Services Marketing AMB340

T u t o r: Aimee Riedel
Students: Zhiyan Huang (n9308733)
Shan Yang (n9265503)
Jingtao Lin (n9255737)
Word counts:
Due date: 1st of June, 2016
 Content
1.0 Introduction....................................................................................................................................... 3
2.0 Service Marketing Mix Analysis ................................................................................................. 3
2.1 Service Product and Positioning ...................................................................................... 3
2.2 Pricing, Productive Capacity, and Demand .................................................................. 4
2.3 Physical and Electronic Distribution .............................................................................. 4
2.4 Integrated Service Marketing Communication .......................................................... 5
2.5 Service Process ....................................................................................................................... 6
2.6 Managing People .................................................................................................................... 6
2.7 Servicescape and Physical Evidence ............................................................................... 7
3.0 Recommendation............................................................................................................................. 8
4.0 References List .............................................................................................................................. 10
5.0 Appendix .......................................................................................................................................... 12
5.1 the Blue print of Uber experience of process ........................................................... 12
.................................................................................................................................................................. 12

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1.0 Introduction

Uber is an app-enabled transport company that provides a taxi service to customers.

Comparing with most taxi service corporations in Australia, Uber has its competitive
advantages in price, convenience, and service. By Lovelocks theory, people and
possessions are two recipients of the service. In this case, Uber is not an
information-base service. Also, customers are the primary recipients of the taxi
service and should be present. Therefore, Uber is a people processing service
company which means that customers will co-operate with the service provider
while entering the service. Overall, to occupy more market share and become a high-
involvement product in Australia, Uber should focus on service quality.

2.0 Service Marketing Mix Analysis

2.1 Service Product and Positioning
A successful corporation should identify a competitive positioning strategy to stand
ahead of its competition. At the aim of identifying Ubers service product and
drawing up an effective positioning strategy, it is basic to confirm target market. In
general, Ubers target market are people who want to have a ride confirmation
shortly after the need arises. Uber has three services currently. ECONOMY targets
the usual taxi passengers who require private. Moreover, businesspeople who want
to show off or be more professional are the target audience of PREMIUM. Lastly,
ACCESSIBILITY aims at people with some large items or the disabled with the
wheelchair. Overall, Uber successfully provides various taxi services than other
companies and satisfies the target market. However, some issues negatively affect
customers satisfaction and Ubers reputation. For instance, personal safety issues
and legal matters. Therefore, recently Uber in Queensland is on the chopping block
(Brisbane times, 2016). Consequently, it is necessary for Uber to improve the
product safety and give passengers the guarantee of security. For example, real-time

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location tracker and life insurance. Theses can not only help Uber enhance its
service quality, brand image and create brand loyalty but also make customers more
confident in the imminent services. Moreover, Wirtz (2012) considered that hiring
the right people is the essential step of successful HR in a service company.
Therefore, Uber should strictly hire the drivers and train them.

2.2 Pricing, Productive Capacity, and Demand

A successful pricing strategy can help firms achieve maximum profit. Uber adjusts
the price at different times of the day by predicting demand and supply. The pricing
strategy applied by Uber is value-based pricing which is considered as a demand-
oriented pricing approach. Specifically, Uber uses yield management pricing which
can maximise revenue by charging different prices for the same product at a
different time (Utaka, 2015) When fewer demands of rides during the off-peak
period, customers may consider value is the low price on the premise of same
service quality. Therefore, Uber would apply discounting strategy to increase
demand. However, when customers meet the rush-hour traffic, the supplement of
taxi service can not meet the request. Then they recognise value is what they get for
what they give. As the result, Uber would increase the price to provide prompt taxi
service. In order to enhance Ubers pricing strategy, it is a recommendation for Uber
to applied penetration pricing strategy in the three forthcoming services. This
approach encourages firms to set a low initial price on new service products
(Marburger, 2012). It can help Uber penetrate the market quickly and deeply to
increase market share and defend it later against new competitors. Also, Uber could
provide allowances for customers who perform some activities to stimulate demand
and increase revenue.

