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Intended Market Entry To Singapore

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Question:

Discuss about the Case Study for Intended Market Entry to Singapore.

 

Answer:

Introduction        

This paper shall focus on product or service launch decisions. This paper shall particularly focus on determining segmentation, targeting and marketing mix strategy for introducing Ola Cabs in Singapore.

Purpose

The purpose of this report is to develop strategy for launching product or service in a foreign country market. International marketing strategy is critical as it would help the company in competing in the regional as well as global arena. The paper aims to investigate the optimal product strategy. It shall also describe the variables that would affect the timing and sequence of entry in the market.

Limitations

A few limitations were faced while preparing this report. It has a limited scope. It provides suggestions, not solutions. It uses a fragmented approach. The suggestions can be resistant to marketing managers. It was lengthy and time-consuming to research data and present it in a succinct form. The report could have been made better by conducting an in-depth analysis for stating the competitive analysis.

Scope

The scope of this paper is to research the market segment and transform market challenges into new opportunities. The report shall also provide guidelines for international marketing managers looking to launch products or services in the global market. This paper shall assist the management practitioners to be counterproductive in product launch decision making.

Background

As discussed in the previous report, Ola Cabs needs to be launched in Singapore for meeting the demands or shortage faced in the economy. Ola Cabs or Ola was founded in the year 2010 in Mumbai, India. With the initial success in Mumbai and the national roll out, Ola is ready for global expansion. Ola offers a wide array of cab services ranging from economical to luxurious commutation based on booking through a mobile app. Ola provides benefits to the commuters as it is hassle-free travelling, cash and cashless payment options. Singapore has experienced a shift in trend towards convenient commutation with the increased smartphone usage. Singapore is chosen after conducting a thorough review and concluding that the country faces taxi-shortage.

Environmental Analysis

According to the previous report, politically, taxi-booking apps experience tighter control and stringent regulations. The LTA planned to regulate third-party taxi booking apps for only using licensed vehicles and drivers. The policies further state that the companies without a registration certificate are liable to pay a penalty of S$10,000. Alternatively, the person may face imprisonment of up to six months, or both (Tegos 2015).

Economically, the country has a low unemployment rate, growing GDP and strong development. The Singapore government has avoided setting a minimum-wage system. Singapore enjoys the lower unemployment rate of 1.9% in comparison with other developed countries (Feng 2015).

Socio-culturally, the commuters are favouring the third-party taxi booking apps. Other features such as safety, reduced hassles, easy payment options and reduced waiting time adds to positive social trends. The trends and preference in public transportation are increasing rapidly.

Technologically, the digital payment gateways, GPS-enabled locations help the commuters and drivers to opt for third-party taxi booking apps. The smartphones are GPS-enabled allowing the users to request and book a taxi. Technology transforms the taxi industry as the mobile apps are beneficial for both the taxi drivers and commuters.

Legally, Third-Party Taxi Booking Service Providers Act 2015 plays a critical role as it pressurizes the taxi associations and drivers. The drivers are penalized with money or imprisonment if they violate Environmental Protection and Management (Vehicular Emissions) Regulations. The third-party taxi providers offer both taxi and non-taxi booking services that make it compulsory for them to register under the Act.

Naturally, the government aims to maintain air quality standards in Singapore as the climate change is making the society vulnerable. The National Environment Agency makes efforts to create awareness among the public. The climate change in Singapore can cause sea-level rise, periods of drought and flash floods, risk the biodiversity and greenery, increase endemic diseases, and vulnerable affect food security.

 

Target Market and Competitive Analysis      

Target Market Analysis

The market can be segmented as follows:

Demographic Segmentation- The market can be segmented into different age groups such as 16-21, 22-35, 36-50 and 50 and above. The Singaporean market can be segmented into low-level, middle and upper-level income. The third-party taxi booking apps can be segmented for both men and women as gender segmentation. Lastly, the market can be segmented for people qualified high school, graduate, post-graduate and doctorate (Wong, Szeto & Wong 2014, pp. 73-81).

