Akramova Madina

Webster University
MNGT 2700
Karan Khurana
Date: 4th May 2021
UberBlack
1.
What value does the company deliver to customers? Which one of Uber’s customers’
problems needs solving?
Uber provides a comfortable and fast ride for its customers. It has many different options and
will suit everyone’s wallet. Everyone can order a taxi with few taps on their smartphone. Easy
and fast. Uber’s main problems are safety and prices that increase and decrease all the time and
not consistent. Their customers did not feel safe and think that Uber’s promise about a safe ride
is not fulfilled because customers think they are not checking their drivers.
Who are Uber’s key partners? Who are its key suppliers?
Drivers are considered as Uber’s suppliers and key partners. Drivers “bring” customers that use
their service so they are suppliers. And of course, investors with their own money help to gain
profit for the company.
What key activities does Uber’s value proposition require? What are Uber’s key metrics?
Uber’s drivers can be their own “boss” and decide when to start the work and when to end it.
Their working time is flexible and can always be changed by themselves. To be their driver you
should have a car that is released after 2000 and have an insurance policy in place. Customers
can choose from different options and decide which option’s fare suitable for them. In their free
time, drivers can cash out their money.
What key resources does Uber’s value proposition require? What is needed to solve
customers’ problems?
Uber’s key resources are its drivers and riders and the company relies on them to expand the
business. Drivers drive to their destination safely and riders if they are satisfied will recommend
to others to use Uber. There were several cases where drivers were an irresponsible or
completely different person. In order to decrease such cases, adding a photo of the driver, the
driver’s current location, and confirming that driver has arrived, would be a resolution to this
problem.
How does Uber get, keep, and grow customers? Which customer relationships has Uber
established?
One of the main factors to obtain new customers and keep the ones that they have is their
marketing strategy. Uber always makes sure to respond to any issue that occurs i.e. safe ride
issues. After receiving few complaints about this, they immediately stopped advertising safe
rides because they understood that they cannot guarantee it. Uber studied its target market to
establish a customer relationship and this included studying customers’ behavior.
Through which channels do Uber’s customer segments want to be reached?
Now people prefer to use social media rather than “traditional” channels. Uber knows about it
and using social media like Instagram and Facebook to reach its customers and of course
traditional channels like billboards, etc.
For whom is Uber creating value? Who are Uber’s most important customers? What are
the customer archetypes?
For people who cannot afford their own car because of big expenditure on insurance, petrol,
maintenance, etc. For people who got drunk and cannot drive a car or do not have one. For
people who want to get a “safe ride” from suspicious places. All of these types of customers are
valuable for Uber.
What are the most important costs inherent to Uber’s business model? Which resources
are most expensive? Which activities are most expensive?
Uber’s fares are coming from the company’s expenses for infrastructure costs and legal costs.
People sued Uber several times because of misinformation and these cases cost hundreds of
dollars. They also increased expenses for marketing because of their competitors’ i.e. Lyft
increasing demand and wanted to show that Uber is the best option among others.
For what value are Uber’s customers willing to pay? For what do they currently pay?
What is the revenue model? What are Uber’s pricing strategies?
Uber takes 20% of the fare from their drivers and the remaining goes to the driver’s invoice. The
company relies on the fees. Also, as said before customers can choose whichever option they
want, and based on this Uber gets its revenue because different options cost differently.
2. How did Uber achieve its present position?
Market — Uber was in the luxury market
Problem — Uber’s problems were trust and it was private
Solution — Uber entered a new market, started developing existing strategy and became
accessible to everyone.
How customer found out about Uber:
 Sees advertisement on Facebook
 Downloads the app
 Sign-ups to the service
 First time orders a taxi
 Gets a discount for the first ride
 Likes the service
 Starts to suggest it to family and friends
 New customers start using it
Uber started in the luxury market as a private luxury car service and founders started realizing
that the company has good potential. After thinking it over they move to a new market and start
promoting it heavily.1 But the main reason why Uber is so successful is that they could
understand what the market needs and what customers are asking for. Their service was able to
offer something that other taxi / cab companies could not. You can order it anywhere, anytime.
You can choose the type of car you want i.e. luxurious car or ordinary. The fact that you can pay
with cash, credit / debit card, or electronic money made people even more interested. And the
main factor for women was Safety. They felt more secure with Uber. The company did not only
offer good customer service but also fulfilled the brand’s promises. Every company can say a
million promises when they are just starting but Uber made sure to fulfill them all.2 Uber’s
founders started to launch it first in every state of the US and then promoting it worldwide. The
world’s market needed this kind of service and was very successful in most of the countries in
which market they enter.
3. Where are the positive feedback loops? Is Uber losing momentum?
Uber’s users and drivers are giving comments like problems with localization, people and
company receiving a lot of criticism, and Uber losing billions of dollars because of the failure in
foreign markets i.e. China. Uber’s earliest investors answered to all of this criticism by drawing
on a tissue some kind of loop (?). Uber is a place where more cars attract more people and vice
versa. As in every network effect, the participation of two sides is more important than the
number of drivers and passengers. If drivers are highly participating, then the waiting time for
passengers decreases and will be more available. The same with participation from the
passengers’ side. So how does Uber’s feedback loop works? That is how: the more drivers the
less waiting time for picking up will be, the more people will use it the higher will be coverage
area, if the number of drivers is high it means the prices will be lower. Networks effects are
extremely hard to build and they should be carefully built and fuel feedback loop. 3 Coming to an
Uber losing its momentum. Uber is not losing its momentum and here are the reasons why. Uber
spent lots of money on incentives, advertisements, and promotions to keep their drivers with
them. Every $1 costs (spends) Uber $1.55 (on their drivers). Critics are saying that this price is
too high but their main competitor is spending 50% more money. Even though Uber lost 2.2
billion dollars it made a revenue of 5.5 billion dollars and this is a very good indicator because
the company year earlier earned 2 billion dollars. Besides that, Uber spending a lot of money on
its other ventures like UberEats. In 2016 Uber purchased Otto. AI Trucks and made a big
movement. So even though the company is losing its money it's not losing its momentum.4
4. Was surge pricing a distraction or a core part of the business model?
In Uber’s business model surge pricing was both a core part and distraction. Uber found that the
drivers are not doing the full 12 hours shift if they hit the daily target early. By surge pricing
Uber making sure that there will be more drivers and it will encourage them to earn more.
Thinking of that I think it can be considered as a core part of the business model more. Uber’s
customers really hate surge pricing and were criticized by many but the way it helped the

