Uber vs. Ola: The Indian Market
Marketing Management MKT5MMA
Sanchita Ratnaparkhi 18396277
The need for taxi companies
The generation today, especially in India, is drowning in student loans and mortgages. Even though owning a car is a matter of pride in society a lot of people are now realizing that hiring cars is a much more convenient way of life. For people who have meetings only twice or thrice a week find it easier to hire a cab to get to work than to drive themselves. Another big factor is the traffic situation in India. Even people who own cars usually have a cheuffer because driving in traffic is stressfull. Hiring a cheuffer is an added expense to owning a car. Why go through all that when you can hire a car with a driver for when you need it.
Cabs are becoming increasingly available in India with companies like Ola, Meru and now Uber.
Ola Cabs
Ola is an Indian company founded by Bhavish Aggarwal in 2010. He was once travelling from one city to the other on a business trip when he had a bad experience with a cab that he had hired. The driver in the middle of the journey wanted to renegotiate the price of the trip and ended up leaving Aggarwal in the middle of the trip. This led to the birth of Ola Cabs which works pretty much like Uber: a smartphone app that lets you hire a cab driven by a community driver.
After realizing that many other customers probably face the some major issues with cabs in India : drivers that stood them up, arrived or dropped them off late, bad driving skills and no reasonable explanation to their pricing, Ola was formed as a solution to all this problems.
Ola did not buy or rent any cars. Instead they teamed up with local taxi companies and hired drivers. They added a touch of modernity and technology to the old set – up and people could book a cab using the app or through the ola call center.
Ola now has approximately 4 million cars all over India that offer services as follows:
- Ola Mini
- Ola Prime
- Ola Luxury
These services each have a different rate of pay and the customer can choose the services based on his/her budget. Payments to Ola are made mostly in cash. Another option of Ola money is available but is used fairly less as most ola bookings are last minute bookings which means not everyone has ola money loaded.
Ola’s business model works on a pay-perperformance model. Drivers get paid directly and Ola gets a commision out of it.
Ola’s Marketing Strategy
Ola credits most of its marketing to Facebook. Ola started its campaign by running multiple Facebook ‘reach blocks’, which allow advertisers to reach all of a specified demographic on a given day. This included highly targeted video ads and photo ads featuring content from its #ChaloNiklo campaign, one that originally did not bring the estimated results, that encouraged people to download Ola’s mobile app (livemint, 2015). Arjun Kolady, the e-commerce head at Facebook, in an interview said “Building app awareness is a three step-process: app discoverability, app re-engagement and app measurement. And Facebook provides solutions for all three steps” (livemint, 2015). Ola directed people to its website by proving their link in ads on facebook thereby increasing the “footfall” to their website. They also had ads in other apps to get people to use their apps.
Facebook also helped Ola reach their target consumer segment which was individuals over 21 years of age. Ola’s customer acquisition rate went up by three times after they started utilizing social media as a marketing strategy.
Problems Ola is facing
The reality of using Ola in recent times however, seems to be far from the promises of the company when it started. Drivers hired by Ola have complained about bad managers, poor HR systems, unplanned work and no work – life balance (GlassDoor, 2016). Customers have faced a lot of problems that the company originally aimed to handle. The complains range from drivers not knowing the routes to problems with money handling. Ola often has offers which customers report have been cheating them (Quora, 2016). The drivers accept the hiring and then cancel it last minute . Often times the app does not let you hire a cab and on calling the call center you are told that the only way to book a cab is from the app. There are also reports of unsafe environments and unprofessionalism by the drivers (Tripadvisor, 2016)