Problem Definition
Your client is a company called Cabismo.
Cabismo provides a booking service for Minicabs in Germany. Minicabs are a mix between taxis and rental cars. You order a car and a driver, however, they are private and do not belong to the public transport industry like taxis.
Cabismo plans the initial launch of their app for the biggest German cities.
They have asked us to assess their market entry strategies.
Comments
After the case is finished, the candidate gives a written recommendation to Cabismo. Focus on a summary at the end, so the candidate has a good foundation to present his ideas.
Start with an interviewer-led approach by giving the three major questions to structure the case.
The recommendations to the questions are rather to be solved in a candidate-led way. You can offer information about the company and market, but we do not provide solutions.
Detailed Solution
The following framework/structure provides an overview of the case:
I. Positioning
Which chances and risks can you identify for Cabismo? Suggest a target niche for Cabismo.
The candidate should focus especially on competitors and discuss their positioning with regard to their value proposition and target customers.
Available Information:
1. Product
App
- Customers have to download the app. They are able to order a Minicab instantly. A verification of the phone number is done during the first ordering.
- Drivers have to download the app and register. If they receive a booking they can decide whether to accept or not. After they have accepted, the user and the minicab company receive a confirmation.
- The App tracks the driver and is able to find the nearest driver.
- You can either book instantly or make an appointment for later on. In case of instant booking the drivers needs on average 15-20 minutes to reach the user.
Minicabs
Advantages:
- Cheaper than taxis:
- Not bound to government regulated prices.
- Taxis charge while standing (traffic light, traffic jam), Minicabs have fixed prices based on distance only.
- Higher savings are possible for corporate drives, because VAT on minicabs is 19% opposed to taxis with 7%.
- Enhanced service: Minicab companies are small and have 2-15 cars. They have many regulars who have to be satisfied to keep them as customer.
- Discreet: Minicabs are not colored like taxis .
Disadvantages:
- Minicabs usually need 5-10 minutes more to arrive at the customer. (compared to taxis)
- Minicabs cannot be stopped at the street instantly. They have to be ordered via phone or app.
2. Company
Revenue is generated via provision per booking. They plan to charge 8% per booking from their partners (e.g. for a 10€ booking they receive 0.80€).
Cost drivers are mainly human resources and marketing (customer acquisition / CRM).
3. Market size (Entire Germany, population 82 m)
Total available market (TAM) (Taxi and rental cars): €4.077 m
All vehicles = 83,277
Annual revenue / vehicle = €48,947
Segmented available market (SAM) (Rental cars only): €1.546 m
All rental cars = 31,592
Annual revenue / vehicle = €48,947
Serviceable Obtainable Market (SOM) (Minicabs only): €106 m
All Minicabs in Germany = 3,647
Assume average revenue per minicab-booking = €10
4. Competitors
- Existing local Taxi and Minicab Companies with and without their own booking app
- MyTaxi – App for taxi booking
- Blacklane – limo booking, higher prices
- UBER – global market leader, entered the German market a few months ago, also mostly limos
- MyDriver – App for minicabs and limos, higher prices.
5. Customers
- Young professionals (25-35 years old)
- Highly tech-affine
- Good earnings (e.g. €3,000-€5,000 gross)
- Still price sensitive
- Comfort is a priority and not image
II. Market Entry
Show pros and cons of different market entry strategies for the local market in the Cologne area. Compare regional app marketing with classic app marketing.
Classic app marketing is considered as marketing in stores such as Google Play or Apple’s App store. Apps are available for an entire region or country as opposed to a single city.
III. Expansion
Help Cabismo expand to the biggest cities in Germany by providing an advice on commercialization and scaling of the app.
Let the candidate evaluate the best and most important steps regarding organization and marketing when entering the next cities.
