Service Marketing by Meru Cabs

• Find information about the industry as a whole (no of players; billings; contribution to GDP; market size; Key trends; market leader/s; key stakeholders (customers, bankers, end-users etc).

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Industry

Car rental

Company

Meru Cabs

In last one decade one can see how the car rental industry has shifted its base from unorganised sector to organised one.

Car rentals increase 14% in current value terms in 2011 to Rs313 million, with transactions touching 81,000. Car rentals predicted to see 14% constant value C AGR over forecast period to reach Rs614 million in 2016. The fleet size, in general, did not show much growth due to increasing costs, including fuel prices and intense competition. The growth in the fleet size was driven by expansion of the branded car fleet, which enjoys alliances with hotels and airports, unlike the unorganised category. With increasing Internet penetration, online car rental sales increased by 33% in 2011, compared with the increase of 14% in overall car rental sales. Online booking is common among international tourists, with domestic tourists also increasingly switching to online.

Since domestic tourists are more familiar with booking offline by phone or in person at a rental office, overall car rental purchases continued to be dominated by offline sales at the end of the review period. Hertz’s Indian franchisee, Carzonrent India, remained the leading provider of car rental services, with an 18% value share in 2011. Car rentals have still a long way to go in the context of branding and promotions. The majority of car rentals are still unorganised and therefore advertisements are not of much benefit.

A very few branded players have tie-ups with major hotel chains, and these players remain associated with each other for longer terms. However, branded car rentals are growing at a faster rate and are likely to become competitive in the near future. Unorganised car rentals are moving towards consolidation, with smaller players tying up to reduce operational costs and sustain business. Organised car rentals are gradually becoming competitive and are expected to move towards the same trend. The online car rental egment is expected to see a constant value CAGR of 25% over the forecast period, mainly driven by an increasing Internet-savvy consumer base.

• Choose one company and work out conceptual and contextual learning for the company across each session as below:

1. Identify and explain company’s inbound marketing activities. Is the role of traditional marketing activities minimised?
2. Identify use of new media by the company to promote and communicate service/ pdt offerings to their respective TG. Do you think the company can attain better marketing ROI by calibrating investment judiciously across online and offline ad and marketing spend?

A recent inbound marketing activity taken up by Meru Cabs was the composition of a ‘Whateo’. The clip can be seen here. The clip talks about Meru Cab and ease with which it provides quality services. Through the clip they also talk about a customer being able to book a cab within ’60 seconds’ online. Meru Cabs are predominantly booked through phones by consumers.

Whenever a consumer dials to book a cab, he is informed of the option of being able to book ‘Online’. Meru Cabs have been credited for a lot of innovative OOH campaigns. In Delhi, it rolled out the ‘Don’t drink and drive’ promotion to encourage people to call for a Meru instead of drinking and driving. For this promotion, Meru Cabs identified four TGIF (TGI Friday’s) pubs and 160 restaurants, where it has placed tent cards and utilised their LCD screens to spread the message. The tent cards carried the message – ‘If you find this hard to read, it’s time to book a Meru cab. In another interesting innovation, colour coding was used on coasters. A customer was given the first drink on a black coaster. The subsequent drinks followed on green, amber and red coasters. The red coaster signified that it’s time to call for a cab which comes with the message, ‘You do the drinking, we do the driving’. The tag line of Meru – ‘Rely on us,’ sends out a message of safety and hassle-free ride on board. It released a radio ad campaign of a small boy going all alone in Meru to receive his grandmother from the airport. They have ventured into ‘Movie Marketing’ through the movie ‘Toh Baat Paki’.

As a part of the campaign for ‘Toh Baat Paki’ quite a few Meru cabs in Mumbai were decorated with flowers to resemble a ‘wedding car’ since the film revolves around the traditions of an Indian wedding. Such campaigns increase the buzz about the company, increasing traffic on the portal. Interestingly, Meru Cabs has always been in news through the facilities that they provide. For example, they were the pioneers in installing the Card Payment instead of cash. They put out press releases, online articles about any new facilities in their services, thus increasing awareness about their service.