Geographical Segmentation- Singapore is a developed country; the geographic regions shall be divided into semi-urban and urban regions. The geographical locations can also be divided as densely populated regions such as corporate areas, airport, or residential areas (Wedel and Kamakura 2012, p 4).

Behavioural Segmentation- The behavioural segmentation can be defined on the basis of benefits sought, usage rate, and readiness to avail service, brand loyalty and occasions to purchase. The taxi services can be availed regularly, and the benefits sought may be in relation to payments, convenience and reduced waiting time (Aarhaug & Skollerud 2014, p 279).

Psychographic Segmentation- The psychographic segmentation can be measured on the basis of lifestyle, values, opinions and attitudes. Ola Cabs services can also be treated as a symbol of status- lower class, middle class and upper class. The attitudes of the people can be equated to that of choosing comfort and luxury (Hakam, Wee & Yang 2015, p 145).

Based on the above criteria, the differentiated targeting strategy can be pursued. A combination of various market variables can be chosen to target a relevant target segment. Demographically, the target market can be chosen for the people belonging to the age group 22-35. The people belonging to this age group are usually office goers. Mainly, women are targeted for introducing service in Singapore. The middle level income are targeted a Singapore has large population of middle class. The middle class is also ASEAN’s biggest economy (Ting 2016, para 8). The education level is selected as at least a high school graduate. Ola Cabs is an online booking app that requires basic knowledge for running and operating the mobile application.

Geographically, the target regions are selected as the densely populated areas. The busiest areas in Singapore such as corporate areas, residential and airport shall be targeted. The dense population is present in these areas due to which there is high demand in the urban regions (Wedel & Kamakura 2012, p 4).

Based on behavioural segmentation, the target market is chosen for the people who are looking forward to seek benefits from the third-party taxi booking apps. Not only shall the service be beneficial to customers, but also the taxi drivers. The commuters shall enjoy convenient travelling and hassle-free payments, the drivers shall enjoy a larger pool of customers. The Singaporeans are facing shortage of cabs, and the problem of commutation can be solved with more number of taxis available in the peak hours or heavy downpour (Reed 2015, para 4).

Based on psychographic segmentation, the lifestyle of the consumers can be defined. The people availing third party taxi booking apps are the people living a convenient or luxurious lifestyle. It is inferred that online cab booking services are for the people who do not wish to struggle for regular commutation (Cross, Belich & Rudelius 2014, pp. 531-536).

Since more than two distinct market segments, differentiated marketing can be followed in which attempts shall be made to appeal multiple market segments. Differentiated marketing strategy shall be used as the market conditions are same for every taxi company. There is a need to design products with special characteristics for achieving competitive advantage within the market. Ola Cabs can create different marketing campaigns targeting the above mentioned market segments. The marketing campaign can be designed for the benefits sought, convenient lifestyle, reduced waiting time for office goers and safety for women. The demand for taxis is mainly arising from the above mentioned segments (Toften & Hammervoll 2013, pp. 272-285).

Every taxi service aims to provide reliable, safe and timely commutation. The positioning statement for Ola can be to provide economical, safe and quick transportation for providing comfort to the commuters (Parkinson, Baker & Möller 2016, p 237).

Positioning Map

Figure 1: Positioning Map

Source: Created by Author

Competitive Analysis     

Ola faces competition from both direct and indirect competition. The direct competitors are the most popular taxi services in Singapore are Uber and GrabTaxi (Wei 2015, para 1). The indirect competitors are the other transportation networks such as buses, private cars, conventional taxis and trains.

About Uber and GrabTaxi

The first Asian country to welcome Uber was Singapore. Additionally, Singapore is the first place to experiment with cash payments (Newsroom.uber.com 2016, para 1). Also, it allows payment via credit card. Uber launches new features according to the changing demand trends. The company engages with driver-partners for understanding the consumers and improving services (Newsroom.uber.com 2016, para 6).

