Project Report

Comparison of Uber and Careem

Submitted by
Anum Ahmad
MBA-A3
0019

Project supervisor
Prof. Syed Asad Ali Asim

Submission date
January 2019
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Topic statement:

A comparative analysis of Uber and Careem with respect

to service quality and consumer preferences

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Acknowledgment
I have taken efforts in this project. However, it would not have been possible without the kind
support and help of many individuals and the organization. I would like to extend my sincere
thanks to all of them.

I would like to express my gratitude towards my mentor Prof. Asad Ali Asim for his kind co-
operation and encouragement throughout the course of the project, which helped me in
completion of this project. My thanks and appreciations also go to people who have willingly
helped me out with their abilities.

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Executive summary
Public transport in Pakistan is not the best means of transport due to several reasons like poor
quality and high rates. Due to the introduction of app-based ride sharing services, people can
now get better services at low rates in addition to increased convenience and privacy. There
are many local players in the market as well, but the two most popular services are the
Californian based Uber and Dubai based Careem. Theses two services are leading the ride-
sharing market and have also provided tough competition to the traditional taxis causing them
to lower their rates too.

This report analyses and compares these two services to determine which one of them is better
in Pakistan. For the purpose of analyzing them, a detailed analysis of their marketing mix
strategies and SWOT has been done in this report which identifies the difference points in their
service quality. The external environment that these two service companies have to face in
Pakistan has also been analyzed and some strategies that can be used for overcoming
weaknesses and avoiding threats have also been recommended.

A detailed comparison of the service related aspects of Uber and Careem has been done in the
end. Aspects like vehicle quality, driver behavior, fares, mapping systems, app convenience
and others have been included. In addition to this, consumer preference has also been discussed
on the basis of internet search (customer views on multiple websites) and a survey of ride
sharing trends conducted by rozee.pk in 2017. All this analysis shows that Careem is providing
much better service in Pakistan as compared to uber and is also the most recommended out of
these two everywhere. In the end, this report presents some recommendations for uber and
careem to improve their services.

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Contents
Acknowledgment ....................................................................................................................... 3

Executive summary.................................................................................................................... 4

1.0 Introduction ..................................................................................................................... 6

2.0 Analysis of Uber ............................................................................................................. 6

2.1 History.............................................................................................................................. 7

2.2 Vision and Mission .......................................................................................................... 8

2.3 Marketing mix strategies.................................................................................................. 8

2.4 Swot analysis ................................................................................................................. 11

3.0 Analysis of Careem ....................................................................................................... 13

3.1 History............................................................................................................................ 13

3.2 Vision and mission......................................................................................................... 15

3.3 Marketing mix strategies................................................................................................ 15

3.4 Swot analysis ................................................................................................................. 18

4.0 Industry analysis ........................................................................................................... 19

4.1 Pestel analysis ................................................................................................................ 19

4.2 Competitive analysis: Porters five force model ............................................................. 20

5.0 Comparison of Uber and Careem with respect to service quality and its effects on
consumer preferences in Pakistani market (Faisalabad) .......................................................... 22

5.1 Service quality factors compared ................................................................................... 23

5.2 Consumer preferences shaped by these services aspects ............................................... 26

6.0 Conclusion .................................................................................................................... 28

7.0 Recommendations ......................................................................................................... 28

7.1 Strategies for Uber to improve performance ................................................................. 28

7.2 Strategies for Careem to avoid threats and overcome weaknesses ................................ 29

References ................................................................................................................................ 31

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1.0 Introduction
Public transport in big cities is sometimes not the perfect choice for travelling because it can
be less comfortable and too crowded which reduces privacy. It could not even be availed at
whatever time and place we need to travel within a city. But for those who do not have a vehicle
of their own or do not want to use it for some reasons, public transport was the only option.
Now, this picture has been changed. Due to Uber and Careem one does not have to stand at a
street and wait for a rickshaw or taxi, as a ride of your choice can be hailed simply by using
smart phones at any place. These ride-hailing app services have changed the traditional taxi
services and by using these apps users can demand a ride from anywhere in the city like their
offices, homes, malls, restaurants, and schools.

The purpose of this report is to study these ride-hailing app services and determine which is
better. This report will be a comparative analysis of two major ride hailing players of Pakistan
including Uber and Careem. It will analyze the difference in service quality provided by both
companies (in context of Faisalabad city) and the effects which their provided quality and
marketing has on consumer preferences under the title “a comparative analysis of Uber and
Careem with respect to service quality and customer preferences”. This project is an
exploratory study and will include detailed analysis of both companies before comparing their
services in Faisalabad.

2.0 Analysis of Uber

Uber was founded in San Francisco in 2009, by Travis Kalanick and Garrett Camp, as a
transportation network company and is commonly known for being a digital taxi service as it
connects riders with drivers through a mobile app. It entered the Pakistani market in 2016 and
currently it is providing services in 8 cities including Lahore, Karachi, Islamabad, Hyderabad,
Faisalabad, Gujranwala, Multan and Peshawar.