Cabvertising (advertising of other brands, products in the cabs) has become a big medium of advertising for a lot of companies. Through these companies’ press releases, marketing strategies, Meru Cabs gets mileage as a ‘medium’ of cabvertising, thus increasing the presence and awareness of Meru Cabs and its online facilities. Meru Cabs have also come up with Apps for mobiles to book cabs. They have ensured that they have apps supporting all sorts of phones eg. Android, Blackberry etc.. In terms of brand building, Meru Cabs has been successful. It has a 35% of repeat clientele.

Due to the strong message it sends out through the tag line ‘Rely On Us’, 40% of Meru Cabs customers are women. Thus although Meru Cabs has not been involved in the traditional marketing strategies or out and out advertisting, they have ensured that they remain in news and attract traffic to their portal. One area of improvement for Meru Cabs could be search engine optimization for the strings ‘Radio Taxi’ or ‘Fleet Taxi’. Meru Cabs don’t feature when searched through such strings. Meru Cabs can benefit heavily by increasing presence on social networking websites – Facebook, Google+.

This involves minimum or no monetary investment but great returns. However, with rising competition, Meru Cabs has been losing the market share. Although they are pioneers they are not the leaders. Hence aggressive advertising online and offline would help Meru Cabs gain an edge over competitors. A2. Identify company’s efforts to cater to customer needs subtly using ‘under promise and over deliver’? When Meru was launched in 2007, it focussed on safety, comfort and hassle free transportation service. When Meru came into the market, one didn’t have any other alternative to the rash cab drivers.

Prior to Meru, cab service in India was pathetic and often commuters faced following problems with the “Ghar ke pass waala” taxi services:

• Rickety and moribund taxis
• Long waiting period for cabs
• Smelly, unhygienic cabs without A/c
• Unnecessary bargaining and fights over faulty meters
• Unsafe and unreliable Meru Services tapped this need gap and came up with their “rely on us” campaign.

They only talked about catering the reliability factor but were successful in pampering the customers with comfort and care in the form of well mannered cab drivers and cleaner and more hygienic cabs. Reliability was promised. Safety factor delivered by installing GPS system and installation of panic system. Comfort factor delivered by repositioning cab service from bulky rickety black-yellow ambassador to more hygienic and trendy vehicles and A/C facilities. Hassle-free services delivered by installation of tamper free meters and online and phone booking facilities. A3. Identify 7Ps for the chosen company and how it compares across competitors, elaborate on how challenging it is for the company to formulate the 7Ps given the extent of its intangibility, inseparability, variability and heterogeneity.

Product Meru Cabs is the first company to introduce computerized communication & dispatch systems with GPS (Global Positioning System) based online tracking for licensed Radio Taxis in India. Modern, brand-new, air-conditioned comfortable cabs. Mostly cabs are Sedan cars like Indigo, Ikon etc. Usage of clean green fuel resulting in a cleaner environment and reduced pollution Emergency security features such as a panic button are installed in the car along with First-Aid kits in case of any accidents or emergency situations. Meru also has a 'Lost and Found' tracking system in place so that any items left behind unintentionally in a cab can be traced to the vehicle that the reporting customer has used. Recently, it has also started corporate travel programmers on a test mode for business clients.

Competitor Comparison

Easy cabs

Easy cabs don’t have the lost and found service as provided by Meru Cabs Price. The Meru Cabs service is a licensed metered taxi operation and is governed by the fares prescribed by the Department of Transport for your city.

• The digital tamperproof meter on board and the printed receipt that they give ensures that the passenger pays strictly in line with the prescribed fare structure.
• No hidden costs or overcharging.
• Charged only from your pick up point to your drop point
• Radio taxis fare according to government has been fixed to Rs 15 to Rs 20 Delhi| Mumbai| Bengaluru| Hyderabad| For the first Km – Rs 20| For the first Km – Rs 24| For the first 4 Kms – Rs 70| For the first 2 Kms – Rs 70| Rate after 1st Km – Rs 20| Rate after 1st Km – Rs 17| Rate after 1st Km – Rs 17. 50| Rate after 2nd Km – Rs 18|
• A Night Surcharge of 25% is levied between 0000 hrs to 0500 hrs

Easy cabs also have the same pricing. For building the brand, Meru Cab started various ad campaigns and promotional activities. The tag line of Meru - 'Rely on us,' sends out a message of safety and hassle-free ride on board. It released a radio ad campaign of a small boy going all alone in Meru to receive his grandmother from the airport. Meru Cab also rolled out the 'Don't drink and drive' promotion to encourage people to call for a Meru instead of drinking and driving.

