Market Structure and Environment Analysis
Discuss About The Principles And Practices Of Marketing Mcgraw.
Marketing management is an important element of marketing that largely contributes to the success of a company or the marketing department. Marketing management entails market structure, the market environment, target market segment, sales forecasting methods and corporate social responsibility. In light various market components, there is need to add another product to the company’s products to leverage the brand. Grab is a transport company that uses Smartphone app to deliver taxi and bike service to passengers or customers. Marketing management also takes into consideration various marketing forces that determine the sale volume and supply. One of the methods that are used to forecasting sales volume is composites of sale force opinion method and takes into account the volume of sales that have been done by agents or drivers of the past years. The method is chosen due its accuracy and reliability since the method is not affected by market conditions. The following paper explores the marketing management of Grab company within Singapore and Southeast Asia market.
The market where the grab taxi is positioning in the oligopolistic market with several players and the best strategy is emerge positioning strategy. Grab taxi is positioned in the emerging market and the market structure is there are many different competitors that are likely to compete with the company and being an emerging company this acts as the best opportunity for the product or service to gain the customer share hence its position in the market (GrabTaxi, 2015). The emerge market structure is a new market structure since the company and its products was launched in few years ago. The market includes new players that are also competing to take their position within the market.
The business environment under which the company operates can be analyzed based on various countries and competitive forces within the Southern Asian region. The company was originally launched in Malaysia from where it spread to many countries within the Southeast Asian nations. Some of these countries the company has extended its operation include Malaysia Thailand, Singapore, Vietnam, Indonesia, Philippines, Myanmar, and Cambodia. Some countries have incorporated the technology into their transport system and a good example is Malaysian Public Land Transport Commission (SPAD). The Philippines temporarily stop the operation of Grab Bike for lack of guidelines (Tan, 2016).
Secondly one of the competitive forces that has influence in the taxi industry at the time of launch of the Grab Taxi is the government. The taxi business is majorly controlled by the government of countries found in the region. For instance, in Singapore, the main player in the business is the government that offers regulatory and licensing services for those companies that wish to enter the market (South China Morning Post, 2014).
Target Market Segments
Thirdly, another competitive force that has a direct influence on the taxi business is a group of business influence people. The taxi business within the Southern Asian region is controlled by politicians, military personalities, and thugs. According to Aaker and McLoughlin (2010), the taxi business under which Grab Taxi operate is largely dominated by many politicians such as minister that play a critical role in the operation of the business in the country. These players have influence in both financial and regulation of the market (Dewald & Bowen, 2010).
The target segment can be grouped based on geographical factors, demographic factors and behavioral segments that influence taxi businesses within the ASEAN.
Grab Taxi should consider demographic factors within Southeast Asia and demographic target present market segment in terms of population characteristics that has influence in the marketing and delivery of taxi services. Singapore is one of the dense population countries with 5.6 million permanent residents which increase the market for Grab services and there is more taxi service required to reach the demand. For instance, one characteristic of the demographic targeted is psychographics that mainly look into the lifestyle of many people living in Singapore. Most of the people living permanently in the country are homeowners and this is 90% indicating that a better taxi service convenient as Grab Taxi is required (Jansen, Moore & Carmen, 2013).
Secondly, geographical segmentation is another target segment that Grab need to focus on as the region under the company’s coverage is vast. The geographical areas that are represented by Singapore include mainly of an island and several islets and this is a larger geographical area. In addition, the company needs to focus on the larger geographical area beyond the Singapore borders. The area that Grab needs to cover the taxi network is approximately 721.5 km2 (278.6 sq mi) and this is majorly islets. The company needs to focus on areas such as Bedok that has more 280,000 people making the city one of the largest in the country (Sherlock, 2014).
The best sale forecasting method that can be used in Grab is composites of sale force opinion method. The method is chosen due to its accuracy and the ability of the method to produce reliable data. The composites of sale force opinion method are based on that opinion from salespeople on the ground. The opinion is obtained from those involved in marketing which in the case of the Grab are drivers and the general sales agents of the company. The bottom line of the business is based the past volume of the sales made by sale persons and are used to analyze projected sale volume. The marketing department of the Grab data can be used to forecasts the volume of the sales that are projected (Armstrong, 2012).