GrabTaxi or Grab is one of the most popular cab services in Singapore. Grab offers cashless payment offers making travelling easier. Grab is continually optimizing its features and putting it to the best use of users. Grab provides efficient customer service assuring speed, safety and certainty (Tung 2015, para 5). It also provides limousine vehicles for targeting luxurious customer base (Auyong 2014, para 9).

Product Features

Uber drivers use GPS that is considered better than the Singaporeans (Reed 2015, para 6). The cab is easy to get at busy and peak time and during rains in comparison with other cab services (Reed 2015, para 8). Uber offers a range of cars with different prices from low cost to premium such as UberX, UberXL, UberEXEC, EXECLARGE, and UberTaxi (Uber.com 2016, para 2).

GrabTaxi offers a ‘Flash’ feature which breaks the boundaries between private cars and taxis. The feature helps in getting a ride quicker thereby opening up a large pool of drivers. It offers an intense competition to the private cars and taxis (Waal-Montgomery 2015, para 1). Various car options are provided for economical and luxurious travelling such as Economy, Premium, 6-seater Economy, 6-seater Premium and 13-seater cars (Grab.com 2016).

Price

There is a pricing war between GrabCar and UberBLACK as both the cars cover limousine fleets. In Singapore, the charges for S$38 flat rate for trips with a distance below 4kms and the price above S$50 is treated as flat (Hong 2014, para 24). However, UberBLACK charges a minimum fare of S$12 and the price increases according to distance and surge pricing (Hong 2014, para 24). Going by the consumers’ behaviour, GrabCar appears to be cheaper in longer journeys and off-peak hours. However, Uber claims that it is cheaper than its competitors considering the distance covered (Hong 2014).

 

Promotion

Both Uber and GrabTaxi use social media and direct mails to promote and advertise their brands. Both use different promotional offers for free rides and discounts to attract the customers. The coupon codes are available at multiple websites that helps in attracting a large consumer segment (Twitter.com 2016).

Porter’s Five Forces Model

For understanding the growth and attractiveness in the transport industry, the Porter’s five forces analysis can be considered at the macro-level.

Five Forces Analysis

High/ Low/ Moderate

Analysis

Threat of New Entrants

Moderate

The capital required for starting up the business is low. For booking an online taxi service, the customers do not require any membership. The app can be used for free due to which switching cost for customers is low. The low switching cost for consumers make it easy for the new entrants to enter the market. However, the government regulations act as barrier in the industry. Also, it is difficult to find experienced and skilled drivers (Beiker 2015, pp. 139-151).

Threat of Substitutes

High

The increasing petrol prices may influence the commuters to travel through other cheaper transportation such as trains and buses. Other than public transportation, the private cars or car-sharing companies are a threat for taxi services. The traditional taxi services other than the third-party booking apps are also a threat. The cheap price and easy availability of other transportation modes could be risky for Ola (Cohen & Kietzmann 2014, pp. 279-296).

Bargaining Power of Buyers

 

Low

The switching cost of customer is low as there are other modes of transport available. The business model and operations set new expectations for the customers. With greater access to substitute products and convenience, it is easier for the customers to switch to other companies. As the prices are fixed, the buyers do not hold much power in bargaining. The customers are likely to be price sensitive due to which they would choose whatever falls cheaper or convenient to them (Magretta 2012, p 42).

Bargaining Power of Suppliers

High

The main suppliers of Ola are car dealers, fuel and skilled drivers. Ola does not own any vehicles. The business model is dependent on the partners as they would outsource labour and assets to individuals who are willing to use their web application. Car dealers have low bargaining power as there is a large pool of dealers available offering high end model at low prices. The fuel suppliers have moderate bargaining power as prices are regulated by the government (Haufler 2013, p 7).

Intensity of Rivalry

 

High

GrabTaxi and Uber have established a high market share in the Singaporean market. Currently, price is not a differentiating factor in competition as the people are more inclined towards timely service, comfort and luxury. With the low entry and exit costs, the companies do not have to own the fleet of cars. Other indirect competitors are the substitute rivalries such as buses, trains and traditional taxis (Harding, Kandlikar & Gulati 2016, pp. 15-25).

