Firstly, Uber elicited market prowess during its initial stages of growth, by using a differentiation technique, the organization provided services to customers via an app. In this way, it avoided various hurdles that faced traditional types of rental car service providers such as Airbnb. As it progressed, the C.E.O. claimed that Uber was experiencing a surge in users owing to its app provision, a factor that other organizations had not considered. The organization was able to tap into a larger market, where it focuses on customers that are not at the taxi location, thereby providing convenience, where customers were afforded a chance to call a rental car at the location of their choice.
This was a huge convenience for Uber since it did not have to market its services but rather depended on the human need for simplicity and ease of use to gain more customers. Moreover, by alleviating the need for parking space, Uber was able to eradicate various costs such as those for parking space since its drivers consist of ordinary people who are willing to use their vehicles to provide rental car services. It, therefore, does not incur vehicle costs such as those involving replacement as its competitors, further allowing Uber to focus on revenue generation rather than increasing costs of doing business. While various entities have tried to sue Uber for its disregard of traditional regulations, the giant organization has continued to operate its business unimpeded while in some instances, it has alleviated any pending issues regarding breaking the law during its business operations.
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Furthermore, Uber, rather than addressing the issues that its competitors had elicited at its start, involving its deviation from traditional regulations affecting such forms of organization, decided to use cost leadership to boost its market share. While its competitors were busy protesting the rapidly growing service provider, their commuters were stuck without any form of transportation. In this manner, rather than fight the dissenting organization, Uber took over their businesses, providing affordable rental car services to stranded commuters, a move that saw it boost its market share by about 850%. During this period, the organization lowered costs on its services, offering customers an incentive to continue using it through the provision of discounted rides. In this manner, the organization was able to gain a larger section of the rental car services market since its offerings were different from those offered by its competitors such as a customized provision of rides, where all the client needs to do is access the Uber app. The organization then connects the customer with a nearby Uber driver, illustrating the efficiency of the process as it has many operators in different nations.
Additionally, Uber’s differentiation strategy provides for the availability of supply even during periods of increased demand. For example, prices for a taxi ride during the New Year Eve usually spike, reaching about seven times the price of a regular ride during other periods. This enables Uber to gain many drivers as it has been previously mentioned that it does not own the vehicles under its roster. Increased prices attract drivers, who in turn provide services to customers, alleviating the possibility for lack of supply despite increased demand for rental car services during these periods. Moreover, due to the flexibility of operations, Uber continually attracts drivers where the use of credit cards is favored by individuals in this line of business as opposed to the use of cash.
This is because taxi drivers are frequently robbed of their earnings during these rides. Therefore, by differentiating its process, Uber alleviates the possibility for a driver to be robbed as transactions conducted are paid directly to the organization based on established rates in the locale.