2.3 Physical and Electronic Distribution

It is important to mention that Uber uses the interpersonal service channel to
deliver its taxi service. This is because both customers and Uber drivers are present

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and active in the servicescape during the transaction between Uber clients and Uber
drivers (Lovelock, Patterson, & Wirtz, 2015). Besides, the taxi service Uber is
delivering is a 24/7 service because Uber delivers its taxi service 24 hours a day,
seven days a week. It is also worth mentioning that Uber provides customers with
its taxi service in cyberspace. The reasons for customers choosing Ubers taxi
service are the convenience, ease of search, lower prices and 24-hour services
(Badger, 2014). Additionally, Uber delivers information, order-taking and payment
services to customers in the cyberspace (the Uber app). This is because customers
can search for the location information, pay the taxi fee and order for picking up
when using the Uber app. As Uber relies on the electronic distribution strategy, it
should attach more importance to improving the service system of the Uber app. For
instance, Uber should improve the positioning system and the security of payment
system of the Uber app. This could help to enhance customers confidence in
choosing Uber, and thereby benefit Ubers amount of transactions.

2.4 Integrated Service Marketing Communication

Uber has nearly no shortages and excellent promotion strategies, and it tries to
provide some services that its competitors will never do. For enhancing its public
relationship, and in order to deliver the kittens to users, Uber cooperated with
Cheezburger and ASPCA. Lovelock, Patterson and Wirtz (2015, p235) mentioned
that unusual activities could present an opportunity to promote a companys
expertise. Thus, this unique service gained a lot of praise from its users, who
received a series of good deals. Besides, in most cities, Uber delivered Christmas
trees, as Santas little assistants do, and roses on Valentine's day. The company
considered its users desires and made an effort to meet their requirements. For
instance, Lausch (2007) said that the Adams Wood product was designed
specifically for customers when customers asked for a specialised product. Adapting
to meet customers needs and to provide them with tailored services is considered
one of the most important factors for achieving success because customers'
satisfaction with the company's services is higher. Royo-Vela and Casamassima

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(2011) suggested that a higher level of satisfaction leads users to engage in word-of-
mouth (WOM) advertising for the company. Therefore, it is recommended that Uber
establish a customer database for collecting consumers information in order to
formulate a tailored service according to customers' requirements.

2.5 Service Process

In the pre-purchase stage, customers will investigate and compare the available
information about Uber and other companies. Anilkumar (2012) claimed that
consumers' service knowledge level will influence their decision-making. By
comparing with the traditional cab service, Uber is known as a service provider
with a lower price and better service. Also, all transactions of Uber are done through
smartphone apps. Once a consumer locates his or her address, the driver nearby will
accept the order, arrive at the exact location and provide the customer with a plate
number and type of car. Uber provides a cashless service, and real-time GPS is used
to track down the progress of each trip in order to make sure of the consumer's
security. Moreover, aiming at improving the service quality, Uber gives customers
the right to evaluate the driver. A driver who receives evaluations lower than
the average level will be dismissed. Lovelock (1995) mentioned that employees in a
well-managed business should treat their customers as a guest even in detailed
aspects. Thus, providing candies and drinks can be considered as a supplementary
service for Uber. It is the key element to make customers feel the hospitality of
supplementary services because this can increase the customers satisfaction with
the core service. Overall, Uber can pay more attention to the other elements of
the supplementary service, such as safekeeping.

2.6 Managing People

Successful human resource management strategies can be beneficial for an
organisation to successfully operate its businesses (Nankervis, Baird, Compton,
Coffey & Shields, 2013). Thus, Uber should carry out successful human resource
management strategies. In the aspect of hiring the right people, Uber is likely to hire

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drivers in an illegal way. Although Uber would have a criminal background and
driving history check before drivers get on the road, it only requires these drivers to
have their vehicles and driver licenses. This means the majority of Uber drivers do
not have their taxicab licenses. However, in most countries, including Australia,
when an individual or an organisation intends to deliver a taxi service, they are
required to have a taxicab license (Posen, 2015). In the aspect of training service
employees actively, Uber is used to hiring drivers online without any training.
However, interpersonal and technical skills and service knowledge are of
importance to Ubers drivers. These two aspects show that Uber is operating in a
cycle of failure. This is because Uber has a narrow job design for drivers with low
skill level requirements, and Uber drivers lack the ability to resolve customers
problems. Therefore, Uber should hire drivers with not only driver licenses but also
taxicab licenses and train drivers actively.