Target Market Entry Strategy  

The products and services of Ola in Singapore shall not be different from that of India. Singapore is economically stable that makes it easier for the organizations to enter. As both the countries are Asian, the cultural elements are similar.

Scale

Ola can make strategic commitments that would have a long-term impact and presence in the market. The strategy for large scale shall be adopted. Significant amount of resources shall be required for finance, personnel and marketing. It would be easier to attract customers with large scale entry as marketing would enable a wide reach. It would also challenge the existing or potential rivalries from entering into the market. The entry mode shall change the nature of competition in the market as it would enable in gaining a greater market share. A small-scale may limit the reach because of which large scale entry can be adopted (Samaha, Beck & Palmatier 2014, pp. 78-98).

Mode

Licensing can be followed as an arrangement between Ola and Singaporean government to run its operations (Laufs & Schwens 2014, p 1110). Ola requires a huge number of cars requiring significant investment. It is a flexible work agreement that can be turned in favour of both Ola and the car companies. This strategy can help in obtaining extra income and reaching new markets that would not be possible using other modes. The investment in this strategy is low and Ola can quickly expand without much risk or investment. Ola has limited operations in its home country, therefore licensing is highly attractive option as it is new in international business. The political risk shall also be minimized as the license would be locally owned. Valuable spin off is also possible as there is no danger of nationalisation. The patents are protected and local supplier can secure government contracts (Turnbull & Valla 2013, p 293).

Timing

Ola shall be a late entrant in the Singaporean market as other cab services such as GrabTaxi and Uber exist. Being a subsequent entrant, Ola shall enter with improved products and services. A larger market share can be captured by rectifying the mistakes committed by the earlier entrants. Ola shall require adequate resources and superior marketing techniques for competing. The Research and Development cost shall be low as the operations are already running in India. The company shall focus on making superior product packages and dominate packages. There is less risk involved with a greater chance of return on investment. The unoccupied niche can be captured by Ola. The concept of third party booking apps is known to people; therefore less cost shall be involved in educating (Szulanski, Ringov & Jensen 2016, pp. 304-322).

The sprinkler strategy or sprinkler diffusion strategy can be used for successful implementation as a high standard of marketing strategies has to be used. This strategy shall help in simultaneous marketing activities targeting different market segments. The strategy shall make full use of competitive advantage and rapid development. Uber and GrabTaxi have acquired a high position in Singapore for which Ola needs to conduct extensive marketing activities (Bhalla 2013, pp. 138-165). 

 

Recommendations

Product Strategy

In India, Ola provides a wide range of product packages for different customer segments. Based on the target market for Singapore, Ola can offer different cars such as Ola Micro, Ola Mini and Ola Prime (Olacabs Technologies 2016). The car would be suitable for one person, two people or more than two people. The product mix strategy can be divided into three levels that would help the product in defining in a better manner. The three levels are: Core product, actual product and augmented product (Oliver 2014, p 41).

The core product is related to the benefits and usage. Ola cabs shall resolve the issue of shortage of cabs in Singapore. The benefits offered by the taxi service such as easy payment, reduced waiting time and hassle-free commutation that are sufficient reasons for the Singaporeans to purchase the product (Reed 2015, para 4). The actual product is represented by the quality, branding and style of the products that helps in differentiating it from other competitive brands. Ola can differentiate by adding Ridesharing feature in its mobile app in Singapore. The consumers would be attracted towards the brand as it would prove economical to them (Mohammed 2015, para 10). Additionally, Ola does not provide environmental-friendly cars in India. In Singapore, it could consider running electric cars for reducing cost of fuel and maintenance.

All the Ola cars can be painted in white and green as they are in India as it would give a brand identity in presence of hundred other cars (Olacabs.com 2016). The augmented product can be determined by the services offered and customer care. Ola can provide night services for the convenience of customers. The product packages can also exclusively offer airport pick-up and drop that would be beneficial for the customers who do not own a car or are visiting the country for a specific purpose. The customer care services shall be beneficial to the customers for handling their grievances or any other assistance (Oliver 2014, p 41).

