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Meru Cabs - A spectacular growth story - Case Analysis

Analysis of a case on the spectacular growth story of Meru cabs and the operational challenges it faces. Presented as a course work submission for Marketing Management Course at IISc.
by

Gaurav Khanna

on 8 April 2014

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Transcript of Meru Cabs - A spectacular growth story - Case Analysis

Radio Taxi Industry in India
Company
Chauffeur
Cab
Customer
Call Center
Customer
Driver
Technology
2006
2012
2017
Recognized as organized sector
Growth
Market size of INR 14.4 billion
15,000 cabs
CAGR 25%
Predicted Growth - 30.9%
MERU
EASY
MEGA
TAB
Revenue
Company Owned
Franchise/Subscription
Cabvertising
Fares
Business Model
Airport trip
Point-to-point
2007
2009
2013
2011
2004
2002
MERU CABS
Subscription based model
The No.1
5500 cabs
4 metro cities - Bangalore, Delhi, Hyderabad, Mumbai.
Still the No.1
Travel Link
V-Link
45 cabs
Mumbai
6300 cabs
2 more cities added - Ahmadabad & Jaipur.
Company
Entrepreneur
Customer acquisition & assignment
Owns & maintains assets
Back end support
INR 10,000 fee
INR 800-1,100 daily
Insured
Driver
Back end
Front end
Oracle ERP
Siebel CRM
Finance
HRMS
Asset Management
Cabs
Drivers
Customers
Driver Lifecycle
Complaints
Feedback
Cab Unavailable
No driver bids
Cab does not reach to customer
Customer keeps cab waiting
Waiting time
Increase fleet size
Training
Call customer & ask later booking
Register before pickup time
Training
Complaints
Longer route
Driver behavior
Cleanliness
Lost & found
Reduced to 60-70 s
Fail Points
COST ANALYSIS
FUEL
CABS
Manufacturer controlled
MDTS (Mobile Data Transmission System)
INR 1,00,000 per system till 2009
High end system imported from Italy
MANPOWER
1:13 manpower to cab ratio
1:25 staff to cab ratio
Major cost components
Government Controlled
Core - servicing
No negotiations on price & destination
Tamper free meter receipt
Positioning
Brand
Reliable & Hassle free!
Advertising
Neha Dhupia - brand ambassador
Social media advertising
Technology
MDTS
Back-end automated system
Patented Algorithm
Service
Driver Training
Cab maintenance
Call - centers
Automated SMS communication
Business Models of Meru Cabs
Agents from companies approach drivers.
Driver is given a vehicle
for which he has to pay
a daily fee
of ~INR 800-1000
Maintenance marketing
HOLISTIC MARKETING
INTERNAL MARKETING
INTEGRATED MARKETING
RELATIONSHIP MARKETING
SOCIALLY RESPONSIBLE MARKETING
MARKETING DEPARTMENT
SENIOR MANAGEMENT
OTHER DEPARTMENT
COMMUNICATION
PRODUCTS & SERVICES
CHANNELS
CUSTOMERS
CHANNELS
PARTNERS
ETHICS
ENVIRONMENT
LEGAL
COMMUNICATION
Holistic Market Dimension
Beyond the daily fees, the extra income through fares goes to
Drivers pay a refundable deposit and application fees and undergo training.
Operator owns the vehicles but drivers are assured a certain amount of fares.
Franchising Business Model of Easy Cabs
Easy Cabs tied up with Delhi Metro Rail Corporation to set up kiosks at 25 metro stations
Trained and verified drivers, technology back up and parking space will be allotted to them.
The operator expects the franchise to look after the day-to-day management of operation
INDIA
IMPORTERS
Garments
Money (Sales)
COMMUNICATION
INFORMATION
Determinants of Customer Delivered Value
CUSTOMER DELIVERED VALUE
IMAGE VALUE
TOTAL CUSTOMER
COST
MONETARY COST
TIME COST
PERSONNEL VALUE
ENERGY COST
PRODUCT VALUE
SERVICES VALUE
TOTAL CUSTOMER VALUE
PSYCHIC COST
SUPPLIERS
INDIA
MARKETING MIDDLEMEN
CUSTOMER
COMPETITORS
PUBLIC
ECONOMICS
DEMOGRAPHICS
PHYSICAL
TECHNOLOGY
POLITICAL/ LEGAL
SOCIAL/CULTURE
Major actors & forces in Marketing Environment
Marketing System
Financial
Media
Government
Citizen-action
Local
General
Internal
Surplus value the foreign market will enjoy on the sale of "premier cotton garments" and ethnic embroidery.
Low cost, yet high quality ready-made garments because of cheap labor will pull the western market in favor of Indian goods.
E-commercialization will provide easy access between local indian suppliers and foreign markets with decreased transaction cost.
Organic cotton and other natural fiber garments exported is a part of the growing design philosophy and trend of sustainability.
"Made in India" label will promote Indian garments with a distinct identity in international market
The operator is looking at a franchisee who has some understanding of running taxi business and can maintain the comapny's standard of service delivery.
It asks for non-refundable fees for a period of three years from the franchisee who will be given a fleet of 50-100 cars and a certain amount of money to maintain them
The franchisee will have to pay a monthly rent for the kiosks as also appoint 3-4 people as staff
Oracle Service Oriented Architecture
& Measures
Non - Radio
Taxi
Ageing cabs
Growth of Urban Population
Increase in disposable incomes
High traffic in other forms of public transports
Official reimbursement
Radio Taxi
The MERU Story...
MERU Operations
Question 2. Why has Meru invested so heavily in technology? What have been the positives & negatives?
Green
Air conditioned
Touchscreen MDTS - GPS/GPRS
Digital Fare Meter
Car maintenance
Patrol vans
INTENSIVE
MARKETING
DIVERSIFIED
MARKETING
INTEGRATED
MARKETING
STRATEGIC MARKETING
"Meru typically over budgeted in areas where they thought the consumer is going to be affected"
POSITIVES
NEGATIVES
Efficiency
Cost reduction
Quality service
Sustainable growth
Competitive Advantage
Backup plans
Training costs
High Investments
Shortage of qualified drivers
Far-fetched break-even point
Question 3. What are the operating challenges Meru faces and how does it propose to overcome them?
Question 1. How does Meru gain competitive advantage in its service business?
Question 5. Going forward what may be the strategic alternatives open to Meru and how do you see the opportunities and risk embedded in them?
Question 2. Why has Meru invested so heavily in technology? What have been the positives & negatives?
Market penetration
Market development
Product development
Forward
Backward
Horizontal
Concentric
Horizontal
Conglomerate
Existing Product
MARKET
PENETRATION
NEW PRODUCT DEVELOPMENT
MARKET
DEVELOPMENT
DIVERSIFICATION
New Product
Existing Market
New Market
Increasing Risk
Increasing Risk
ANSOFF'S MATRIX
Reliability(R)
The ability to perform the promised service dependably and accurately
Utilization of
intensive technology
& data.
Increase
Customer value
& improve
Customer loyality
Linked up wih pubs
to encourage people to call for cabs after drinks.
Redefining the "
TAXI" experience
SERVQUAL
Introduction of
GENIE
, an economic Cab.
Launched
MERU PLUS
, a premium multi-point rental car service.
TRIP TRACKER
Service ensuring the safety of travellers targeting women consumers.
Expanded services to
Jaipur
&
Ahemdabad
Catering to the needs of
different segment
of the market.
Expanding Meru to
TIER-I &II
cities.
Future prospects
after building a strong product and a huge customer base.
Question 1. How does the Meru gain competitive advantage in its service business?
Assurance(A)
The knowledge and courtesy of employees and their ability to convey trust and confidence
Tangibles(T)
The appearance of physical facilities, equipment, personnel and communication materials
Empathy(E)
The provision of caring, individualized attention to customers
Modern, brand-new, air-conditioned comfortable cabs
Provide advertising platform
Government regulations and initiatives
Round the clock availability, transparent fare meter, ease of booking, safety and customer service.

