that easy for both the companies Ola and Uber to operate in such an
environment. They have to optimize their costs at all levels; need to be more customer-
centric & target oriented; highly innovative; resistant to pressure from the regulatory
authorities and above all keep delighting their customers as customer is the king”.

2. Aditi and Jyothi in their research have suggested that “Platform economy companies
have given drivers a stable, mid-term period of time to accumulate wealth, which in
turn has allowed them to stabilize and take short-term decisions by making large
investments in their work, and to bear the risks of flexible working conditions in the
short-term with more confidence.”
 24

3. Vishal Ravish’s research suggests that“According to industry experts Ola’s focus has
wavered from last year since the company has launched new food and grocery delivery
(Ola Store) and dabbled in shuttle service where Uber is singularly focusing on the
core business to catch up Ola.”

4. Dr. P. Kishore Kumar, Dr. N. Ramesh Kumar in their research has suggested that “There is
stringent competition in the organized cab services industry therefore organization need to
motivate consumers through coupons. The innovative behavior of consumers helps to
download mobile apps and further motivates them to redeem coupons while booking cabs. The
results of this study are consistent with earlier research studies because it is found that price
conscious consumers are likely to redeem coupons. The modern consumers are innovative and
at the same time they are price sensitive therefore coupon redemption helps for customer
retention. The brand image also plays a vital role in customer retention apart from offering
coupons.”
 25

5. Jeff in his study has said that “India’s size and fragmented transit system also means
that there could be room for two or more rideshare companies to co-exist in the future.
Since ridesharing is still in its infancy in the market, there is plenty of room to still
grow for both companies: but the battle could be heated.”

6. Sana, Renu and Shabnam have suggested that “Instant ridesharing, dynamic
ridesharing, ad-hoc ridesharing, on-demand ridesharing, and dynamic carpooling is a
service that arranges one-time shared rides on very short notice. This type of
carpooling generally makes use of three recent technological advances.
• GPS navigation devices to determine a driver’s route and arrange the shared ride
• Smart phones for a traveler to request a ride from wherever they happen to be
• Social networks to establish trust and accountability between drivers and passengers
These elements are coordinated through a network service, which can instantaneously
handle the driver payments and match rides using an optimization algorithm.”
 26

7. Abhilesh Tripathi in his study said that “Ola Cabs is currently not making any profits
but the business model of Ola Cabs is currently working on the strategy of capturing
the market and tapping the potential of a large number of Indian commuters by
offering different services like local transfers, outstation travel and full day/half day
rentals thereby catering to the varied needs of the customers. Currently Ola Cabs is
working to gain market share while trying to provide an enjoyable experience to the
customers and thereby gain their trust. To attract more and more customers they
provide discounts/ referrals/ coupons etc.”
 27

RESEARCH METHODOLOGY
Research methodology is a way to systematically solve a research problem. It may be
understood as a science of how research is done. In this we study the various steps generally
adopted by a researcher in studying a research problem along with the logic behind them.
In research methodology we do not only talk about the research methods but also consider
the logic behind the methods that we use in concern of our study and also explain why we are
using a particular method so that research results are capable of being evaluated either by
researcher himself or by others.
Secondary data are those which have been collected by someone else and which have already
been passed through the statistical process.

Research Problem
A researcher must find the problem and formulate it so that it becomes susceptible to
research. Like a medical doctor, a researcher must examine all the symptoms (observed by
him) concerning a problem before he diagnose correctly.
And therefore I also define the research problem that understands the pricing strategies of
OLA and UBER cabs. Also the customer satisfaction derived out of utility of both the cab
service providers.

Research Approach:
The research approach for the purpose is secondary research to collect information.

Research Instrument:
The direct observation data and survey method is used as an instrument.

Research Tool:
MS- Office
 28

Survey Method:
The survey is non-experimental, descriptive research method. Survey is used extensively in
library and information science to assess attitude and characteristics of wide range of subjects
from the quality of user system interfaces to library users reading habits.

Location of study: Jaipur

Research Design
It is simply the framework or plan for as study, used, guide in collecting and analyzing data.
In this research the exploratory technique is used and for data collection and the
questionnaire is filled up by the customer to understand their satisfaction level. Also
information has been taken from books and the websites.

Data Collection:

Data is the key activity of marketing research. The design of data collecting method is
backbone of research design.
Data constitutes the foundation of statistical analysis and interpretation. Hence the first step
in statistical work is to obtain data.