According to Reuters, Uber's launch in Pakistan was part of a $250 million drive into central
Asia, the Middle East and North Africa. As of 2018, Uber has 75 million riders and 3 million
drivers, 10 billion trips completed worldwide, presence in 65 countries and more than 600
cities, and 15 million trips completed each day (Uber, Company info, 2018).

Uber started its business in Pakistan through Lahore by providing its UberGo services at a price
as low as Rs. 13.7 per kilometer with a base fare of 100. It also provided the facility of cash
payments by customers because a lot of people in Pakistan do not have credit cards.

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2.1 History
The idea behind uber was what if you could request a ride from your phone? But from
"everyone's private driver" in the beginning, Uber quickly grew into a global logistics layer
and transformed the entire taxi industry. Following is a timeline of Uber.

Timeline:

 December 2008: The idea is born, when Travis Kalanick and Garrett Camp can't get a
cab in Paris.
 March 2009: UberCab launches in San Francisco, a smartphone app that lets people tap
a button and get a ride.
 July 2010: First Uber ever, UberCab connects its first rider with a black town car for a
ride across San Francisco.
 October 2010: The company drops "cab" from its name and further separates itself from
the taxicab industry. The familiar Uber brand is born.
 December 2011: Uber goes international by launching in the City of Light (Paris)
 July 2012: Sweets to streets; riders request ice cream on-demand in 7 cities across the
US.
 November 2012: Uber launches operations in Sydney, Australia, bringing reliable rides
to Aussies.
 August 2013: Uber launches in its first Latin American city, Mexico.
 April 2014: 100 cities enjoy uber
 August 2014: Riders headed the same way share the ride and split the cost—streets are
less congested and cities less polluted with every ride.
 September 2014: uber military launches
 April 2015: uber eats launches
 May 2015: uber is in 300 cities
 June 2015: For the first time ever, riders can use cash to pay for a ride in India.
 March 2016: Uber launched in Pakistan
 December 2016: Uber is in 500 cities
 May 2017: Uber freight launches, five billion trips and counting

(Uber, history of uber, 2018)

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2.2 Vision and Mission
“We ignite opportunity by setting the world in motion.”

Uber helps people move towards their dreams and believes that when people can move, good
things happen as opportunities appear, open up, and become reality. Uber has helped people
go to all kinds of places and has created billions of human connections. The next section will
be discussing the marketing mix strategies that enable Uber to achieve its mission.

2.3 Marketing mix strategies

Product/service

Uber provides a variety of services to its users around the globe. Uber rides can be booked
through their website or the mobile app which has made comfortable transportation easily
reachable. Following is the list of services provided by uber globally.

 Uber-Moto: Bike service that enables traveling in the city at the cheapest rates
 Uber Go: The most common service provided by uber.
 Uber Pool: This service enables multiple people to travel together towards the same
direction and reduces road traffic.
 Uber X: This option allows users to book expensive cars to enjoy comfort and style.
 Uber Auto: Rickshaw service
 Uber Eats: Enables users to order food
 Uber rush: Courier or package delivery service

Apart from these services, Uber also launched a boat service in Istanbul which allows users to
book boat rides. Uber mini is also available in Pakistan which allows users to book small cars
at cheap rates. Uber rides can be tracked through the app and Wi-Fi service can also be used in
premium cabs. Currently, Uber is offering only four of these services in Faisalabad including
moto, auto, go and mini.

Price

The base pricing strategies used by uber depend on the region in which it is operating. Uber
prices are a combination of three factors including the base fare, the rate for estimated time and
distance and also the demand of rides at a specific time in the area. In this regard, it could be
said that pricing strategy of Uber is very basic as it depends on demand and supply principle.

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Normally when Uber enters a new market, it uses artificially low prices to gain market share,
which means it uses penetration pricing. Apart from this penetration pricing it uses following
principles to set its prices:

 Economy pricing: low prices for no frills rides. For instance, Uber mini in Pakistan.
 Upfront pricing: providing cost estimations to customers before order confirmation.
 Surge pricing: as in the rule of demand and supply. The demand increase will increase
the rates and is known as surge pricing.

The current rates of Uber services in Faisalabad are as follows.

Figure 1: Uber rates in Faisalabad

This figure shows the rates of Uber for January, but these rates keep on changing as a result of
weekly review of prices. And although Uber was considered cheaper than its competitor
Careem, but when prices for the same distance at the same time were compared in January,
Careem was found to be cheaper than Uber for the same service. Also, Uber uses surge pricing
more often than Careem.

Place

Uber is present in more than 600 cities worldwide which it selects on the basis of population
and infrastructure. In Pakistan it is present in 8 cities including Lahore, Karachi, Islamabad,
Hyderabad, Faisalabad, Gujranwala, Multan and Peshawar. Uber services can be accessed
through its mobile application (available on Playstore and app store) and its website but other
than these it does not have any major accessible places. It even has a low number of offices
worldwide due to its network business nature. But it does have offices in Pakistan in all the 8
cities in which it is operating because of the nature of customers and competition in Pakistan.