2.7 Servicescape and Physical Evidence

Physical evidence is an essential element for service companies which can shape
appropriate feelings in both customers and employees (Bitner, 1992). Bitners
servicescape model will be applied to analyse Ubers physical evidence. It is a theory
behind customers response and will identify the main physical dimensions in the
service environment. Music will cognitively influence an individuals emotion. Based
on the study of Schellenbreg and Vieillard (2008), people prefer happier sounding
music than sad sounding music. However, Uber does not formulate any terms about
music playing and drivers will play music whatever they prefer. As the result, in
some cases, high volume and sad sounding music will negatively affect customers
emotion. Therefore, Uber could make rules about music playing. Moreover, in
service settings, research has shown that scents can have significant effects on
customers perceptions, attitudes, and behaviours (Wirtz, 2012). When exposed to a
pleasant scent, people will be more optimistic than exposed to an unpleasant scent
(Bradford & Desrochers, 2009). So, it is a suggestion that Uber encourages drivers to
use light perfume to improve service environment and provide customers with a

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sense of relaxation. Lastly, in terms of space, maximising free space in the car will
increase the comfort level for customers. Also, by placing water, snakes, tissues in
the car, passengers will be high involved in the service process and get a positive
service experience.

3.0 Recommendation
According to the research, it should be recommended that Uber should lay more
emphasis on the safekeeping of Uber driver's car. It is worth to mention that Uber
provides a people processing service. According to Lovelock (2012), a customer
must be physical when entering the service. Thus, it is vital for Uber to guarantee
the quality of the car so that they can keep their clients safe. The first, to ensure the
quality of the vehicle, vehicle inspections should regularly be required. The second,
all the documents related to car inspection should regularly be uploaded to Uber.
The third, if the car cannot reach basic standards, this will be disqualified for a
period until drivers provide valid inspection documents.

Uber should hire drivers with taxicab licenses. This is because hiring drivers with
taxicab licenses can positively influence Ubers operation. Those who intend to
deliver a taxi service are required to have a taxicab license in most countries, such
as Australia (Posen, 2015). If Uber is unlikely to hire drivers with a taxicab license,
this would lead to an illegal practice in Australia and finally exert a negative impact
on Ubers operation. This can be explained by Waddock, Rasche and Ebrarys (2012)
state that an enterprises illegal action can have an adverse effect on an enterprises
operation. Thus, it is necessary for Uber to hire drivers with a taxicab license.

At last, Uber should make appropriate price strategies to its forthcoming service
products. Firstly, Uber should use penetration pricing strategy to set a low initial price
on new service products. This can help Uber penetrate the market quickly and deeply to

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increase market share and defend it later against new competitors. Secondly, Uber
should predict the demand and supply of the new service. If the demand of the new
service is low, it should apply bundling price strategy or discounting price strategy.
Also, free trial for the first time service is also necessary. This can stimulate the
demands if customers have a good experience. Then Uber can increase the price
with the increasing demands. Overall, a successful price strategy is flexible and
depends on the demand and supply.