Secondary Data:

Secondary data are the data, which already exists somewhere. Secondary data provide
starting point of research and after that the advantage of low cost and ready availability.
Secondary data can be divided into two parts:

1. Internal Data
2. External Data

When researcher uses the data that has already been collected by others, such data is called
Secondary Data. Secondary data can be obtained from the journals, reports, etc than it is
called as internals sources or internal data.
 29

Internal data are reports and memos generated within the organization to facilitate its
operations. External data are those specially produced for outside consumption.

Sources for which the data has been taken are:

1. Research papers/ articles

2. Official websites of OLA and UBER
3. Direct observation
4. Survey and Consumer feedback
 30

DATA ANALYSIS

The above graph depicts the analysis based on the conversation where users of the service of the
cab providers talked about safety on social media.
(Source: Simplify360)
 31

The above graph depicts international panels of millions of anonymous mobile device users to
delivers meaningful and actionable insights into mobile app usage and engagement with
unparalleled granularity and scale.

(Sourced from independent data providers and cross-referenced to ensure quality and accuracy)
 32

The above graph depicts the number of cab hailing apps installed at the end of march, is
higher than that of ola at 43.7%
(Source: Kalagalo)
 33

The above graph depicts the rate war between the ola and uber cabs in Delhi. The different
prices of both the cab services can be seen by taking into consideration the prices in Delhi.
(Source: Business Today)
 34

The above graph depicts the comparison of price at 5.5 kilometer ride using the cheapest Uber
and Ola ride options available. This shows how prices vary among these six Indian Cities.

(Sources: ride.guru)
 35

The above data depicts the bifurcation of Ola and Uber prices, their service
distribution across various cities and their market overview.
 36

LIMITATIONS

1. Emphasize on the pricing channels of both the cabs have been taken into consideration
irrespective of the other dimensions such as marketing plans and strategies of the
companies.
2. Consumer satisfaction cannot be measured at the accurate base scale as both the
companies deprive of different price allocation scheme.
3. The accuracy of data is not fully ensured as the figures changes in very short instances.
 37

RESULTS AND CONCLUSION

The success of the taxi aggregator business model is ample proof of the ever growing influence
of technology in the success of a business. Technology has played a greater role in effective
alignment of demand and supply in taxi aggregator services. This research highlighted the
innovative manner in which the aggregators like Ola and Uber pricing policies have penetrated
the Indian market using smart phone technology. They have identified the problems in urban
transportation in Indian metros and then converted them into business opportunities. What is
more, they have achieved success in their efforts too.

Also, we can see that where as the market share of Ola is much wider as compared to Uber. But
the price per ride or per km is lower in case of Uber rather than that of Ola. This might result in
prospective growth of Uber cab services in the Indian market in the coming years.

The peculiar nature of services adds to the complexity in service delivery. However technology
can be a great enabler in service quality. Having achieved success, the taxi aggregators need to
focus on performance measures to ensure the sustainability of the business model. With increase
in the levels of the service quality, the expectations of customers are bound to grow in the future.
Performance metrics enable benchmarking of the services and direct the focus on continuous
improvement in service quality. Taxi aggregators should also focus on innovations to grow the
business.
 38

REFRENCES

1. OLA VS UBER: The Battle of Dominance

By: Dr. Ruchi Shukla, Dr. Ashish Chandra & Ms. Himanshi Jain
(Source: IOSR Journal of Business and Management (IOSR-JBM)

2. The Emerging Nature of Work in Platform Economy Companies in Bengaluru, India: The
Case of Uber and Ola Cab Drivers:

By: Aditi Surie, Jyothi Koduganti

(Source:E-Journal of International and Comparative Labor Studies)

3. Ola Funding, Ola Vs Uber market share, and Founders:

By: Vishal Ravish
(Sources: www.whizsky.com)

4. A Study on Factors Influencing the Consumers in Selection of Cab Services:

By: Dr. P. Kishore Kumar, Dr. N. Ramesh Kumar
(Source:International Journal of Social Science and Humanities Research)

5. India’s Taxi War: Uber vs. Ola

By: JEFF DESJARDINS
(Sources: www.visualcapitalist.com)

6. “Effectiveness of Ola/Uber services”

By: Sana Khan MBA (Marketing)-10004
2) Renu Sharma MBA (Finance)- 10009
3) Shabnam Sayyed MBA( Finance)-10008
(Sources:www.sachdevajk.in)

7. OLA VS UBER CABS: COLD WAR

By: Abhilesh Tripathi
(Sources: Research intern at Goldman Saches)
39