We’d all likely agree that Uber thrust itself into the marketplace with one of the most recent disruptive technologies. It was such a brilliant idea, where you can order a car, track exactly where it is and when it will pick you up and then pay for it via your smart phone. But will they even survive? This week, Apple announced that they had purchased Didi for $1 Billion, Uber’s biggest rival in China. While I’m a huge Apple fan, they never really invent stuff, they look to enter categories with easy entry and where consumers are being under-served. Maybe this is just a sign that Apple has too much cash or they want to replace lost sales in China.
While Uber might have launched a great App, they sure are bad at managing their brand. Here are mistakes they have made the past year.
Brands have four choices: better, different, cheaper or not around for long
When Uber first came out, I thought “wow, that’s so much better than a Taxi cab”. Yet the fixation on price has treated ride-sharing like a commodity. In Uber’s mind, they want to use the efficiency of the App to drive out the weak. Just like Twitter, they are yet to figure out the way to become profitable. However, what is their long-term vision for becoming a profitable brand?
Here’s a quote from an Uber spokesperson: “Shock, horror, Uber makes a loss. This is hardly news and old news at that. It’s the case of business 101: you raise money, you invest money, you grow (hopefully), you make a profit and that generates a return for investors.” That’s more like Business Arrogance 101, sounding like Twitter, who after 10 years has yet to convince us that it will be around for 15 or 20 years.
The risk here for Uber is you treat yourself like a commodity, yes, you will drive every other competitor out of the market. But after you do, you will be a commodity.
Uber has yet to define their brand, and exactly what their core strength will be
There are four options for what CORE STRENGTH your brand can win on: product, promise, experience or price. Many brand leaders have their marketing strategy wrong, when it comes to aligning everything behind the right strength.
- Product: your main strategy should focus on being better. You have to invest in Innovation to stays ahead of competitors, remaining the superior choice in the category.
- Promise: your strategy should focus on being different. To tell that story, you need to invest in emotional brand communication. You want to connect consumers on a deep emotional level with the concept.
- Experience: your strategy and organization should focus on linking culture very closely to your brand. After all, your people are your product. As you go to market, invest in influencer and social media that can help support and spread the word of your experience.
- Price: focus on efficiency and drive low-cost into the products you sell and high turns and high volume. You have to be better at the fundamentals around production and sourcing.
I keep trying to figure out where Uber should play. At first, I thought what an amazing EXPERIENCE. I love ordering, love watching the little car on my phone and love getting out of the car. Just like Netflix, the Uber brand could have been all about the brand experience. However, while Netflix has created their own content (House of Cards) while Uber has had a hard time recruiting higher quality drivers, hurting the experience. In the last month, I’ve had two Uber drivers get lost and one car in disastrous smelly condition, really questioning the whole brand experience. The Airbnb brand would be a role model of a brand that has taken the experience to new levels. But, that leaves me to say Uber is a price brand, similar to how we’d peg Expedia. I can use a car-sharing app to get Uber, Lyft, Juno, or a taxi. I don’t see any significant difference between any of the services, each of which arrives quickly, charges similar fares, and offers clean cars and knowledgeable drivers. Sounds like Uber is fast becoming a commodity, focused on price. Maybe they will end up being the Expedia, who competes as a price-commodity with about 15 other hotel/travel brands.
Don’t go to war with City Hall
Of course, all these disruptive technologies are going to upset someone. Netflix had to work directly with governments around the world to gain entry. Netflix stayed patient and tried to work behind the scenes market by market. Still a work in progress. Uber took on the completely different tact, continuing to directly challenge City Hall. In Toronto recently, Uber took out a very aggressive Petition Campaign, pitting voters against City Hall. In the end, the Toronto City counsel voted to keep Uber, but with 3 major stipulations: 1) Uber had to charge the same price as Taxis. 2) Uber had to pay a licensing fee 3) Uber had to do a better job in regulating their drivers. After those 3 stipulations, that leaves Uber without any competitive advantage. The taxis have apps, and now with everything equal, the Taxi companies have a long list of experienced drivers, a local brand name and service values. Uber might have won the approval of City Hall, but they just lost big time.
While Toronto is just one city, Uber is going head to head with City Hall around the world. Even the wins are turning out to be losses. While all my Facebook friends were happy with the win for Uber, I was sitting there with my mouth open thinking “what a destruction of the Uber brand”.
Uber has not created Service Values
Uber’s President recently re-designed his own logo. The old logo seemed good enough. What he should have been doing is working hard to create an Uber culture, backed by service values that the company could have built a superior brand experience. With Experience Brands, your strategy and organization should focus on linking culture very closely to your brand. After all, your people are your product. As you go to market, invest in influencer and social media that can help support and spread the word of your experience. Wells Fargo bank offers comfortable banking, Ritz-Carlton uses impeccable customer service to really separate itself, Emirates Airlines who take service to new heights (and prices accordingly) and Starbucks creates an escape with indie-music, cool servers, leather chairs and a touch of Europe. Each of these brands operate in high commodity type businesses, yet they each use precision based service guided by tight service values that line up to a brand purpose.
Uber is forgetting that a brand is a reputation
Every week, there seems to be a bad story about Uber. When that Uber driver went on a shooting rampage last month, I must have heard “Uber driver” 50x a day. Uber, Uber, Uber. Every time I hear Uber executives quoted, they seem mad at the entire Universe.
When a woman tweeted Uber, claiming that she had been choked by her driver. According to an email leaked to Gawker, Kalanick immediately emailed his PR team, blaming the media for suggesting that Uber is “somehow liable for these incidents that aren’t even real in the first place,” and then instructing them to “make sure these writers don’t come away thinking we are responsible even when these things do go bad.”
You are supposed to manage these stories, not get just get angry at them.
The race to convergence of the Automobile market
It’s still hard to imagine what driving will be like in the year 2030. I have no clue, so it’s safe to say my only input will be to say “Wow, this is really cool”. When markets converge, there are many sub-categories working really hard in the hopes that they will be the ultimate winner. Here are the various sub-categories that are converging:
- Electric Automobiles. (Tesla)
- Self-Driving Automobile Software. (Apple or Google or Microsoft)
- Self-Driving Automobiles. (Mercedes, BMW, Audi, Toyota, Honda)
- Efficient production of mass produced automobiles. (Toyota, Honda)
- Design and Styling of the inside of automobiles. (Mercedes, BMW)
- Ride sharing Apps. (Who cares)
I have put in brackets who might win. This convergence could set up partnerships you could imagine, such as Apple and Tesla or Google and Toyota. A year ago, I would have thought that the ride-sharing Apps would be at the centre of the power structure of the market. BTW, the real winner of this convergence might be 15 years old and designing cool things in his garage. Unless Uber can stop treating this like a commodity, they will just end up the next Expedia where no one really cares what App you use.
Uber has no competitive advantage. They have a hyper focus on price, not the experience potential. They lack any service values that will establish a brand culture. And they have an arrogant attitude that will make many cheer on their demise. Maybe Apple really does know something. Or maybe they just had a spare billion sitting around doing nothing.
Uber is one more cool App, with bad management of the execution. I’m predicting Uber becomes the next Pet Rock that we will soon forget.
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