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4.0 References List
Anilkumar, N., & Joseph, J. (2012). Factors influencing the pre-purchase attitude of
consumers: A study. IUP Journal of Management Research, 11(3), 23-53. Retrieved
from
http://gateway.library.qut.edu.au/login?url=http://search.proquest.com/docview/103
3786317?accountid=13380

Badger, E. (2014). Another reason why there's no stopping uber: Politicians and their
staffs use it: The company is an unlikely winner in the 2014 election cycle.
Washington: WP Company LLC d/b/a The Washington Post

Bradford, K. D., & Desrochers, D. M. (2009). The use of scents to influence consumers:
The sense of using scents to make cents. Journal of Business Ethics, 90, 141-153.
doi: http://dx.doi.org/10.1007/s10551-010-0377-5

Bitner, M. J. (1992) Servicescapes: The impact of physical surroundings on customers

and employees Journal of Marketing 56 (April): 57-71

Brisbanetimes, Uber drivers would lose license under Katter party plan, 2016, doi:
http://www.brisbanetimes.com.au/queensland/uber-ban-in-katter-party-sights-
20160419-goacfz.html

GST crackdown: Uber tax: The australian tax office is starting to demand its cut from the
digital economy. it will force drivers for the uber ride sharing service to charge GST,
which could force up fares. Rebellato, E., McNeill, S., Didaskalou, A. and
Rohrsheim, D. (Directors). (2015).[Video/DVD]

Lovelock, C. (1995). Competing on service: Technology and teamwork in supplementary

services. Planning Review, 23(4), 32-47. doi:10.1108/eb054517

Lovelock, C. H., Patterson, P. G., & Wirtz, J. (2015). Services marketing: An asia-pacific
and australian perspective (6th ed.). Melbourne VIC: Pearson Australia.

Lausch, G. (2007). Adapting to meet customer needs. FDM, 79(12), 72-75,77. Retrieved
from
http://gateway.library.qut.edu.au/login?url=http://search.proquest.com/docview/200
029435?accountid=13380

Marburger, D. (2012). Innovative pricing strategies to increase profits (1st ed.) Business
Expert Press.

Nankervis, A., Baird, M., Compton, R., Coffey, J., & Shields, J. (2013). Human resource
management : Strategy and practice (8;8th; ed.). Melbourne: Cengage Learning
Australia

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Posen, H. A. (2015). Ridesharing in the sharing economy: Should regulators impose uber
regulations on uber? Iowa Law Review, 101(1), 405.

Royo-Vela, M., & Casamassima, P. (2011). The influence of belonging to virtual brand
communities on consumers' affective commitment, satisfaction and word-of-mouth
advertising. Online Information Review, 35(4), 517-542.
doi:http://dx.doi.org/10.1108/14684521111161918

Schellenberg, E. G., Peretz, I., & Vieillard, S. (2008). Liking for happy- and sad-
sounding music: Effects of exposure. Cognition & Emotion, 22, 218-237.

The state government has increased penalties for drivers of the ride-sharing company
uber but in passing the laws parliament inadvertently opened up school buses and
limos to being deemed illegal. Carvalho, K., Wiggins, N., Lobwein, J., Katter, R.
and Bool, S. (Directors). (2016).[Video/DVD]

Utaka, A. (2015). High price strategy and quality signalling. Japanese Economic Review,
66(3), 408-420. doi:10.1111/jere.12054

Wirtz, J., Lovelock, C. H., & Chew, P. (2012). Essentials of services marketing (2nd ed.).
Singapore: Prentice Hall.

Waddock, S. A., Rasche, A., ebrary, I., & Ebrary. (2012). Building the responsible
enterprise: Where vision and values add value. Stanford, California: Stanford
Business Books, an imprint of Stanford University Press.

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5.0 Appendix
5.1 the Blue print of Uber experience of process
Time Line ACT 1
Service Standards Time greeting for guest
and Scripts easy to use time time
or not optimal route (GPS)
Front stage

whether the app is

Employee appearance
good to use or not
Physical Their voice tone Car appearance
how efcient the
Evidence polite or not candy and drinks
driver give
response naturally talk with consumers

Line of interaction
locate the address, send customer to their
greet destination and talk with
time and accept
customer them
reservation

Line of Visibility
park to
the nearest place delivery drinks
check the and candies to
of customer and
availability
conrm their consumer
Line of Internal identity.

Physical Interaction

maintain the App maintain

maintain facilities
reservation facilities
system

Support Process
Backstage

Line of Internal

IT Interaction

reservation

bill receipt

customer feedback and record

consumer rate to driver

Databasses

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