Pricing Strategy

The pricing strategy for Ola can be defined using a combination of pricing structures. The pricing strategies are similar for the entire taxi industry. The services can be defined as three-part structures, base-fare, price per kilometre and price per minute. Alternatively, the pricing can also be defined as a fixed price for any trip within a particular area, price linear to mileage, differential pricing at different times of the day (Zeng & Oren 2014, p 1135). The different cars offered by Ola carry different prices. The pricing can be varied ranging from economical to premium based on the cars hired by the commuters. The Micro shall be priced the least, Mini shall charge slightly higher prices but less than Prime, and Prime can charge premium prices. The availability and advantages offered shall vary depending on the prices offered by the cars (Zhang & Ukkusuri 2016).

The prices can be charged as base fare and additional charges based on distance or time travelled. For longer distances, Ola can charge based on distance covered while for shorter distance, prices can be charged per minute travelled by the commuter. Additionally, Ola can charge higher prices at peak hours as there is high demand of cabs while people are going or leaving from their offices. During heavy rainfall or circumstances where the cabs would be high in demand, surge pricing can be applied where the services can be availed by the people not looking to compromise on convenient travelling (Zhang & Ukkusuri 2016).

Place or Distribution Strategy

Place or location plays a critical role in the taxi business. Ola must focus on busy streets such as corporate areas where there is heavy rush of people. Also, the taxis shall be lined up near airports and railway stations so that when a customer wishes to book a cab, Ola can be available at the quickest. If Ola does not make its presence visible at the busiest locations, the competitors such as Uber and GrabTaxi would be preferred by the travellers thereby losing market share. Ola must run its cabs across the city and halt at places where there is a high chance of people looking to book cabs (Wright & Nelson 2014, pp. 147-161).

Not only the busiest locations but the residential areas where women or kids have to commute and are looking for convenient travelling must be strategized by Ola. The niche market segments shall be covered by Ola as women have to regularly travel to supermarkets and carry the heavy packets home. Ola must be lined up near supermarkets so that the taxi services are instantly available for the ladies. Ola would only be available through digital channel and not the local hiring as it would not solve the problem of shortage for targeted market segment. Additionally, Ola can offer outstation services by taking its customers across town that is a unique strategy and different from its competitors (Rayle et al. 2016, p 169).

Promotion Strategy

A campaign can be designed with the slogan ‘Taxi- Anytime! Anywhere’! A combination of various media or channels can be applied for promoting Ola. The different elements such as advertising, sales promotion, sponsorship and direct marketing shall be beneficial in marketing Ola. Advertisement would be paid attracting a large mass of people through television, radio or newspapers. Other forms of advertisements such as web pages, brochures, billboards and direct mail can also be used. Press releases can be used to create positive publicity and influencing media outlets. Sponsoring major events shall help in attracting attention and increasing brand visibility (Shimp & Shimp 2012).

Another strategy is using direct marketing tools in which the targeted customers shall be influenced using telemarketing, emails, and customized letters and text messages. Ola can educate its customers about its various benefits and uses targeting women and the specified target group. Using sales promotion, Ola can offer free rides to the new users. Ola can encourage its customers to refer the service to their friends for which a code shall be provided. When the new users enter that code, they can be offered discounts or free rides. Contests can be conducted by Ola where the winners shall be given rewarded with special discount coupons. Additionally, the customers may also be upgraded with rides in times of non-peak hours where the premium cabs are available in the nearby areas of the users. For example, if the customer books an Ola Micro, he may be upgraded to Ola Mini or Ola Prime and would be charged for Ola Micro. This shall motivate the consumers in making repeated purchase (Arokiasamy 2012, p 1-11).

