Generic and Intensive Growth Strategies of Uber
Uber was founded in March 2009 by Garret Camp and Travis Kalanick. The company has its headquarters in San Francisco, California, United States.
It is the largest ride hailing service globally that operates to provide on demand transportation services to riders by connecting them with independent drivers through its app.
Uber has expanded its international footprint very fast in recent years. The company operates across more than 90 countries and connects riders with drivers across more than 10,000 cities worldwide. Uber has expanded its business faster by providing ride hailing services at competitive prices compared to the traditional taxi operators. However, the key factor driving its growth worldwide is its focus on innovation. Technology is the main factor that is driving Uber’s strong competitive advantage in the global market.
In this post, we will analyze the generic and intensive strategies adopted by Uber for gaining competitive advantage and sustaining growth. Both strategies are important for businesses and strategic planning and can enable businesses to achieve competitive advantage and find sustainable growth.
Generic Strategies of Uber
Michael E Porter introduced the generic strategies that are designed to help companies achieve competitive advantage and are divided into three basic types including cost leadership, differentiation and focus. While companies having adopted the cost leadership strategy focus on providing lower prices, those having adopted differentiation focus on differentiating their business to serve customers effectively. However, the third strategy that focuses on serving a niche market is subdivided into cost focus and differentiation focus.
Uber’s idea was born of the need to find rides quickly. It is a technology platform that provides an easy way for riders to connect with independent drivers. Technology is the main factor that has helped Uber rise faster in the international market and also the key factor differentiating it from traditional players. However, Uber has not only used differentiation as its generic strategy but it has also adopted a competitive pricing strategy to achieve competitive advantage and sustain growth.
So, the generic strategy used by Uber includes both cost leadership and differentiation. It offers more competitive prices compared to the other players in the market which has helped the company expand its customer base very fast. It has also been able to achieve a sustainable competitive advantage through lower prices since that has helped it attract more and more customers. As customers flock to Uber’s platform so do the riders. Overall, its competitive pricing strategy has helped the company establish itself as a market leader and most popular ride hailing services provider.
Differentiation has also played a key role in the growth and expansion of Uber and helped it establish itself as the undisputed market leader. Uber is known as a highly innovative technology platform that connects riders with drivers through its app. The app uses advanced algorithms to understand demand and cater to user demand with higher efficiency. The easy to use app helps riders choose from a variety of available services. In this area also, Uber is the most advanced of all ride hailing services providers.
Intensive Growth Strategies of Uber
The focus of intensive strategies is on growth and expansion with existing or new markets. There are four intensive strategies that include market penetration, market development, product development and diversification. The focus of market penetration is to increase market share in existing markets with existing products. Market development entails entering new markets with existing products. On the other hand, product development includes introducing new products into existing markets. Diversification focuses on targeting new market segments with new products. At various stages of its growth, Uber has used these different strategies to find faster growth.
Market penetration: This strategy was adopted by Uber during the early stages of growth. When the app was in its early stage, the company focused on growing use by promoting the benefits for both the riders and drivers. It was initially focused on helping customers connect with drivers and find affordable rides. The company was successful at achieving faster growth since the app made it a lot easier for both riders and drivers to connect. Affordable pricing also helped the company grow market share faster.
Market Development: As Uber continued to grow popular and find publicity during its early stage of growth, it expanded in the US market and then to the international markets. It has expanded a lot in the last several years and is currently offering its services across more than 90 countries and in more than 10,000 cities. Uber is still using this strategy to expand market share and sustain its growth.
Product development: Uber has used this strategy to cater to the different needs and preferences of customers across the globe. For example, while some riders prefer affordable rides to their destinations, others want premium rides that are highly comfortable. Its Uber Black offers premium rides in luxury cars. However, those looking for affordable rides can use the Uber Taxi. People needing rides for large groups like 5 or 6 people can try Uber Xl. In this way, Uber introduced various options for different user segments and for different types of needs which helped it grow the popularity of its services and sustain faster growth.
Diversification: Uber has not remained limited to just ride hailing services but diversified into related areas. It has successfully diversified beyond its core ride-hailing business into other services like Uber Eats (food delivery), Uber Freight (logistics). It has also added more transportation modes like boats, helicopters, and delivery vehicles. Through diversification, Uber has successfully tapped into multiple lucrative markets and expanded its revenue streams.
Conclusion:
Uber is the most successful ride hailing services provider in the world with a strong international presence. The use of advanced algorithms and data and analytics have enabled the company to achieve growth faster. Its popularity around the world has grown driven by its focus on affordable pricing. Uber has also introduced a variety of taxi services to cater to the different customer segments with different needs and preferences. Innovation has helped the company differentiate its platform from others and the cost leadership strategy has helped it cement its position in the international market and become the most dominant player. Uber’s sustainable competitive advantage is mainly based on innovation and cost leadership. It has been able to increase its revenue through aggressive expansion into new markets as well as by diversifying into new areas beyond the core ride hailing services.