Sales Forecasting Methods
To calculate the sale forecast and the expected sale in the near 3 years, Grab can use the data of downloads and number of drivers or riders and users to forecast revenue for the coming three years. Currently, the company app has experienced 90 million downloads with over 5 million people using the app. The number of drivers or agents using the app is estimated to be over 5 million (Purnell & Carew, 2015). The number of cities that are within the Grab usage network are 195 and there is within the Southeast Asia market. Over the last 5 years, the number of downloads has moved from 50 million to 90 million, the revenue has increased from $2.5 billion to $6 billion. Many market research indicates that in 2025 the total revenue will be $13 billion following the doubling trend that has been observed over the past five years. This, therefore, leaves no doubt that the number of downloads will be 124 million within the next three years. This also projects an estimated increase of $3.5 billion within the next three years. The overall revenue of the company within those three years, therefore, will be $9.5 billion (Cunningham, 2018).
Drivers are required to register as users before starting services with Grab and these data are used for the various purpose to create value for the company in the course of CRM. Some of the data that are captured include telephone, email, and social media. Firstly, Grab has applied customer relationship management that uses register data to evaluate the service offered to customers (Lee, 2014). Secondly, the company has data from driver register is a most important aspect of CRM that gives the company information on the location and personal information. Thirdly, data such as telephone forms the core of contact during the service delivery and also enable connection between company, driver and the customer. In the course of using the application drivers registering enable the company to connect the client to the driver. In addition, the data captured by the company assist the company to evaluate the service quality that is offered to customers. The company also uses the data captured upon registration for improving service that is offered to commuters during customer relationship management (Radhika, 2017).
Corporate social responsibility involves taking responsibility for the environment and social wellbeing. The mission is grounded on improving safety and accessibility alongside improving lives of riders and drivers. The corporate social responsibility as part of the company’s activity can be divided into two environments and wellbeing.
Corporate Social Responsibility
The wellbeing of drivers and customers is a core responsibility of Grab and this is evident in a number of ways. Firstly, the company has medical insurance for passengers and drivers to secure the safety of customers while enjoying the ride or taxi services. Secondly, the company has various initiatives that aim to better the lives of both customers and drivers. This includes safety measures that have been developed to cater for the social responsibility of the company towards the society and environment. The wellbeing corporate social responsibility has also be demonstrated through the response of the company to various key players that include its competitors. According to Chong (2017), the company is strict towards behaviors such as sexual assault or abuse that has been reported by customers.
The corporate social responsibility for the company towards the environment touches a number of initiatives that aim to better the work environment. The corporate social responsibility towards the environment entails various activities that the company has undertakes for the past years (Wieland & Handfield, 2013). The environmental CSR focuses ensuring that cars and bike used by the company do not pollute the environment and exhibit stewardship towards the environment. Maintenance of safety during the ride has environmental impact since the company’s responsibility aims to better lives and environment. One of these activities includes reducing the hostility created by rival companies in the course of operation (Bhattacharya, Sen & Korschun, 2011). For instance, Grab has shown professionalism when dealing with the conflict between its drivers and local drivers as many Grab riders and drivers have been reportedly assaulted in Malaysia and Philippines.
Grab is one of the pioneer companies in Smartphone taxi services is most likely to face both opportunities and threat alike.
There are many opportunities that Grab has in the near feature and this is within the Singapore market or internationally. Firstly, Grab through its research department has identified the gap in demand for the service within Singapore that needs to be filled. This is important as it offers the opportunity for the company to fill and gain a substantive position in the Singapore market. Secondly, Grab’s market position with Southeast Asia is making the company to gain reputation hence larger market share. Moreover, the company is currently the largest in the region and this is particularly contributing to increasing demand for its products within this market. Thirdly, Grab through its local approach has caused the company to outcompete other larger companies such as Uber. The approach is making the company to penetrate local market hence becoming competitive and this is attributed to the competence research department of the company (Cheong, 2014).
There are some threats that are most likely to effects the operation in the near future within the taxi. Firstly, stiff competition is an important threat to the operation of the company as many companies such as Uber are also taking their market share within Southeast Asia market (Low, 2015). In addition, local operators and local taxi or bike companies are bringing high competition in the market. This has resulted in conflict and assaults of many Grab operators. Secondly, the poor relationship between Grab operators and passengers has been an issue since the inception of the company. Assault of passengers has been an issue that has also resulted in conflict and court cases as many customers have reported by assaulted or harassed leading dismissal of such drivers (Channel News Asia, 2015).
