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IBBAAA BRAND MARKETING PLAN FOR THE TARGET MARKET MUNICH - GERMANY

Analysis | Strategies | Tactics

EVELYN SINDERMANN |MIM 2015 Professor Protano: Strategic Brand Management


EXECUTIVE SUMMARY
Ø  The brands opportunity is to increase the revenue to €8.2M by targeting the
corporate market and creating a premium offer by the end of 2015.

Ø  The rise in disposable net income (€2,504 in average) and the growing number of
corporations in Munich offer new business opportunities for UBER. Raising brand
awareness by capturing & communicating a superior value proposition strengthens
UBERs brand equity.

Ø  The strategic alternatives are:


A: “Keep Driving” (gain market share by penetrating existing target audience)

B: “Go Corporate” (attract new target audience with existing service)

C: “Go Crazy” (innovate & create new product for new audience – be provocative)

Ø  Recommendation: “Go Corporate” is the best option in terms of market potential (growing
demand) and an ROI of 17.7%
Porters 5 forces | The market attractiveness is low due to a highly competitive
environment, risks of substitutes and medium threats of new market entrants

Threat of new entrants | MEDIUM Power of Suppliers | HIGH

¤  Patents on various technologies build a ¤  Drivers & Rental Car Companies have a high
boundary for competitors from a technological bargaining power.
aspect Power of Competitors | HIGH
¤  There are no proprietary elements that ¤  Taxi & Limousine services are higher in price but
prevent new market entrants. offer a broader network

¤  Compliance with German transportation laws ¤  Similar services to Uber (Lyft & Wundercar) are
is required to enter the market currently banned by law but have the potential to
enter the competition with new business models
similar to Uber.
¤  Low seed capital is needed to enter the
market Power of Buyers | HIGH
Threat of Substitutes | MEDIUM ¤  Customers have multiple choices according to their
needs
¤  Public transportation, car sharing services and ¤  Scheduled rides: Taxi
bicycles are easy accessible alternatives and less
¤  Luxury rides: Limousine Services
in price
¤  Self - driving: Car sharing e.g. DriveNow,
Car2Go,
MDI: Opportunity to tap 86% passenger transportation
market by increasing the number of rides by 2020
100
Market Demand of Passenger
20 transportation in Munich*1:
Market Development Index MDI

12,2M

15
Potential Market Demand*2:
90,4M
10
MDI: 12,2M/90,4M ≈ 14%

*1: Passenger transportation based on


0 Taxi business excluding car sharing &
1980 1990 2000 2010 2020 public transportation.
Market Penetration *2: Estimated data
UBER has a growth potential – differentiation &
innovation is required
100

MDI ≈ 14%
SDI ≈ 54%
Market Development Index MDI

Uber has the opportunity


to increase their market
50 share from 7,78% to
14,41% by 2020.
Growth with Market
Development

0
0 50 100
Share Development Index
Our competitive advantage: Price Leadership
Product Leadership

UBER Munich Drivers (Private Limousine Service)

MVG Taxi München eG/ IsarFunk


(Munich public (2 main taxi operators in MUC)
transportaton system:
Ubahn, Sbahn, Bus, Tram)

Customer Intimacy
Operational Excellence
Uber operates in an attractive market with potential to
strengthen their competitive position towards leadership

Phased
Strong Average Weak
Disinvest Withdrawal Double or
Quit
Competitive Position

Proceed with Proceed with


Try Harder
Care Care

Cash Growth
generator Leader
Leader

Unattractive Average Attractive

Market Attractiveness
Building on low operational costs allows price leadership
position.
Relative Strengths Relative Weaknesses
¤  Competitive Advantage ¤  Legal vulnerability
Ø  No proprietary inventory (cars) & direct
employees (drivers & dispatchers) allow Ø  Successful US business model is restricted in
minimal operational cost and fares that are Germany and leads to additional costs.
20% lower compared to the competition
Ø  Commercial drivers license: €240,- per
Ø  A scalable business model facilitates a driver/ every 5 years
possible German-wide expansion with
minimum investments Ø  Privately owned cars are restricted to
Ø  High quality standards of cars & services commercial use. Rental car companies
ensure brand recognition and strengthen need to provide cars and insurance