1
Mamurjon Rahimov. (2016). Uber Pricing Strategies and Marketing Communications. Darden Business Publishing, UV(6878), 3.

2
Brody, D. (2013, July 17). Why Uber is successful | Deborah Brody Marketing Communications. Deborah Brody Marketing
Communications | Percolating Creative Ideas. https://deborahbrody.com/2013/07/why-uber-is-successful/

3
Uber’s Network Effect: The Feedback Loop Disrupting Transportation. (2021, April 28). Platform Thinking Labs – Platform
Strategist. https://platformthinkinglabs.com/materials/uber-network-effects/

4
Uber keeps losing money but not momentum. (2016). Bridge Bank. https://www.westernalliancebancorporation.com/bridge-bank-
home/insights/insights-details/uber-keeps-losing-money-not-momentum
company cannot be ignored. Surge pricing really attracts more drivers and makes service faster
for customers. There was a study about Uber’s surge pricing and according to it, surge pricing
doubled the number of drivers in New York after a concert that was fully sold out. One more
reason how surge pricing is good, it really helps to “decrease the number of customers” when
there are a lot of people around you and zero cabs around you surge pricing allows to allocate
riders. If for someone the price is too high they can find another alternative like subway and etc.
and the one who values (need) s it more will get a cab.5 Surge Pricing was always in the industry
but was used mostly by Airlines and even Hotels and other places. Also, the reason why it is a
distraction is that in 2014 the prices were very high and now Uber lowered it. By attracting more
drivers, they also increase the experience of their riders.
5. Why did the use of social media fail Uber in Seattle?
Many people considered Uber as a transportation company and these “considerations” lead them
to make an official statement. Uber said that they were never a transportation company and they
only bring together drivers and riders. Considering Uber as a transportation company made them
to abide strict guidelines that transportation companies only use. Many cities like San Francisco
understood it and removed the strict guidelines for them while cities like Seattle, they were
against it and made guidelines even more strict for them. Local government restricted the
number of cars Uber can use. People of Seattle were upset and mad with the decision of local
government and started a social media activity and in real life. They spoke about how it is unfair
to do this to Uber’s service and they deserve more cars because demand there was pretty high.
People striking on the streets and all of these efforts did not change the mind of local authorities.
They even added more requirements for getting insurance and new permitting. Uber was
unsuccessful to change the authorities mind but at least social media campaign was very
successful. It helped Uber to promote them in a better light and also gain new customers. Uber’s
customers showed loyalty and support for the company. These strikes also did well in my
opinion because I remember seeing it on Thailand’s news several years ago. Not only locals
knew about this problem but also people from different part of the world.6

5
Uber’s Surge Pricing: 4 Reasons Why Everyone Hates It. (2021, April 23). GovTech. https://www.govtech.com/archive/ubers-surge-
pricing-4-reasons-why-everyone-hates-it.html

6
Posts., V. A. O. M. R. (2014, March 18). Saving UberX: Does Social Media Make an Impact? DashBurst.
https://blog.dashburst.com/saving-uberx-social-media/
Brody, D. (2013, July 17). Why Uber is successful | Deborah Brody Marketing Communications.

Deborah Brody Marketing Communications | Percolating Creative Ideas.

https://deborahbrody.com/2013/07/why-uber-is-successful/

Mamurjon Rahimov. (2016). Uber Pricing Strategies and Marketing Communications. Darden

Business Publishing, UV(6878), 3.

Posts., V. A. O. M. R. (2014, March 18). Saving UberX: Does Social Media Make an Impact?

DashBurst. https://blog.dashburst.com/saving-uberx-social-media/

Uber keeps losing money but not momentum. (2016). Bridge Bank.

https://www.westernalliancebancorporation.com/bridge-bank-home/insights/insights-

details/uber-keeps-losing-money-not-momentum

Uber’s Network Effect: The Feedback Loop Disrupting Transportation. (2021, April 28).

Platform Thinking Labs – Platform Strategist.

https://platformthinkinglabs.com/materials/uber-network-effects/

Uber’s Surge Pricing: 4 Reasons Why Everyone Hates It. (2021, April 23). GovTech.

https://www.govtech.com/archive/ubers-surge-pricing-4-reasons-why-everyone-hates-

it.html