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In Pakistan Uber offices are known as Uber greenlight Hub, which in Faisalabad is located on
canal road. Customers and drivers could visit the office in person in case of any queries,
complaints or other matters. Apart from these, Uber booking stations or help desks are also
available at certain places like Airports and malls.

Promotion

Most commonly, Uber uses social media and tv ads for promoting its services. But word of
mouth was of more benefit according to the head of expansion in Uber Pakistan (December
2016). Its expenses on advertising are usually low. When uber enters a new market, it convinces
clients to use free rides which helps in developing its customer base. In addition, referral
benefits and discounts are also offered from time to time. For instance, recently a 50% discount
was offered by Uber on its bike service in all cities. For availing such discounts, it provides
discount codes to users through the app and the discount code for this promotion was
LKIFMOTO.

Globally, uber uses localized marketing techniques like in India it distributed free colors and
cupcakes on Holi. But its marketing efforts in Pakistan seem to be low. Its social media
presence is also not of much use to customers and it does not have any partnerships in
Faisalabad as compared to careem.

People

Being a service company, the people of Uber can be considered the most important part of the
mix. Uber understands this importance and ensures the placement of best people for the job by
strict checks. It takes 25% of what drivers earn and they keep 75%. Additionally, it provides
bonuses, benefits and trainings to drivers to ensure good relationship with their partners and
best service to their customers as customer experience is important for the business. Customer
service and support is also provided through the website, app or the physical offices and all
customer complaints are dealt immediately to ensure their satisfaction. Uber company has more
than 12000 employees across the globe but no specific information on the number of people in
Faisalabad is available. Recently Uber has also introduced a new feature of anonymity in
Pakistan which ensures privacy and security of personal data of both the driver and the rider.

Process

The process of booking a ride with Uber is very simple. One just needs to have the Uber app
installed and internet service. In this regard Uber has introduced a new app version known as

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Uber lite (the 5MB app version) which allows users to use the app even when mobile data is
limited. Following is the simple process of using uber service.

 Go to Uber app and turn on your device GPS (Location settings)

 Check for cars (other options) available and select the ride of your choice
 Check for ride estimate, type of car and driver details, comments and rating.
 Book the ride and track the ride
 Make payment through any of the preferred means of payment as uber offers a range
of payment methods to customers such as Uber wallet, cash and even credit cards.

Physical evidence

Physical evidence of uber can include the cabs provided by the company and the app interface.
In terms of cabs, uber provides rides in good conditions and it has developed a vehicle criterion
which the drivers have to meet in order to work with uber. Following is the criteria of uber
rides for different services:

 Mini (Mehran, 2002+)

 Go (2005+, 4-door cars)
 Moto (2008+)
 Auto (2005+)

Cars that cannot be used include Bolan, heavy transport vehicles and wagons. Additionally,
none of the cars with any damages are accepted. Which means that customers get the best cars
of their choice to ride. In terms of app, uber app is also very easy to use and it provides the ride
history on the dashboard and can be viewed from an online account too. The process of
booking, tracking and reviewing the services is also easy with an option to even cancel the ride.

This concludes the analysis of marketing mix of uber and the next section will discuss its swot
analysis.

2.4 Swot analysis

The analysis of internal and external factors is very important to understand the position of a
company. SWOT analysis is the most common tool used for analyzing the internal strengths
and weaknesses and the external opportunities and threats of any company. Following table
presents the SWOT analysis of Uber.

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Table 1: SWOT analysis of Uber

Strengths Weaknesses
 Ubers brand equity based on its  High number of controversies
innovative cab service. including hate and protest from
 Strong partner system as it has a large existing taxi industry, political and
number of drivers (partners) to cater legal issues in some parts of the
to the demand. world.
 The easy and convenient user  Can not serve the elderly especially
interface in the Asian markets as they are not
 Different ride options provide tech savvy.
services to different customer  Not providing business and
segments. especially intercity services in
 Customer loyalty and trust due to its Faisalabad which careem is
level of service quality, pricing and providing.
rating system.  Low focus on marketing its services.
 High service standards maintained
through trained drivers and efficient
vehicles.
 Low operational costs as it does not
have to spend on vehicles.
Opportunities Threats
 Technological and internet growth in  Tough competition especially from
Asian markets. Careem in Pakistan as careem is
 Growing number of middle-income preferred by customers more than
consumers and tourism. uber.
 Heavy traffic in big cities demotivate  Government regulations and legal
people to use their own vehicles and pressures. For instance, it should treat
other modes of transport have lower its drivers as employees instead of
service quality. partners and that should it be treated
 Can partner with hotels and as a taxi company or IT company.
restaurants.

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3.0 Analysis of Careem

Careem is also a digital transportation company which was established in Dubai in 2012 by
Mudassir Sheikha, Magnus Olsson and Abdullah Elyas. Careem is the leading technology
platform for the greater Middle East. A pioneer of the region’s ride-hailing economy, Careem
is expanding services across its platform to include payments, delivery and mass transportation.
Careem is currently operating in 15 countries and more than 120 cities with more than 1 million
captains serving 30 million customers (Careem, 2019).

