Meru Cabs A Spectacular Growth Story

By Team 6 Siddharth & Arvind Kota

Situation
The radio taxi service in India revolves around the 5 Cs Company, Customer, Call centre, Cab &
Chauffeur.
It is recognized as an organized sector with a market size potential of 14.4 billion from 15,000 cabs
with a CAGR of 25%.
Meru stepped into this segment as a replacement to the ageing cabs capitalizing on the growth in
urban population and increasing incomes.
It started its operations and gradually expanded to 4 metros, namely Bangalore, Delhi, Hyderabad &
Mumbai
The 2 business models followed are franchise owned or subscription based models.
Meru operates on a subscription based model with revenue coming in from airport trips, point to point
trips and cabvertisements.
The driver is the owner of the car paying a deposit and monthly rental to Meru. The company in turn
helps him with customer acquisition & assignment, Back end support and owns & maintains assets.
The 3 major competitors of Meru are Easy, Mega & Tab Cab.
Meru became the leader of the pack by virtue of its round the clock availability, transparent metering,
and ease of booking, safety and superior customer service.
Meru uses technology to the hilt in conducting its operations. Oracle based service architecture is used
to seamlessly integrate services.
However, in spite of positive response from the public, Meru is yet to break even owing to huge
capital expenditures and heavy investment in support infrastructure.
Points to be addressed (Problems):
Sustenance of its competitive advantage
To explore possibilities of customized offerings
Should Meru expand to other cities?
Management of drivers and encouraging them to maintain excellent service to customers
Increase the drivers earnings and number of trips
Proactively anticipating and preventing service failure


Solution
Merus prime differentiator on the backend side is its heavy use of technology like MDTS GPS/GPRS,
Digital Fare meter, patented scheduling system etc. It must continue to invest in these to make the
operational efficiency higher.
However, in spite of technology there are few fail points:
o The waiting time can be brought down by improving the IVR facility. Even better would be to
motivate the users to use mobile apps as they are virtually free of human interference. With
the advent of increasing mobile technology in both urban and rural markets, Meru must
incentivize the mobile app users to propagate it.
o The car unavailability must be addressed by increasing the fleet size. However, there is
already an issue of shortage of drivers. Meru might have to solve this issue by opening
driving schools in rural markets to train & groom drivers. This will ensure a steady supply of
drivers for its usage. Also, taking assistance of microfinance institutions to assist drivers to
purchase vehicles will help in increasing the fleet size.
o Cab not reaching customers are already been addressed by training which has to be
intensified.
o Finally, complaints pertaining to longer route, driver behavior & cleanliness can be address
by mobile applications. Integration of GPS to provide traffic and shortest route options will
help a customer to understand his shortest route. This will be a transparent measure enhancing
Merus transparency commitment. Instant feedback is alos possible through mobile apps.
Meru can also explore the option of customized offerings by introducing a loyalty program scheme
similar to airlines. It would help increase the repeat customers at the same time providing Meru with
invaluable data to customize offerings.
In an attempt to differentiate itself and further reinforce its commitment towards safety, Meru can
introduce a tracker facility where the passenger can opt one of their relatives / colleagues to allow them to
track the cabs progress. Alerts and updates regarding pick up and dropping time will give a better
experience for kids and elders. Hence, more segments will be opened up for service.
Similarly, women friendly cabs with women drivers at an extra charge can also be introduced at specific
timings in the day to improve its differentiation.
Meru can also link with Pubs to provide taxi service as this will also help avoid drunken driving. This will
also increase it market share.
The towns and upcoming metro market is still an untapped market and it should move into these new
markets as it will help Meru apportion the fixed overheads to a greater capacity. This will also reduce the
burden of capital expenditure.
Meru can also look into introducing a low frills economy cab segment to upgrade the auto rickshaw users.
It can also attempt to introduce an intra city car rental service to improve its revenues.