For this promotion, Meru Cabs identified four TGIF (TGI Friday's) pubs and 160 restaurants, where it has placed tent cards and utilized their LCD screens to spread the message. The tent cards carried the message - 'If you find this hard to read, it's time to book a Meru cab. ' Another interesting innovation, color coding was used on coasters. A customer was given the first drink on a black coaster. The subsequent drinks followed on green, amber and red coasters. The red coaster ignified that it's time to call for a cab which comes with the message, 'You do the drinking, we do the driving'. Thus the company connected a public service message with the idea to boost sales. This promotion will be intensified around New Year and other occasions. Meru Cabs is a national brand now and the challenges in every city are different. For instance, in Mumbai and Delhi, the company needs to differentiate itself from other brands. In Hyderabad, it needs to create the category itself. Meru Cab also ventured into ‘Movie Marketing’ through the movie ‘Toh Baat Paki’(2010).

As a  part of the campaign for ‘Toh Baat Paki’ quite a few Meru cabs in Mumbai were decorated with flowers to resemble a ‘wedding car’ since the film revolves around the traditions of an Indian wedding.  Easy cabs provided a discount of Rs 500 on domestic flights in association with IBIBO. com. Place Headquartered in Mumbai, Meru Cab Company provides a radio taxi service inthe four key metros of India - Mumbai, Delhi, Hyderabad and Bengaluru. Easy cabs are also present in the same cities i. e. - Mumbai, Delhi, Hyderabad and Bengaluru. People

Meru cabs believed that the critical difference between an ordinary taxi service and the Meru cab service lies in the investment that they make into their training. Meru cabs take stringent steps in engaging a chauffeur like address verification, complete medical checkups, testing of driving skill, ability to manage the onboard technology on the vehicles, familiarity with the city locations and all the mandatory licensing criteria. If a chauffeur meets these criteria, he is enrolled in a 5-day training program where they impart knowledge on customer service, hygiene, safe driving habits and how to handle an emergency.

Experienced drivers. Recruiting the right staff and training them appropriately. It is necessary because consumers make judgments and deliver perceptions of the service based on the employees they interact with.  Easy cabs follow a less stringent method of driver recruitment. There are no medical tests. Chauffeur training is not as efficient as provided by Meru Cabs. Process The system used to assist the Meru Cabs in delivering the service is  Customer calling at the care number and cab reaching in time at the desired location. Customer booking Meru Cab through the website and cab reaching in time at the desired location. Customers can also hail the Meru Cab on the road if the Taxi top is glowing white.

Easy cabs also follow the same process of cab booking. Physical Evidence. Where is the service being delivered? Consumers will make perceptions based on their sight of the service.

Condition of the Taxi: Modern, brand-new, air-conditioned comfortable cabs. Mostly cabs are Sedan car’s like Indigo, Ikon etc.

Easy cabs have a fleet of Ikon, Accent, Esteem, Logan and Indigo.

• Identify the customer segments and how the service is accordingly differentiated to the benefit of the company and customers

When Meru was launched, it attracted young professionals and high end customers as it was cleaner and more luxurious in comparison to the available cabs that time and hence a new segment was created Meru for women: Safe, secure and convenient transport option. Meru Cabs launching premium fleet taxis in Mumbai based on passengers demand in future. In Delhi, Meru provides preferred treatment to the customers who want to go to the airport or return from there and hence cabs are always available for them Meru cab has launched 'Meru Select', an exclusive program for our most valuable customers. It offers an exclusive membership after analysing the preferences and usage of Meru Cabs services. This is an invitation based program. This service is differentiated to the benefit of the company and customers in the following ways: 100% assured cab service: they assure 100% cab availability, whenever they accept the booking – the customer gets an immediate confirmation Relationship cell: A dedicated team to take the feedback escalation & help resolve query, if any. Exclusive IVRS menu for Relationship Cell while you call Meru Select promise: If they accepted & miss any booking, they pay Rs. 500/- for every non-service, through privilege/gift voucher as a token of regret. Offers: Through this exclusive membership, various other benefits & offers will be communicated to the customers on time to time basis. A5. Identify the buying behaviour of your customer segments. Chart out the buying process of customers from Identification of need to consumption of service to post purchase stage The most important customer for Meru Cabs is young professionals and the customers travelling to and fro from the airport. Meru Cabs was the pioneer of the Radio Taxi services in India. It identified the need of providing clean, reliable, tamper-proof meters.