It entered the Pakistani market in 2015 but officially launched in March 2016 after success in
the middle east. Careem currently operates in 15 cities of Pakistan including Karachi, Lahore,
Islamabad, Peshawar, Faisalabad, Hyderabad, Multan, Gujranwala, Sialkot, Abbottabad,
Sargodha, Mardan, Sukkur, Quetta and Bahawalpur.

3.1 History
Just like uber, the concept of careem was also born because of personal need. Two of the
founders of careem were management consultants at McKinsey company in UAE and had to
travel a lot. According to Mudassir Sheikha, the co-founder, "It started as a basic Web-based
car booking service focused on corporate customers and has evolved into the largest digital
transportation platform in the region."

Careem is the leading app-based ride service in the markets where it is operating and has left a
global giant like uber behind. It provides customers multiple options to book rides, multiple
ways of booking rides, and multiple modes of payment with safety, convenience, affordability
and reliability. Careem focuses on being local in all its markets and understands the specific
needs of customers to provide best solutions. As in the words of the founders

"When our customers wanted to pre-schedule their airport and commute rides, we launched
scheduled rides. When they expressed the need to speak to a person on the phone, we launched
our 24/7 call center. When many customers in Saudi Arabia and Egypt requested the option to
pay in cash, we launched cash payments. When many parents in the UAE asked for baby seats
for the safety of their kids, we launched Careem Kids with pre-fitted car seats."

Following is a timeline of careem which explains its journey since founding.

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Timeline

Figure 2: Timeline of Careem, Source: (Paracha, 2017)

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3.2 Vision and mission
“Simplify and improve the lives of people and build an institution that inspires.”

This mission as explained by co-founder Sheikha is that careem believes that there is a
significant opportunity to use technology to simplify lives and build success stories that will
inspire entrepreneurship and transform the region. Careem wishes to play a small part in it.
“With the help of technology, we offer our Customers the freedom of mobility, we give our
Captains an opportunity to take financial control of their own life, and we provide our
Colleagues with a platform to build an institution that will inspire generations of innovators.
We do this because We believe that every single person in our region deserves a simpler life.
By uplifting communities, supporting infrastructures, and solving local problems, we strive to
be the enabler that improves the lives of millions of people.”

3.3 Marketing mix strategies

Careem entered Pakistan because it was considered an underserviced area in terms of public
transportation. It has the first mover advantage in the MENA region and South Asia, due to
which it is also moving ahead of its competition. Following are the details of the marketing
mix of careem.

Product/service

Just like uber, careem also provides a variety of services to cater to a larger market. The main
product is the same i.e. app and website but it does provide multiple options for payments, for
booking rides at particular times (now, later, repeat), and varieties of ride options. It provides
several options like booking packages for all your rides in a month by an upfront payment in
which no peaks will be charged. Following are the services provided by careem in Pakistan.

 Careem Go: The basic cab service provided by careem.

 Careem Bike: Allows traveling on bike at a low cost.
 Careem Tezz: The rickshaw service.
 Careem Business: Provides better convenience and service, allows business teams to
travel together to meeting, interviews etc.
 Intercity: Is available in 8 cities. Allows users of Faisalabad to travel to Lahore in a
one-sided or round trip.
 B2B Delivery: Delivers things like documents from one place to another for businesses.

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 Careem Go Mini: The cheapest service as it uses Mehran. It is not available in
Faisalabad.

Price

Just like uber, careem prices are also a combination of multiple factors including starting,
moving, waiting before start, waiting in journey. Where starting is the base price, moving is
charged per kilometer, waiting is charged if the driver has to wait outside for more than two
minutes, and in journey is for the stops made between journey. Careem also charges a
cancellation fee if the ride is cancelled after two minutes of booking. For rides booked later,
the fee is not charged if cancellation is made before two hours of the time booked. There is also
a minimum rate which has to be paid for a ride. For instance, following are the prices of careem
according to all these factors as of September 2018.

Careem Go Business Careem Tezz

Base fare Rs.75 Rs.160 Rs.65
Minimum fare Rs.100 Rs.250 Rs.70
Charge per kilometer Rs.9.33 Rs.23 Rs.8.8
Rate per hour Rs.233 Rs.370 Rs.220
Cancellation fee Rs.100 Rs.250 Rs.70

Table 2: Careem rates in Faisalabad

In addition to these services, careem intercity in Faisalabad costs Rs.4300 for on-way trip to
Lahore and Rs.5000 for round trip with two hours of wait time in Lahore. Just like uber, careem
prices also follow the demand and supply principle and charge a peak factor in times of high
demand.

Place

Careem is present in 15 countries and more than 120 cities in the MENA region and South
Asia. In Pakistan it is available in 15 cities as compared to the eight cities of Uber. Customers
and captains can contact careem in its offices or through a helpline in case of any queries or
complaints. Careem office in Faisalabad is located in Batala colony. Apart from these contact
points, careem services can be simply obtained through its mobile app, website or by a call
because it is an app-based business.