¤  Superior Value


Ø  Cash-less payments and pricing
transparency builds trust & safety among
customers and drivers

¤  Superior technology & innovation strengthen ¤  Lower profit margins due to additional costs and
Ubers operational excellence and help growing shared revenue with rental car companies are
brand recognition in a competitive environment.
compensated with higher volume.
Market growth potential compensates possible profit loss
due to external threats
Opportunities Threats
¤  Increase the number of drivers from ¤  High pressure from governmental
120 to 200 by the end of 2015 restrictions & key industry players
Ø  Use economies of scale: 80 additional Ø  Taxi industry sees Uber as a “grey-
cars result into a 40% revenue growth market service” and tries to file lawsuits
that may cause unexpected legal
Ø  Higher frequency lowers the estimated expenditures.
time of arrival.
Ø  Possible minimum wage restrictions for
Ø  Customers benefit from faster the taxi industry and price increases
service from rental car companies will decrease
Ø  Increasing the frequency of rides per profit margins.
driver/day from an average of 11 rides Ø  Negative PR about Uber influences the
to 15 results in an estimated revenue customer behavior and can result in
plus of €2.5M annually dropping demand and market share.

¤  Capitalize on operational excellence to ¤  Profitability will drop if Uber cannot
increase the volume and frequency of compensate possible cost increases by
rides and gain market share of more establishing significant brand equity
than 5% by the end of 2013.
The business model in Germany – an explanation

3. Passengers use Uber app:


4. Drivers receive
•  Pick-Up request
requests via the Uber
•  Real-time tracking
app:
•  Payment
•  Locate passenger
pick-up & drop-off
destination
1.Uber recruits drivers •  Receive cash-less
•  Pays commercial taxi license payment via Uber
(legal requirement)

2.Uber connects drivers with


local rental car companies
•  Commercially driving with
private cars is illegal
Consumer – two main target groups
Students (age 18-25) Young Professionals (25-35)

•  Transportation to/ from University •  Transportation to/ from work or


business meeting

•  Cheap alternative to taxis & public •  Comfortable driving experience


transportation •  Fast & reliable transport
•  Pick-up from parties & events •  Expense tracking when traveling for
•  Split fares with friends work
•  Traveling “in-style”

•  “Cooler” than taxis


•  Most of my friends don’t know about it •  A high qualitative service with short
yet waiting times
•  Surge-pricing during peak times too
expensive

Consumers support the Uber business model. Build on general demand for
transportation, enhance brand equity and awareness for future growth.
Customers – Drivers build the core of the business model

Drivers

•  Passengers
•  Profit margin
•  Commercial taxi license
•  A vehicle

•  Easy-to-use technology
•  Safe money transfer
•  Reliable customers
•  Insurance & benefits

•  Reliable partner who provides technology & infrastructure


•  Direct connection to the passenger

Drivers value Uber technology. Build on drivers feedback for


innovation and consumer insights.
Collaborators – Local rental car companies (a
necessary middleman by law)
Rental car companies

•  Renters (Uber drivers)


•  Profit margin
•  Long-term contracts about expected rental volume

•  Responsible drivers
•  Growing customer base

•  Partner who delivers constant source of income

Enhanced credibility and higher rental volume increases the chances to


negotiate lower rates.
PESTEL: Increasing market demand opens possibilities in the areas of new
technologies & sustainability. Risks of increasing costs need to be considered.