People Strategy

People are the most important element as they enhance experience of the consumers. Ola must hire the right staff and train them efficiently. The people at Ola must be focused at five areas- Reliability, Assurance, Tangibles, Empathy and Responsiveness. These elements play a critical role in customer satisfaction. The customer service representatives must be hired who are hold good communication skills. Additionally, the drivers hired to drive the Ola cabs must be experienced. They must be trained for being hospitable to the commuters. Personality development training must be given to the staffs so that the customers would be assured of high quality services. The customers make perceptions and judgments based on the interaction with the representatives of an organization (Huang & Ford 2012, p 359).

The Millennial heavily focus on efficient customer service. The drivers must be provided with training regarding usage of GPS, learning about routes in Singapore, confirming or rejecting a ride, knowledge of the famous tourist spots and overall in-depth knowledge. People act as the interface between the company and the customers. Induction shall help in introducing the organizational culture to the staffs. Training must be provided both ‘on-the-job’ and ‘off-the-job’. The commuters may initiate a conversation with the cab drivers to know about the locality for which the driver must be knowledgeable and answer to customer queries. Customer interaction and service would add value and satisfy maximum consumers (Huang & Ford 2012, p 359).

 

Process Strategy

Process is a critical element in which value is delivered. A number of processes can be adapted by Ola for adapting to the needs of its customers. The processes include both direct and indirect activities. The direct activities shall add value at customer interface through the services. The indirect activities are supported at the back office before, during and after the services are availed. When a customer books a cab, the server at the back office connects with the driver available at the nearby location. The details and pick up location are shared with the driver according to which he would reach the location and pick up customer (Taxi Singapore 2016). After entering destination, the driver shall travel to the destination. The customer shall select the payment mode through cash, wallet or card. The money is automatically paid in case of wallet and card. In case of cash payment, the amount is collected by the driver. The back-office shall then provide the driver’s commission. The customer can be given an option of feedback and rating at the end of his ride. The process must be efficient as it is the organization’s main offering (Taxi Singapore 2016).

The entire process shall be run through internet and online booking. The benefits of cost-saving and time- reduction can be availed. The entire system shall assist Ola in delivering the service. The customer and driver shall also be given each other’s contact number for communicating as required. The driver would assure in making the customer reach his destination point safely (Taxi Singapore 2016).

Physical Evidence Strategy

A few tools of the physical evidence in the marketing mix can be described using ambience, perceptions and the other factors that can be witnessed. The physical evidence can be analyzed by the place where service is being delivered. The cab arrival at the location would act as physical evidence. A few other tools that would change consumer perception are the condition of taxi. The taxis must be modern, air-conditioned and should have comfortable seats. These factors would affect the consumer perception just by looking at it or while experiencing it. After the ride is completed, the receipt would be flashed on the consumer’s smartphone. Additionally, an email can be sent for the records of consumer (Lovelock 2014).

Conclusion          

It is concluded that Ola has a great opportunity in the Singapore market. The taxi industry is expected to rise more in Singapore.  The above report focuses on product or service launch decisions. The differentiated targeting strategy can be followed. A combination of various market segments can be chosen to form one. Mainly, women are targeted for introducing service in Singapore. The busiest areas in Singapore such as corporate areas, residential and airport shall be targeted. The commuters shall enjoy convenient travelling and hassle-free payments, the drivers shall enjoy a larger pool of customers. Ola faces intense competition from the most popular taxi services in Singapore are Uber and GrabTaxi. Ola can make strategic commitments that would have a long-term impact and presence in the market. Licensing can be followed as an arrangement between Ola and Singaporean government to run its operations.

Based on the target market for Singapore, Ola can offer different cars such as Ola Micro, Ola Mini, and Ola Prime. The pricing can be varied ranging from economical to premium based on the cars hired by the commuters. Ola must focus on busy streets such as corporate areas where there is heavy rush of people. Sponsoring major events shall help in attracting attention and increasing brand visibility. Induction shall help in introducing the organizational culture to the staffs. The taxis must be modern, air-conditioned and should have comfortable seats.

 

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