It hit the head on the nail by providing comfort for within city travelling. When Meru was launched, it attracted young professionals and high end customers as it was cleaner and more luxurious in comparison to the available cabs that time. For the young empowered professional, it is crucial to reach a desired location on time and comfortably. He is dressed formally and often heading for client meetings to which he needs to look presentable. He might not really worry about the cost because either he can afford the cost or his company will bear the travel cost.

Once he steps put of the cab, such a professional would be in a stable state of mind due to the hassle free transport and no stress related to heat, dirt etc... For the customer travelling to the airport, timely service is of importance. He has a flight to catch and might have luggage to carry with him. Safe and timely transportation for such a customer will be valued. When he steps out of the cab, he will look at the time and would appreciate help with his luggage. The other crucial segment is that of women.

Women form 40% of Meru Cabs’ customers. This very obviously states that Meru Cabs has been successful in tapping this segment. A woman looks for safety when she hires a cab. A woman could be the young professional or a frequent flyer. A late night women traveller would call for Meru Cab purely for safety and when she reaches her destination safely she would probably be silently thankful. These crucial target segments call on Meru Cabs with a certain level of expectation and have almost zero level of tolerance.

• How are customer expectations formed? How can your company control customer expectations? Explain with relevant illustrations.

Customer expectations are beliefs about service delivery that serve as standards or reference points against which performance is judged. As customers compare these perceptions with the reference points when evaluating quality of service, they form their knowledge about customer expectations. Relationship marketing place a huge rule in setting and controlling customer expectations.

Besides that customer expectations are set and controlled based on various factors such as:

Assurance: -  Meru Cabs uses the tag line ‘Rely on Us’. For a woman consumer especially ‘Rely on Us’ goes a long way in increasing customer base. Meru has been successful in tapping the women segment as 40% of its customer base is women.

Empathy: - The individual attention provided to each customer right from booking to pick up and drop matters a lot in this industry.

7Ps:- The marketing mix plays a huge role in setting and controlling expectations. Egg. Promotional activities in controlling expectations.

A client oriented process can set expectations

• Reliability: - Delivering what is promised helps set as well as control expectations as it helps a customer form experiences. The response time, the timely arrival of cabs, proper pick and drop at desired locations form the basic factors of reliability
• Responsiveness: - Willingness to help customers and to providing prompt service can go a long way in controlling expectations. Customer Care Centre in case of Meru Cabs when a customer calls to book a cab would help a customer judge and evaluate the service.
• Tangibles: - The physical and tangible services provided by the cabs help form better experiences to the customers. Trained drivers, good internal infrastructure such as the GPS system etc.
• Identify any situation where the company has achieved a service recovery or has instituted a service recovery program successfully

Meru cab has instituted the following service recovery programs:

“Lost and Found” – GPS based tracking technology responsive tracking system in place so that any item left behind inadvertently in a Meru cab can be traced to the vehicle the customer used. Some basic amenities like maps of the city is offered to passengers using Meru services

Another feature the panic button that is installed inside the Meru cab, which enables the driver to connect to the Control Centre in case of an emergency or mishap

Security to the customers due to GPS technology, ensuring that the speed limit is not exceeded and there is no drunk driving and routine spot checks by Patrol Vans to ensure highest standards of service But we have noted from the following instances that these programs have not been successfully implemented which leave the customers dissatisfied and agitated and hence these have a scope for improvement and upgradation:

A customer forgot her mobile in the cab and the information was provided to Meru cab over website feedback, website lost & found feedback & call centre but they neither got any feedback nor closure of complaints

Meru cab was ordered to pay Rs 22,088 as compensation to a honeymooning couple who missed their flight since their luggage could not be taken out due to a jammed lock in a car boot Credit/debit card acceptance technology in cabs is a successful program installed and implemented by Meru cabs which enables customers to travel even when they are not carrying cash.