Political & Legal Economic Social


•  Germany reached historical high in
Industry regulations: •  Population density in cities is
disposable income. Munich has the
•  Government requires growing
highest disposable income (monthly
commercial licenses •  People follow fast paced life
net average: €2,504)
•  Political discussion about style
•  Growing corporate sector
minimum wage laws for taxi Ø  Increasing demand for
Ø  Price sensitivity decreases
industry transportation in urban areas
Ø  Growing profit in corporate sector
Ø  Decreasing profit margin due to
increases demand for private
higher cost
transportation

Technological Environmental
•  Automobile manufacturers work on •  Trend goes towards environmental
technologies for more sustainable friendly & sustainable transportation
vehicles •  Growing demand for Electrical &
•  Use of mobile applications for daily Hybrid cars
activities is increasing
Ø  The market is open for technological
enhancements and innovation
The strategic problem – a lack of brand awareness

Situation: UBER penetrates a traditional service industry with an innovative &


technology based business model – for a 20% lower price than the average
competition...

...but what is the problem? – Supply & Demand

Uber is new to the


Low demand makes
German market.
the business
People don’t see Uber
unattractive for
as their “first choice”
drivers.
yet.

The business has a high growth potential but lacks in


Brand Awareness
Strategic Brand Alternatives

LOW BRAND
AWARENESS

CHANGE LEAVE GERMAN


BUSINESS MARKET (Search for
ESTABLISH MODEL (Invest other European
BRAND EQUITY into own fleet of countries with less
electric & hybrid governmental
restrictions)
cars)

“KEEP DRIVING” “GO CORPORATE” “GO CRAZY”


The Alternatives – A | B | C

A: “Keep Driving” (gain market


share by penetrating existing target
C
Not an option
Ø  High legal audience)
New

restrictions
B: “Go Corporate” (attract new
Product

target audience with existing


service)
Existing

A B C: “Go Crazy” (innovate & create


new product for new audience – be
provocative)

Existing New

Target Market
A: “Keep Driving”
PRO CON BENEFIT
•  No need for investments in •  Changing customers •  Price Leadership status
R&D or innovation perception of an can be retained
•  Existing customers can be existing product/brand
used as advocates is difficult
•  Increases sales & profits •  No differentiation
•  Easy to imitate for
competitors

Investment ROI
Marketing campaign 6,5%
€ 700,000
B: “Go Corporate”
PRO CON BENEFIT
•  Enter new customer segment •  High costs in terms of •  Combines the
•  Create value for a different Marketing knowledge of Ubers
audience operational excellence
•  Leverage on growing number of with new market
corporations and high options
disposable income within the
business sector

Investment ROI
Marketing Campaign: €200,000 17.7%
Sponsorship/ Branding € 85,000
C: “Go Crazy”
PRO CON BENEFIT
•  Advantages of the “first •  Very risky strategy •  Immediate industry
mover” •  High costs attention (if
•  No competition (at least for a •  Difficult to implement implemented
short time) successfully)

Investment ROI
•  New Product Development & 8.9%
Marketing Campaign:
€ 2,000,000
Recommendation: “Go Corporate” is the best option in terms of
market potential (growing demand) and an ROI of 17.7%
By focusing on large businesses Uber can leverage on its high quality, double its market share
by 2017 and take over the market leadership in the corporate passenger transportation
sector by 2020.

PHASE 1 15 PHASE 2 200 PHASE 3 € 12 RESULT 14.8%

120
11 € 8,6
7.7%

2015 2016 2015 2017 2015 2018 2015 2020


Increase frequency of Increase Increase average Market share
rides/ driver per day number of drivers price/ride
Entering new target market by communicating
brand value

Functional UBER stands for fast | reliable |


high quality transportation

UBER is a partner that


cares about you and the Uber means consistency & high
people that are important customer friendliness
for your success: •  No need to hail taxis on the street
•  Clients / Business •  Corporations rely on Uber:
partners whenever & wherever they need
•  Employees transportation

Emotional Experiential
SBIVAR
Solution
Brand asset valuator: Consumer awareness is
the key to brand value.
Differentiation & Relevance

Unused Power brands Goal: Partner with the 10


potential /niche LEADER largest companies in Munich
Brand Strength

within the next 5 years.

Ø  Differentiate through Quality


Mass market
Ø  Use customer feedback for
improvement
Ø  Research new innovations for
the UBER App
Ø  Customize service according to
the companies needs
New / fading Eroding brands Ø  Stimulate positive word-of-
brands mouth among business
professionals
Esteem & Knowledge

Brand Stature
Enhance partnership with leading corporations and encourage positive word of mouth
(Customers & Drivers)
SBIVAR Raising brand awareness by creating a premium value
Branding / Value
proposition for corporations.

