MKT5MMA: Situation Analysis of Saavari Car Rentals - Market Analysis Assessment Answers

August 17, 2017
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Solution Code: 1BIC

Question: Market Analysis Assignment

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Use this to write an introduction and background to the report

Background: needs for taxi industry overall and then to local taxi company that is your focus.

  1. What market is your company in?

    What type of product? What is the product used for?

  2. Describe the size of the market for your product and the major segments.
  3. Describe past growth and growth trends in the various segments.
  4. Identify the major players (and their market share) in the segments of interest. What are their positioning? (Who are your competitors- including Uber)
  5. Identify the major macro environmental forces impacting your company/product/market (SLEPT analysis)

    Conduct a SWOT analysis for your companyWhich major macro environmental forces do you see as bringing opportunities for new product development?

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Solution:  Situation Analysis of Saavari Car Rentals

Introduction

Every individual cannot make a product of their own that can cater for hid needs all round. Taxi services are developed to cater for needs of different customers around the globe who may necessarily and not necessarily at a point be in need of one but forced by circumstances.

Background context

There are many requirements, obligations and costs in setting up and running a taxi business. Many businesses fail within a short period of time because they do not keenly consider the requirements. You will need the following on an overall basis:

  • To be eligible to apply for a taxi license
  • To select your zone of operation
  • A taxi license, either buy or lease
  • Vehicles
  • Insurance

Industry background

Most towns in mumbai have a lot of people and therefore most of them do not have their own personal vehicles and forced to use public transport available on their way to and from work or school. The public transport sometimes is limited and thereby making transportation of these people hard. Also the matatus do not operate late night and this lead people from long distance travel to get stranded as they try to find transport to their various homes if they arrive to town late at night when matatus are not available (Yudelson, 2006). This is the state and mission behind taxi services available in town. They try to help in transportation if the matatus are not available or limited on a 24 hours operating base, hence covering the late night travelers. They have developed to ensure that they have many vehicles as possible thereby making their business convenient their services efficient. However in order to join the market you need to the following for a taxi company, local perspective.

  • Approved vehicles suitable for use as taxi-cabs.
  • A network service provider
  • Taxi fit-out such as dome lights and security camera
  • An exempted color of taxis.
  • Taxi should be fitted with decals, labels and livery
  • An approved electronic transaction system
  • Taxi driver safety such as, protection screens
  • Annual vehicle inspections
  • Vehicle registration
  • Advertising in taxis

Part one

The type of market served is consumer market, classified further under services, because this is service bought by individuals for their own use.

  1. This is user merchandise because it remains a service used via end consumer for individual use. The client relates characteristics such as quality, expense and smartness in the course of choosing a suitable service provider. Hence customers devote ample time and determination in getting-together information and relating alternatives. (Hassan, and Nawaz, 2015).
  2. A cab is a kind of a car in lieu of rent with a driver, castoff by a sole customer, habitually aimed at not sharing a ride. It conveys passengers between locations of their choice (Cant, 2006).

Marketing mix and targets

The market size is the number of individuals in Mumbai market. On an estimate, the value of Saavari is 1.6 billion on Rs base, considering the thought of market size as the total addressable market, served available market and the target market (dhillion, 2014). Having been established several years ago, Saavari taxis have constantly been a business leader due to their assurance to service. They do have actual time GPRS supported fleet management system and two ways communication radio structures fixed in the vehicles for effective communication, (Jain, 2000).All the cars are expansively insured, air accustomed and have functional safety belts. In keeping their vintage status, the cabs often have doors and windows that do not open or close easily. They also have stations at all the major airports with the company’s driver waiting for the client upon arrival. They have organizers who keep track of trips over the internet to ensure that the driver is at all times at the airfield earlier to a customer’s coming or time for leaving (Luther, 2009). Uber also have commercial allocations which require customers to open an account with them. They then offer them brand-named ticket accounts which they use for boarding cabs. That facility is on acclaim and such clients get once-a-month invoice. These taxis are slow and therefore, feel safer although most drivers refuse to travel short distances (Dutta, 2012).

To encounter the competition of uber, the company should introduce wise entry strategies that would discourage the competitor and allow the product to penetrate into the market. Thus, the company would expand the product line to appeal extra market segment. The price of its service should be flexible depending on the circumstance in the market. This will enable customers to purchase the service according to their budget.  Management of the company will compete by lowering prices if there will be raise of production efficiency that would save the company situation (Lovelock and Patterson, 2015).

As the service becomes more appreciable, it is vital the Saavari marketers to expand the network of distributors in order to capture the uber market (Deepu27dec, 2012). After the service is accepted in the market like that of Abel, the pricing strategies of the product will be flexible. Saavari should offer incentives to customers in order to encourage customers to support the product, especially to face the uber competition (Gilligan, 2009).

Segmentation

In the demographic segment, there has been realization on the location part because customer preferences do not necessarily bear relationship which translates that Saavari has to come up with better parameters to divide his customers more accurately. There are additional aspects such as cultural foundation and revenue which also outshine location. More focus also into affiliates of a geographical section tends to be too assorted to be suitable as a significant aim (Luther, 2001).The growth has been seen in serving Taxi because the business is rapidly growing and more people are getting to know about their services day in day out.

Segmentation trends continue to evolve as the market place evolves. Segmenting customers based upon the social media platforms will be vital for Saavari. This is so because it becomes critical path for reaching those customers before they make purchase decisions. Here are some different methods to segmenting. Saavari should use media strategy and innovation to influence the path to purchase. At this communal stage of development, instants have turn out to be openly targets since the customer will do stuffs in a different way on their visit on the internet subject on their existing goals bountiful out some ciphers (Cohen, 2006). The customers seek out a different content. These are all exceedingly targetable without the need to divide the market demographically (Hassan and Nawaz, 2015).