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Promotion

Careem uses multiple channels for promotion. Social media campaigns, tv commercials,
billboards, partnerships, sponsorships, and discounts are some of the ways used by careem.
Discounts can be availed from time to time by using the discount codes just like uber. But
Careem’s presence on social media is much stronger as compared to uber. Some of the famous
careem campaigns include “bakra on wheels”, “careem air,” “qurbani hides,” “chalo lets heal”
and “rishta aunty service.” In terms of partnerships, careem has partnered with some restaurants
in Faisalabad. As a result of this partnership, 10-15% discounts are provided to those restaurant
customers who arrive there by careem.

People

Careem considers its people to be its most important asset. It aims at empowering people and
giving them control of their financial lives. Careem means generous and that is why this
company says it aims to be generous to its employees and customers. Careem calls its drivers,
captains, as the word captain signifies someone who is in control. Additionally, as careem is a
service-based business, its service quality majorly depends on the people. Due to that it focuses
greatly on their training. Trainings are provided every week and strict background checks are
ensured to provide the best service. Bonuses are also provided to captains and other employees
often but on special events sometimes, like Eid, they receive bonuses equal to their salary.
According to one source, careem keeps only 20% of what captains earn. Customer and captain
safety is the most important feature and the one in which careem has clear superiority over
uber.

Process

The process of booking a ride with careem is very simple. One just needs to have the app
installed and internet service. For having a careem account one just needs to provide an email,
phone number and name. Following is the simple process of using the service.

 Go to the app and turn on your device GPS (Location settings)

 Check for cars (other options) available and select the ride of your choice
 Check for ride estimate, type of car and driver details, comments and rating.
 Book the ride and track the ride
 Make payment through any of the preferred means of payment as a range of payment
methods are available in careem like cash, credit cards and careem wallet.

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 Tip the captain through the app, or not. Rate your experience.

Physical evidence

According to most internet sources, careem wins here again. The physical evidence of careem
in terms of the rides is much better which means that cars are in good condition and the captains
are well behaved. The vehicle criterion at careem in Faisalabad is as follows.

 Go (sedan: 2005+ hatchbacks: 2012+)

 Bike (2012+)
 Rickshaw (4 stroke)
 Business (sedan: 2010+)
 Intercity (sedan: 2005+ hatchbacks: 2012+)

Cars that cannot be used include Bolan, Mehran, Santro and Cuore or any of those cars which
have some damages. In terms of app, careem app is also user friendly and it provides effective
rating system, wallet system, and multiple packages. The process of booking, tracking and
reviewing the services is also easy with an option to even cancel the ride. The mapping system
of careem is also better than uber as they have developed their own maps in the region.

This concludes the analysis of marketing mix of careem and the next section will discuss its
swot analysis.

3.4 Swot analysis

Following table presents the SWOT analysis of careem to understand its internal and external
environment.

Table 3: SWOT analysis of Careem

Strengths Weaknesses
 Good local image in MENA and  It is a smaller company as compared
Asia. to other global giants like uber.
 Local sponsorships and partnerships  Its complaint system was somewhat
enable better engagement with the mismanaged and earns it negative
market. reviews.
 First mover advantage in MENA and  It usually has higher rates than its
Asia. competitors in the market.

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 Trainings of drivers which results in
better reputation of the company.
 Helpline or call centers, which are not
available for competitors like uber.
 Focus on partnerships and
empowerment helps boost its image
 Better marketing and social media
presence in the markets
Opportunities Threats
 Carpooling services can be offered  Competition from direct and indirect
 Package delivery could be started just competitors.
like uber.  Threat of new entrants because of
 Expansion into regions other than low entry barriers.
MENA and south Asia.  Opposition by traditional taxis and
legal compliance issues

4.0 Industry analysis

As uber and careem have the same business nature, they share the same external environment.
Most factors influence both companies in the same way more or less. Following are the analysis
of external environment of these companies or the industry environment/factors

4.1 Pestel analysis

Pestel analysis is used for analyzing the external environment of a business including political,
economic, social, technological, environmental and legal environment. Uber and Careem being
the same kind of business face the similar external environment. Both these businesses have
faced certain political and legal issues but at the same time have proved beneficial for the
society, economy and environment in many ways. This analysis analyses those factors that are
affecting or being affected by these ride-hailing apps in Pakistan.

Political and legal:

Just as uber faced lawsuits in US, South Africa, UK and other places, it faced these problems
in Pakistan too along with Careem. The main debate is related to the licensing or regulations
of these businesses and the opposition from the traditional government taxis. Governments

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want these companies to treat their drivers as employees instead of partners especially for uber,
as careem calls its drivers captains. In Pakistan, various suits have been filed in the courts
against these companies accusing them of not following the motor vehicle laws of Pakistan
(Shehzad, 2017). The Punjab and Sindh governments have even moved to ban these services
but both companies ensured compliance (Gabol & Ali, 2017). The problem is that should these
companies be treated as taxi companies or not.

Economic and social:

Uber and careem have not been affected much by the economic factors but have themselves
impacted the economy. Their main contributions to the economy include creating jobs,
reducing search cost for taxis and forcing down prices of traditional taxis by providing low cost
services themselves. Creation of jobs is a very positive contribution to the economy (Arshad,
2017) along with empowerment of women. In addition to these impacts, these companies have
provided the society with a solution to their transportation problems at low cost and good
customer service. Due to these benefits, people of pakistan have rapidly embraced these
companies and these have become the most convenient and popular sources of transportation.