The need to take on the larger market requires another product that can be included in the products that Grab already have. The proposed product is commodity delivery services as this remains one of the services with demand in the market. Commodity delivery service involves customer making order and the products are delivered to that customer at any location. This product will fill the gap between customers, Grab and the retailing services and the three will benefit from the products. One of the areas that make local riders to compete effectively with Grab riders is the ability of these local riders to pick commodities and deliver them to the customer at a specific location. The new product will take into consideration commodity delivery prices within the market based on the location of the customer (Jobber & Ellis-Chadwick, 2012).
Screening of commodity delivery service as new products is based on the three beneficiaries of the service. Screening the benefit of this product to the customer, the company and the retailer is important as it will bring on board the value chain for the new product. Focusing on the delivery of service to the customer is the primary goal of the company and this can also be achieved through the delivery of commodities to these customers. The company needs to do research on a new product in order to leverage the brand. The company can also use its many technology platforms to identify potential uses of the new product (Michael & Ilkka, 2013).
Evaluating the product and the market test will require doing trials prior to incorporating the product. Evaluation of the products requires making a simulation model for the product based on the market conditions. The products will make a three-factorial connection that includes the Grab company, point of collection of the commodity and the driver or rider. When testing this product, the simulation will involve these three major players in the product chain. The proposed product chain will start with the customer booking of the delivery service through the Grab app and the company will contact the relevant driver who upon accepting service will collect commodity from store or retail and deliver product to the customer (Yon, 2015).
The company has a pricing strategy that it uses to run its operation with the Singapore market. One of the pricing strategies is dynamic pricing strategy that is used by the company to run its activities. The dynamic pricing strategy has been used in the transport sector as it is proved to be flexible depending on the demand and supply of services with the market (White, 2014). Dynamic pricing strategy or model takes into account two main factors and these include time and market forces. Firstly, as the demand rises the company set price depending on the demand and the number of the supplier of service who is the drivers or riders (Spann, Fischer & Tellis, 2015). The demand and supply forces set the dynamic nature of the price under this strategy. Secondly, another factor that determines the pricing of taxi or ride services is time as some hours within the week or time of the day determines the price of products. In addition, time factor that is a determinant of dynamic pricing can also be classified into peak season and off-peak seasons or hours that cause the variation in price (Lee, 2014).
Grab has many promotional strategies that the company uses to penetrate into the market within Southeast Asia. The two common Grab promotional strategies in South-East Asia include driving cashless payment and technological products promotion.
Technological innovation that makes use of hyperlocal areas is the important approach taken by the company. The company uses the advanced technology to locate areas with high demand for marketing and delivery of services. The company has been using its analytical technology to analyses the data on market demand and other customer-related data. This data gives the local demand level that then makes the company’s promotional areas of focus. This has helped the company take a center in the southeast Asia market. The promotion strategy work in hand with innovation strategy that applies various technologies to market the product within this Southeast Asia market (Chaffney & Ellis-Chadwick, 2012). For instance, GrabHitch is a platform that allows car commuters to identify areas of high car demand.
Driving cashless payment methods is another promotion that Grab uses to reach customers. With the innovation approach used by the company, the company is advocating for a cashless payment method for the safety and security of customers. The company is on the verge of promoting the cashless as this reduces the incident of customers assaulted by riders or drivers due to payment issues. Driving this payment method has also helped the company to reach local operators in a bid to increase customers in the local areas. Furthermore, the company uses this strategy to solve the currency issues that is experienced outside Singapore as the method uses common currencies for cashless payment. Cashless payment come as a result of another promotion strategy that used by the company that takes into account better service drive. This other strategy focus on better service to the customer and cashless payment is one way of improving service delivery to customers. For instance, the company launches GrabPay Credits that assist in top-up via ATM networks (Radhika, 2017).
Conclusion
In conclusion, marketing management forms one of the success elements of a company since it determines the sale efficiencies and sale volume. Grab company has been one of the companies using innovation to create a cost-effective taxi service in Singapore and Southeast Asia. The company has various marketing strategies and this has enabled the company to penetrate the local market as much as an international market of Southeast Asia. The most appropriate sale forecasting method used within the company is composites of sale force opinion method as it provides accurate data required for forecasting revenue. The company needs to introduce commodity deliver service to customers as a new product to leverage its brand.
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