In September 2008, they launched Meru for women: Safe, secure and convenient transport option

• Identify the service around tangible product offerings of the chosen company if applicable

In reality, very few pure services and pure goods exist. In the Tangibility spectrum, Car rental services lie in the middle of the spectrum but towards intangibility side. Intangible Dominant Salt Car rental service Tangible Dominant Teaching Services on which the company has invested Services which the consumers benefit from

• Identify the hard measures and soft measures that can help identify the service performance at each stage of customer touch points.

Hard measures: Driver’s performance is measured through Global Positioning System (GPS ) * Deploying IT for phenomenal gains : General Packer Radio Service (GPRS) and Mobile Data Terminal (MTP)

Routine spot checks by Patrol Vans to ensure highest standards of service

Computer Information System for outstanding customer service using a computer database that supplies moment to moment information about service guarantee lapses, amounts of time and frequencies associated with relevant standards

1. Soft measures
2. Driver’s performance is measured through customer’s feedback
3. Transaction based surveys
4. Trailer calls
5. Relationship surveys of customers about the cab service satisfaction A10.

• Identify the pricing strategy for one of the pdt/service offerings in as much detail as you can with suggestions and recommendations or why you think the pricing strategy is the best strategy

In financial year 2010-11, on a revenue of Rs 150 crore, Meru made a loss of approximately Rs 45 crore and accumulated losses of approximately Rs 160 crore. From 45 cabs in 2006, Meru Cabs expanded to 5500 cabs across 4 cities. However only 3500-3800 cabs are operational. There have been at least three incidents of Meru drivers striking work. Out of every 10 drivers that sign up with it, at least three quit and join rivals or choose to go back to conventional cabs. The rapid expansion seemed like a good idea when Meru launched in 2007. There was no radio taxi service, only cruising or off-the-stand cabs. Very often, no cabs were available in areas where customers needed one. Industry experts estimated that the radio taxi business would reach up to 30,000 cabs by 2017. Today, there are only three pan-India players, which represent only 10 percent of the overall cab market. This is in spite of the fact that Meru has added tremendous capacity over the years. )  However, it is important for all the cabs to be operational. Only expansion would not help whatever the pricing. Meru owns all its cabs and treats the driver as a franchisee. The driver “hires” the car from Meru for Rs 950-1,250 per day, depending upon the city. Each cab is purchased on loan. So, per car, Meru spends about Rs 15,000 on EMI, another Rs 15,000 on repair and maintenance, Rs 18,000 on fixed administration services, for a total of Rs 48,000, while it gets only Rs 30,000 (sometimes less) from a driver on a fixed basis every month.

Also due to the government say, the price is competitively priced with respect to other players such as Easy, Mega etc. However, to overcome the losses some budget cuts can be done on a few facilities like providing water to customers. It should continue aggressively with cabvertising as it is a major source of revenue. A12. Identify key investments in the company which have helped improve service quality. Elaborate each investment conceptually and with approximate quantitative details wherever possible. The key investments in the company which have helped improve service quality are stated below: Meru Cabs use GPS/GPRS enabled technology in all of the cabs to ensure complete passenger safety. Fleet engineers work 24/7 to ensure that our chauffeurs have the minimum disruption by way of vehicles not being serviceable. Backend technology, comparable to the best in the world, ensures that we connect customers to our cabs better than anyone else does, ensuring steady business for our chauffeurs. Accident insurance, medical insurance, also allows them to have a safety net to provide security in the event of an untoward incident  Onboard technology ensures that a customer pays a fair fare with a printed receipt for each transaction. Our cabs use environment friendly fuel. This is especially true in cities where CNG is easily available. Meru plus: India's first pay-per-use car rental service.