Technological and environmental:

Technology is at the root of everything big in the 21st century and so is it at the base of both
these companies as they connect riders and drivers through an app. Not just that, they provide
multiple features like tracking, rating, payments, etc. in their apps to ensure best service. They
continue to improve their apps and make their technology better. The plus point for these
companies is the growing number of smartphone users in the country. Just like technology,
environmental sustainability has also become important in 21st century. The major impact of
Uber and Careem on the environment is that it has reduced traffic from the roads as people
even use these services for traveling within city instead of their personal vehicles sometimes.

4.2 Competitive analysis: Porters five force model

The competitive analysis of business is very important as it helps businesses to shape their
competitive strategies and be better than the competition. For this reason, this report also
presents an analysis of Uber and Careem competitive environment by using porters five force
model. Porter’s Five Forces model is an analytical framework that analyses five individual
forces that shape the overall competitive environment of any industry. Following is the analysis
of the competitive environment of Uber and Careem in Pakistan with respect to the five forces.

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Rivalry among existing firms

Uber and Careem themselves are the biggest rivals in the ride-hailing sector of Pakistan and
both of them have captured huge market shares. They compete on multiple factors like
convenience, customer service, price, comfort and safety. Which again means that if any of
them reduces quality or increases price, it will lose customers. And this rivalry is expected to
increase further due to the low entry barriers.

Threat of substitutes

Substitutes are those businesses that are not direct competitors i.e. have different business
models but do provide the same type of service. Threat of substitutes is also high in this industry
as if traditional taxis lost their customers to Uber and Careem because of low cost and high
value, these companies could lose customers back to traditional transport services if they
increase rates. The traditional taxis and rickshaws can also reduce prices extremely low to gain
their share of the market which can cause uber and careem to lose their customers or profits.

Threat of new entrants

Threat of new entrants into the internet-based ride hailing sector is high as nothing about the
businesses or their apps is hidden. The network nature of business will provide easy access to
distribution channels for new businesses, no significant amount of capital is required, and this
market is relatively new and not saturated which means there are not much entry barriers. These
low barriers are already increasing the number of local competitors too like A-taxi, Paxi, Gaari
Pakistan and Shahi Sawari. The absence of switching costs from Uber or Careem to a new taxi
technology company for customers further increases the threats of new entrants.

Bargaining power of buyers

The bargaining power of buyers is also high in this industry, as there are a lot of substitutes and
rivals available for both companies to choose from. Plus, that Uber and Careem both are each
other’s competitors and if any of these two raises prices or lower service quality, it will lose
customers to the other without doubt. Again because of the absence of switching costs.

Bargaining power of suppliers

Uber and careem are dependent on the drivers for providing the services which means their
drivers are their suppliers. These suppliers bargaining power is also high because of the
competition. A dissatisfied driver can easily leave one company and join the other without any

pg. 21
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switching costs. Moreover, if anything bad happens to a driver or because of a driver, it will
harm the company’s image.

Hence, from this analysis, it is clear that both Uber and Careem must work hard to maintain
and improve their service quality because it is the only thing that keeps their customers with
them. Now, as both the companies have been analyzed in terms of marketing mix and internal,
external and competitive environment, this report will move to comparing the service quality
of both companies and analyzing that which aspects of service quality shape consumer
preference in Pakistan.

5.0 Comparison of Uber and Careem with respect to service quality and
its effects on consumer preferences in Pakistani market
(Faisalabad)
The use of public transport and rented cars is growing in big cities of Pakistan because of heavy
traffic and fewer parking space. Due to this need, multiple mobile app-based taxi services have
entered the market which allow passengers to enjoy safe and comfortable public transport.
These apps help in locating passengers, transporting them to their desired place and charging
according to fare structures based on distance. (Rasheed, Mazhar, & Shahid, 2018)

Customers perceived quality of the services shape their preference about which service to use
comparatively and these perceptions are developed by the way service quality is marketed.
Service quality, according to (Zeithmal, Paraseraman, & Malhotra, 2002), could be based on
both pre and post service aspects. Factors like coverage area, fares, convenience of mobile app,
driver behavior, time reliability and safety represent service quality.