Responsiveness(R)
The willingness to help customers and to provide prompt service
OPPORTUNITIES
RISKS
Car Rental Services
Infotainment services-Real time flight schedules
Branding on Social Media
Partnership with online travel portals
Availability of drivers
Demand-Supply gap
Rejection rate
Highly regulated market
Operational challenges
Manage & encourage driver to deliver quality service to the customer.
Becoming more proactive in anticipating and preventing failure.
Aligning its skills, technology and operations to become a consistent across the organization.
Unavailability of qualified and skilled drivers.
Question 4. Do you see hurdles to growth from its operational decisions?
Meru can't function on its standardized operations because of state specific government regulations (Red tape).
Competition from already established companies.
Providing customized services to different segment of consumers and in different cities.
Heavy investment in acquiring and maintaining assests.
Consumer Decision Model
The Theory of Buyer Behaviour
Agenda
Case Study
Analysis
Issue highlights
Current Scenario
Recommendations through frameworks
Presented by:
Abhinav Singh
Bandani Verma
Gaurav Khanna
Sowmiyan Mori
Kano Model
Customer satisfaction
Degree of achievement
performance
delight
basic
Source: http://www.conceptdraw.com/samples/marketing-sale-diagrams-matrices
Porter's Value Chain
Source: www.merucabs.com
Source: www.merucabs.com
Source: Registrar of companies & companies
Source: www.merucabs.com
Source: www.merucabs.com
Source: www.merucabs.com
Source: www.merucabs.com
Source: www.merucabs.com
Source: www.merucabs.com
Source: www.merucabs.com
Source: www.merucabs.com
Source: www.merucabs.com
Source: www.merucabs.com
Source: www.merucabs.com
Source: www.merucabs.com
Source: www.merucabs.com
Source: www.merucabs.com
Source: www.merucabs.com
Source: www.merucabs.com
Source: www.geniecabs.com
Source: www.merucabs.com
Source: www.merucabs.com
Source: www.merucabs.com
(Buying cabs)
(MDTS)
(Drivers & employees)
(Call center)
Acquiring Customers
MG : 241 MARKETING MANAGEMENT
Case Study Presentation
Submitted to:
Prof. R. Srinivasan
Presented by:
Abhinav Singh
Bandani Verma
Gaurav Khanna
Sowmiyan Mori
Date:
19th March, 2014

MERU Cabs

-
A Spectacular Growth Story
Presented by:
Abhinav Singh
Bandani Verma
Gaurav Khanna
Sowmiyan Mori
THANK YOU
According to the Hindu mythology, Meru Mountain was the epicenter of the Earth the abode of Lord Brahma. When the churning of the oceans (Sagar Manthan) took place, Mount Meru was able to withstand all the resulting turbulence.
Meru, the brand is today a symbol of our commitment to unshakeable reliability- the heart of our promise to our customers.
Full transcript