High
RELATIVE PRICE

Premium

Average TRANSPORTATION EXCELLENCE

Economy
Low

Inferior Superior
PERCEIVED CONSUMER PERFORMANCE
SBIVAR Brand Awareness and revenue growth through corporate
Info / Incentive
business partnerships with “The big 4”
Targeting “The Big 4” for long-term relationships

Companies with high Benefits


transportation demand
•  Revenue of €8.2M by specific targeting
towards Allianz, Siemens, BMW & MAN
•  Possibility of gradually increasing
demand until 2020 by offering high
BMW: 33.000 employees quality
Allianz: 4.200 employees
•  Employees obtain subsidies for their
Siemens: 1.600 employees
commute to/from work
MAN: 1.400 employees
•  Less price sensitive customers
Hypothesis: 5% of “The Big 4” •  Brand exposure
employees need a transportation
alternative to/from work
•  Positive word of mouth among big
companies increases chances for future
= Average demand of 1884
rides/day business opportunities
SBIVAR Brand Awareness through corporate sponsorship
with leading local corporations
Info / Incentive

Sponsored UBER rides for corporate events expose the brand

Identify local key events Benefits

•  Enhance image
•  Shape customer attitudes
•  Showcase UBER attributes
•  Comfort| Reliability | Prestige
Football | Tennis & Golf •  Create positive publicity & visibility
VIP Shuttle service for FC Bayern
players and business partners
#FCBgoesUBER Estimated Investment (for Event
Sponsorship & Corporate Partnerships)
Official limousine service for the
BMW Open. Most prestigious Golf & Marketing campaign (online/offline): €200,000
Tennis tournament in Germany Sponsorship /car branding: 85,000
#PoweredByUBER
THANK YOU

EVELYN SINDERMANN |MIM 2015 Professor Protano: Strategic Brand Management


APENDIX A – Calculation DEMAND/MDI/SDI

UBER  rides  per  year     Revenue  


cars   120   Total  Market  revenue    €53.280.000,00    
rides  per  day   11   Uber  Market  revenue    €4.143.480,00    
days   365  
    481.800,00  

Maket  Demand  
rides  per  person/year   2,96  
average  price   8,6  
rides/year   481.800,00  
total    12.264.700,80    
Popula@on  Munich  (7+)   1.200.000,00  
rides  per  person/year   2,96  
Overall  Taxi  rides  per  year  MUC   3.552.000,00  
       
Demand   90.419.712,00  
APENDIX B - Calculation Alternatives

Op@on  A    €  700.000,00  Investment  


 
Increase  rides  to  15   6,53  ROI  
Increase  #  cars  to  200    €5.273.520,00  Profit  
 
           
Op@on  B          
Marke@ng  Strategy    €200.000,00  Investment  
 
Increase  prices  to  12  EUR   17,70  ROI  
Increase  number  of  rides  to  15   €3.740.520,00  Profit  
           
Op@on  C          
Investment   €2.000.000,00  Investment  
    8,97  ROI  
    €19.946.520,00  Profit  
References
https://growthhackers.com/companies/uber/
http://www.muenchen.de/sehenswuerdigkeiten/muenchen-in-zahlen.html
http://www.adweek.com/prnewser/ceo-of-ubers-branding-agency-talks-visual-
communications/105578
https://clarity.fm/questions/709/how-as-uber-grown-so-fast
http://www.spiegel.de/wirtschaft/unternehmen/uber-startet-uberx-in-deutschland-
a-1034452.html
http://www.taxi-heute.de/Taxi-Thema/verschlagwortung-taxi-heuteallgemeine-stichworte/
Muenchen
https://www.statistik.bayern.de/statistik/kreise/
https://www.destatis.de/DE/ZahlenFakten/Wirtschaftsbereiche/TransportVerkehr/
Personenverkehr/Personenverkehr.html

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