Service quality may assume various aspects like physical quality, interactive quality and
corporate image quality (Hussain, Al Nasser, & Hussain, 2015). This study focuses on mobile
app-based taxi services, so physical quality relates to the tangible aspects of service e.g. car
condition. Interactive quality is related to the level of two-way flow that occurs between service
provider and customer like the app convenience and driver behavior. Corporate quality is
connected to the image or perception of service provider company which is normally shaped
by marketing the services. Following is a comparison of uber and careem on the basis of all
these service quality aspects.

pg. 22
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5.1 Service quality factors compared
Table 4: Comparison of service aspects

Uber Careem
Vehicle quality  Go (hatchbacks 2005+,  Go (sedan: 2005+
with AC) hatchbacks: 2012+)
 Moto (2008+)  Bike (2012+)
 Auto (2005+)  Rickshaw (4 stroke)
 Mini (Mehran, 2002+,  Business (sedan:
affordable and without 2010+)
AC)  Intercity (sedan: 2005+
(cars that cannot be used hatchbacks: 2012+)
include Bolan) (cars that cannot be used
include Mehran, Bolan, Santro,
Cuore)
*Fares  Go: Rs. 178-211  Go: Rs. 146
 Bike: Rs. 65-80  Bike: Rs. 53
 Rickshaw: Rs. 100-119  Rickshaw: Rs. 80
 Mini: Rs. 144-171  Business: Rs. 226
Surge or peak factor Surge rates as explained earlier Peak factor of careem is just
are temporary price hikes at like surge rates of uber. But
times of high demand. And careem charges peak factor
according to most sources, uber rates rarely or at least lesser
charges surge pricing very than uber, which makes its
often. There is a perception that services less expensive at times
uber does not have enough when uber is using surge rates.
drivers to meet demand. It is presumed that the number
of captains at careem is high.
Coverage areas Uber is present in 8 cities of Careem is available in 15 cities
Pakistan. of Pakistan.
And the wait times of uber for Careem is better in this regard
those cities where it is available too as wait times for this

pg. 23
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are considered more because of service are lower than that of
a smaller number of drivers. uber, as they have more drivers.
Contact points Uber greenlight hubs in all 8 Call center service or helpline
(customer service) cities of Pakistan but no is also available in addition to
helpline. Problems have to be offices, which gives careem a
mailed to uber. plus point against uber.
Mapping system Uber uses google maps but as Careem on the other hand has
google maps of MENA and established their own mapping
South Asian region are not so system because it was founded
accurate, so uber has problems in this region and due to
with its mapping system. inaccurate maps provided by
google, they established their
own system.
Promotional  Tv ads  Tv ads
campaigns  Social media use but  Social media presence
presence is not strong is active. Many viral
 Lesser focus on campaigns like “bakra
sponsorships and on wheels”, “chalo lets
partnerships heal” etc.
 Promo codes offering  Sponsorships
discounts.  Partnerships with
restaurants, shopping
malls etc. (the
customers of the
restaurant who use
Careem get discounts
in restaurants)
 Promo codes for
discounts.
App features (booking Uber has lesser requirements to Careem has somewhat the
process) sign up like just name and same booking procedure but its
number. app is considered less user
friendly when compared to

pg. 24
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Its app offers certain features uber as it has more
like anonymity feature, requirements to sign up like
tracking, rating, wallet email etc. and understanding
systems, tipping options and the app for new users is a bit
bookmarking option. Even difficult.
though some features could be In addition to the app features
different at a time but both provided by uber, careem also
companies keep changing and provides tipping system,
updating their apps and any packages, booking for later
feature introduced by one options.
company is easily replicated by
the other too within some time.
Driver behavior In service industry, the service On the other hand, Careem’s
(physical evidence) provider is the biggest physical captains are mostly well-
evidence. Uber does focuses on behaved. The reason behind
training of drivers but still most this is the value and the training
customers reviewed it as not that careem gives to its captains
having very well-behaved and the strict checks that it
drivers. Especially rickshaw keeps for its captains. Most
drivers don’t seem to have people who have used both
undergone any training. services, prefer careem in this
regard and consider it safer.
Brand worth $70 bn (Hanlon, 2017) $1.2 bn (Giannikoulis, 2017)
Brand likeness Much difference could not be Careem on the other hand, is
seen in the market share of both more preferred and liked. It has
these companies but uber gains a more positive image in terms
most customers just because of of safety, quality and
the lower overall rates. It has a empowerment. Especially
negative image regarding women prefer it over uber, and
safety and quality. But even it is the most recommended
though careem has a better among the two competitors.
image, most people keep both

pg. 25
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apps in their phones and use
both services at different times.
*The comparison of fares is based on a fare estimate of traveling from Kohinoor town Faisalabad to university of central
Punjab Faisalabad campus for 21st of January 2019. These prices could vary from time to time because of peak factors and
also because prices are reviewed weekly.

5.2 Consumer preferences shaped by these services aspects

Consumers always prefer the product or service with better quality. And just like that, Pakistani
people also prefer careem as it offers better quality in most of the service aspects compared
above. It has been observed that almost 8 out of ten people on the internet are recommending
careem, even when they use both. The dependence of consumer preference on service quality
is clear as according to a ride sharing trends survey, conducted by rozee.pk in 2017, the factors
that most respondents considered while choosing one of these two services are

 Less wait time for rides to arrive

 User-friendly and well-designed app
 Low cost
 Professional and reliable drivers
 Better vehicles
 Good discounts and promotions

Among these factors more respondents preferred uber over careem regarding the first three
factors which means most people have experienced that uber has less wait times, lower cost
and more user-friendly app. On the other hand, most people preferred careem over uber
regarding the last three factors, which means careem is perceived to have better drivers, better
vehicles, and better discounts. (The survey was conducted in cities of Karachi and Lahore).
One important result of the survey was that most respondents used both services and the
respondents who completely preferred one service over the other were low in number. Some
of the other prominent findings of the survey include (Rozee.pk, 2017)