It charges only for the actual Km travelled and the actual waiting time. Meru Plus is transparent and flexible by keeping the car at disposal for multi-stop journeys  Meru Training Academy: investment made into training the chauffeurs and background checking like address verification, complete medical check up, testing of driving skills, etc. Meru Cab Company Pvt. Ltd.’s (Meru Cabs) automated front-end operations for customer management and integrating the global positioning system (GPS) with the interactive voice response (IVR) An integrated backend system: implemented an ERP system * Launched credit/debit card payment options Launched Meru for women: safe, secure and convenient transport option * Meru has deployed IT in the following ways:

1. Global Positioning System (GPS)
2. General Packer Radio Service (GPRS)
3. Mobile Data Terminal (MDT)
4. Routine spot checks by Patrol Vans to ensure highest standards of service
5. Thoroughly trained Chauffeurs in a smart MERU uniform, fluent in English and Hindi.
6. “Lost and Found”- GPS based tracking technology responsive tracking system in place so that any item left behind inadvertently in a Meru cab can be traced to the vehicle the customer used.
7. Some basic amenities like maps of the city, wet wipes, clean bottled water and a limited selection of music would is offered to passengers using Meru services.
8. Another feature the panic button that is installed inside the Meru car, which enables the driver to connect to the Control Centre in case of an emergency or mishap.

• Identify gap/s in the company’s operations and marketing and suggest how your company can overcome the same using

Gaps model of service quality Meru Cabs was the pioneer in India in the Radio Taxi service. Meru Cabs was followed by Easy Cabs, Mega Cabs etc… These services have been eating into the market share and Meru Cabs is not a market leader inspite of being the thought-leader. Meru Cabs is a case of the Gap 4 i. e. The Communication Gap Meru Cabs’ tag line of Rely on Us has taken a hit time and again. Promises made by Meru Cabs through their portal, advertising etc. as set a certain level of expectation for customers. Also considering the price a consumer is expected to pay, the consumer expects flawless service. A lot of negative feedback is available about Meru Cabs due to lack of efficiency and incompetent service. There have been instances, of Meru cabs not showing up after a customer getting a confirmation. Such instances should be overcome . There is a discrepancy between the standards set for customers and the actual services performed. Meru Cabs can be considered a case of over promising and under delivery to a very large extent. Also a lot of times there is mismanagement due to insufficient communication between the call centres and the drivers.

Meru Cabs should measure its behaviour and actions in a timely manner through:

• External communication with employees should be screened and put across in a more transparent manner.
• Hard Measurements
• Come up with schemes for frequent users (on the lines of Frequent Flyers in Airlines)
• Deliver what is promised. * Undertake booking strictly based on availability of cabs

Incase of unavoidable cancellations, try and inform customers well in advance so that the customer has time to make other arrangements Since Meru Cabs is a part of a frequently used service, it provided an alternative to the age-old black and yellow cabs, it should focus on ‘Relationship Marketing’ a lot more. Its success is based on its success in establishing a relationship with its customers. Bibliography Service Marketing: Integrating customer focus across the firm by Zeithaml, Bitner, Gremler; Pandit, and 5th Edition, Tata McGraw Hill Education Private Limited.  Meru Cabs was one of the first companies to launch metered "Radio cabs" in India.

Headquartered in Mumbai, Meru Cab Company provides a radio taxi service in the four key metros of India - Mumbai, Delhi, Hyderabad and Bengaluru. The name "Meru" is derived from the symbolic mountain of the gods, an icon of unshakeable reliability and character - a core value which lies at the heart of Meru's promise to its customers. Meru Cabs launched in Mumbai with 45 cabs in 2007; expanded to three other cities in 2008 (Delhi, Hyderabad & Bengaluru). Scaled to a fleet of 5,000+ cabs in three years, across Mumbai (1800), Delhi (1200), Hyderabad (800) and Bengaluru (1200). The largest operator in each of the cities where it operates. One of the few transportation companies in the world to deploy an Oracle ERP, Siebel CRM and an Aspect IVR * Usage of clean green fuel - resulting in a cleaner environment and reduced pollution. The only radio taxi company with a privilege programme, Meru Select.

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