On the segmentation for advertising based on brand loyalties, Saavari should merge information with regular customer data for advertisement targets. The facility supplier can aim publicizing to the switchables who are interested to use your product sometimes. Saavari can Segment market based on targetable interests and values. This involves analysis of the welfares of, social beliefs and life features that are available through social platforms. With this, every advertisement drive turn out to be a check that you have the precise section that you are aiming since they display better reaction.

Competition comparison

Companies rarely stand alone in the effort to serve the market. They are surrounded by a host of competitors, that is, companies in the same industry which offer similar products. Major cab player in Mumbai is Uber that will give Saavari high competition. Uber is a United States based taxi-hailing company which is making its way all over the world and is now in Mumbai. It runs by means of a smart phone application to hail a cab. It is registered as a technology company and therefore it is not subject to government regulations, including taxation that is demanded of a public-service provider. The company also does not pay the monthly fee required of taxi drivers which contributes to Uber’s ability to provide a much cheaper service than local taxis. This service is now available in 400 cities globally and Uber faces protests from taxi drivers worldwide. Likewise, Abel personalized services to offer services such as car hire and taxi services in 24 hours to individuals or companies and corporate.

It is will be a great competitor to Saavari because it has an online booking service which their customers can book a cab online. Their vehicles are fitted with GPS satellite which assure safety and comfort to their customers in that if a car develops any mechanical problem, the company will send a replacement right away to the breaking down car as the location is easily established. Drivers often push for fixed rates depending on distance. Abel has captured the market because it operates a 24 hour radio linked service between its fleet and the head office to ensure fast replacement in case of emergency and for good and easy communication.

On the other hand, providing high quality services could help Saavari to vie assertively in the new technology taxi industry to enforce its mark in the thriving global and domestic markets. Contending based on the government policies, Saavari can replace Abel in the competitive edge in the industry. SAavari has to adjust with the new preference in drinks in order to adapt to the requirements of the contemporary young patrons and price aware consumers. Competing assertively in the taxi subdivision will make certain triumph for Saavari cab. Furthermore, the effective positioning of Saavari will enable the company to meet future needs of consumers.

Other competitors in the Taxi industry

  • Mega cabs- this company has been in the business a number of years and it offers most of the best services due to the experience they have from all those years they have interacted with the customers. It is a developed company with a fleet of well serviced vehicles with a minimum booking fee of Rs27 (Team, 2011). The company uses GPS tracking system and 24 hour two-way communication radio system to ease communication.
  • Viira Travels & Logistics Private limited – this is an established taxi company operating 24 hour taxi service (Yudelson, 2006). It offers services to both corporate and individual clients. It operates a computer dispatch system and GPS which enable cabs to be tracked in case of emergency. It is one of the most reputable taxi cab travel companies.
  • Ola taxi- they presented a fresh idea in Mumbai where one can get a taxi cabby means of a smart phone application. The application shows the possible traveler taxicabs that are in their neighborhood (Curtis, 2012).They have fit, fresh and a thriving conserved car fleet and a transparent pricing structure (Iacobucci, 2001).

SWOT Analysis

SWOT analysis stands for strengths, weaknesses, opportunities and threats of a business.

Strengths

  • Saavari has been serving the market for a long time therefore they understand and are fully aware of customer’s needs and preferences and they have adequate facilities to cater for these needs, including a fleet of vehicles in proper condition and qualified drivers.
  • The company focuses on safety of its clients and assuring a feeling of security by having security devices such as GPRS connection with the controller at the main office.
  • Their team of managers and employees fully understand the market trends and adopts environmentally friendly vehicles although other several competitors are adopting the same.
  • The management is investing its own money into this business, which assures the management team will seek to yield as much profits as possible (Blattberg, 2008).

Weaknesses

  • Due the economy the budget of the company is limited and thus they have not been able to purchase as a larger number of vehicles as they would wish in order to expand their business.
  • The target market for taxi is relatively small as not many people can actually afford to pay for the services provided and thus opting for a cheaper service such as the matatus.

Opportunities

  • There is an expectation that there will be a higher demand for the services in due time as the growth of population is being experienced in the cities, that is the people coming to do business and work related purposes. This will give a great opportunity to obtain a larger market share.
  • Expanding services is another great opportunity for the taxi company which will enable it grow more and capture more customers.
  • Offering services such as acceptance of credit cards as a means of payment can increase the customer valuation of the company (Mohr, 2010).

Threats

  • Competition from other cab companies is the closest competitors but the company aims for stronger customer relations to counter attack the competitors (Abdul, 2009).
  • Increased operational costs coming from increased government regulatory fees and taxes.

The macro environmental factors that will bring opportunities for new product development

External Environmental

Political factors

The attitude of political parties in authority impact business practices (McDonald, 2011). It manifests when the legal atmosphere defines what organization can do or not do.

Legal factors

These remain law and regulation. They consist of local work regulations, universal craft rules and limitations in tax industry (Cant, 2006).

Commercial factors

These are factors that symbolize the broader budget. These comprise progress rates, level of occupation and joblessness, prices of raw supplies, interest rates, monetary policies and inflation among others (Adam, 2009).

Technological factors

Saavari should focus on the rate of different developments, variations in statistics, mobile expertise, deviations in the internet as well as management expenditure on research (Boone, 2015). It also focuses on materials development and new methods of providing services.

Social cultural factors

These are a representation of the culture that Saavari operates. They consist of; age dispersal, people growing rate, levels of education, social classes and lifestyles.

Conclusion

Customer’s preference should be forefront of every service provider, not what you think but what the customer wants. It should be the aim of every service provider to engage on stronger customer relations for a better booming business.

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