 Among the respondents who own a smartphone, 73% use a ride-sharing app.

pg. 26
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Figure 3: Usage of ride sharing apps

(source: Ride sharing trends analytical report by rozee.pk, 2017)

 Careem was preferred in Karachi with a 52.74%, while uber was preferred in Lahore
with a 50.7%. These percentages show very low difference in the preference.
 Regular users (who used services more than 4 times a month) preferred careem in both
cities.
 Uber was found to be popular among those who were not earning or whose earnings
were low.
 In terms of popularity, uber and careem were almost equal. As shown in the chart below

Figure 4: Popularity of ride sharing apps

(source: Ride sharing trends analytical report by rozee.pk, 2017)

These are the results of 2017 and the app-based sector is the one which experience changes
almost every week in prices, app-design and other factors. While most factors have remained
unchanged, it can be seen in the comparison made above that careem has taken the lead now

pg. 27
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in the first factor too, which means that most users prefer careem now with respect to wait
times as they have more drivers. Uber has also lost the edge of low cost, again because of lesser
drivers. Having less drivers causes them to charge surge rates more often and the rates of
careem appear low due to this reason because they do not charge peak pricing that often. As
far as app design is concerned, uber still leads. Which means, according to the comparison
made above, careem leads in five out of six factors affecting consumer preference and that is
why it is the preferred brand of app-based ride services in Pakistan today.

6.0 Conclusion
In conclusion, after a detailed analysis of both these companies, this report suggests that careem
is offering much better level of services as compared to uber and is also the preferred ride-
sharing app among these two, despite the fact that uber is a global giant. Careems marketing
mix strategies are much better than uber as it offers more ride options, is more active on
promotional platforms, provides better and trained drivers, and less wait times. But uber also
has its benefits like it is mostly recognized as the low-cost ride-sharing service and the app
with better design and user interface. Another important finding of this report is that both apps
are almost equally popular among people and a huge proportion of users use both services from
time to time according to their need. It is clear that these services have transformed the public
transport industry of Pakistan and have provided people with a much better level of service at
relatively lower rates as compared to traditional taxis.

7.0 Recommendations
Although both services are considered best in Pakistan, but both can make some improvements
to avoid threats and make their services better than competition. Following are some of the
recommendations for them.

7.1 Strategies for Uber to improve performance

Uber, despite being a global giant, is facing stiff competition from Careem in Pakistan. It needs
to create some new strategies to improve its performance. Following can be some of them

 Uber needs to increase its driver base to reduce pickup times. For that purpose, it needs
to invest in employee benefit programs. Increasing the number of driver partners and
keeping them with you is the main aim of such a business because companies business
or services depend on these drivers.

pg. 28
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 It should implement stricter oversight and checks on drivers and vehicles to improve
the condition of vehicles and the driver behavior. Better training programs should also
be implemented as to train partner drivers to behave professionally. Drivers should be
valued as much as riders. Employee relations should be focused.
 Customer service experience should be made more fluid by providing a helpline, so
customers don’t have to get in the long process of in-app or email communication.
 To counter its competitor careem, it should at least set the vehicle criteria equal to the
vehicle criteria of careem.
 Although ubers rates are considered low overall but high and frequent surge pricing
makes careem look cheaper. Uber needs to counter this problem as well by increasing
the number of drivers. It will not only reduce surge pricing but also wait times and will
help gain customers.
 Promotional activities of uber are very low. Uber is already present on social media,
but the presence is not very active. It should not only become active on social media,
but also should work to partner with certain organizations from time to time just like
careem. Promotion is the more important aspect to be improved because it
communicates your messages to the customers and motivates use.
 Uber should also add a few options in its app like the book for later option or the
monthly package option.
 Uber is not offering many services in Pakistan which it is offering in other parts of the
world. For instance, uber rush, uber eats, uber access etc. Pakistan is a huge market, it
can benefit from introducing these new options to the market.
 Uber should expand its operations in other cities of Pakistan too as it is only present in
8 cities as compared to the 15 cities of careem.

7.2 Strategies for Careem to avoid threats and overcome weaknesses

The analysis of Careem shows that even if uber is a global giant, Careem is more strengthened
in its regions and considered far better in terms of service. It can use following strategies to
further overcome its weaknesses and avoid threats.

 Careem should simplify its app sign in process and also make the interface simpler to
make it easy to use for all customers.
 Careem is a strong competitor in the MENA region, it should expand its services to
other regions too.

pg. 29
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 It can add new services to its current fleet. Like package delivery and also careem mini
in Faisalabad, as it is only offered in three cities currently.
 It should provide new app features like bookmarking your favorite locations or it can
introduce new low data version of its app.
 Even though many people use these services but still there are many of those in Asia
and middle east who don’t consider it a safe option. Careem should target such people
in promotions too. It could use referral programs or increase word of mouth by
providing discounts if one user travels with a friend.

pg. 30
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