2.2 Discussion: Research-based Peer Alternative Response to 1.3

Definition of Positioning

            According to Carol Kopp, “Product differentiation is a marketing strategy that strives to distinguish a company's products or services from the competition.” (Kopp, 2020). While differentiation refers to making products different from competitors’ products, positioning has to do with how consumers will perceive the products. For instance, with JGJ, Inc., the company’s goal is to have consumers perceive the transportation service as reliable and easy to use. A differentiation strategy to help fulfill this is to have a more user-friendly platform than our competitors and to not have to cancel any scheduled appointments.

Market Description for JGJ, Inc.

            The current transportation market rarely caters to senior citizens today. Instead, most transportation companies are looking to help the always-on-the go citizens. Thus, JGJ, Inc’s niche market will be senior citizens looking for travel assistance to and from doctor’s appointments, grocery stores, social gatherings, etc. Their travel needs consist of two to three times a week. They are looking for ease of use, reliability, and consistency when using the service. Our target market is in the slowing-down phase of life and wishes to not have to worry about keeping up with advances in technology and the busy, chaotic lifestyle they were in while working.

Analysis of Current Positioning in the Market

Current annual sales volume in dollars and/or units sold in the market

The current annual sales volume for Lyft in 2020 was $2.812 billion (“Lyft”). Along with Lyft, the current annual sales volume for Uber in 2020 was $8.913 billion (“Uber”). According to Arevalo, “According to the latest estimates, for 2018, the industry was worth a massive $61.3 billion” (Arevalo, 2020).

Current competitors and their offerings, including points of differentiation for each offering indicating how they are positioned to each other in the market

Lyft

            Lyft is known for being the low-cost provider for ride-hailing transportation services. Lyft started focusing on price differentiation to expand their current market offering (Kiefer, 2015). One way Lyft was able to differentiate was creating Lyft Line, which allowed consumers to ride with other consumers (like a train/bus) to cut the cost of the transportation (Kiefer, 2015). However, along with lowering costs to consumers, Lyft also believes in being extremely flexible which was apparent in the creation of Lyft Line. Another way Lyft is flexible is by offering flexibility for the company’s drivers. Many people today work a full-time and part-time job; thus, Lyft is very accommodating with outside obligations for its drivers (Kiefer, 2015). Lyft offers various service classes for transportation (Davis, 2020). Along with transportation, Lyft has also started diving into food delivery services, but not as much as the company’s top rival: Uber.

Uber

            Currently, Uber is a much larger transportation company than Lyft. Uber is also known for Uber Eats. This feature has made Uber a much more universally known company than Lyft. However, Uber is also more global than Lyft. Uber operates in more countries than just the US and Canada. Additional countries in which Uber operates include: “…Central and South America, Africa, Asia, Australia, New Zealand, and the E.U” (Davis, 2020, para. 27). Uber focuses on offering a variety of vehicle classes including one known as UberPet (Davis, 2020). Uber also offers Uber Pool, which was created after the company’s rival created Lyft Line (Kiefer, 2015).

GoGoGrandparent

            GoGoGrandparent has partnered with Uber and Lyft to offer transportation services for senior citizens. GoGoGrandparent offers a GoGoGuardian System which is there to support their customers 24/7 (“The Best”). However, to do this, GoGoGrandparent is a more costly transportation option.

Taxicab

            Taxicab is only located in large cities and is well-known to be the most expensive company out of all ride-hailing businesses. Taxicabs date back to the Great Depression, which helps to portray the longevity of the business (Bryant, 2015). However, Taxicab is more regulated than Uber and Lyft, especially in New York City. In NYC, taxicabs are referred to as medallions and they are an extremely sought-after commodity (Bryant, 2015).

Current price points of competitors

            According to Brett Helling, (2020), “For example, according to recent data from Certify, the prices for Uber, Lyft, and taxi are as follows: Average Uber cost - $25.73, Average Lyft cost -$19.20, Average taxi cost - $29.52.” As noted previously, Lyft is known for being low-cost while taxis are notorious for being expensive. One reason taxicab services are so expensive, especially in NYC, is that one taxicab along is worth $900,000 and currently there are about 13,500 (Bryant, 2015). GoGoGrandparent’s monthly membership fee is $9.99 per month along with .27/per minute during the duration of the transportation service plus additional charges from Lyft or Uber (“The Best”).

Projections for the Market

Projected overall market growth rate for the next five years

            According to Tony Arvelo, “The estimated size of this segment of the transportation market for 2018 amounted to an impressive $61.3 billion. Just the year before that, the estimated value used to be $10 billion less, showing how exponentially things can change in this vibrant environment. By 2025, it is bound to reach somewhere between USD 218 and 220, at a Compound Annual Growth Rate (CAGR) of 19.87% (Arvelo, 2020, para 4). In other words, the ridesharing market is going to continue to grow in the next five years at almost 20%. When looking at Uber’s growth year over year in 2016 Uber’s revenue increased 106.29%, in 2017 Uber’s revenue increased 42.08%, and in 2018 Uber’s revenue increased 25.53” (“Uber”).

Projected changes to overall pricing in the market for the next five years

            In the next five years, there may be a price increase anywhere from 70 cents to $3.00 per ride in major cities (Keshner, 2019). This is due to lawmakers passing laws that will require the companies to pay their employees more. According to Keshner, “A day after California state senators passed a bill clamping down on the use of “independent contractors” in the tech industry and beyond, analysts said the two ride-share giants would pass costs on to passengers if the bill becomes a law” (Keshner, 2019, para. 2). In other words, the more ridesharing employees make, the more it will cost consumers.

Recommended Position for JGJ Inc.

Recommended position and points of differentiation for the JGJ Inc. offering

            The current recommended positioning for JGJ, Inc. is to have a niche market focusing on senior citizens. JGJ, Inc. must keep costs low for consumers as well as costs to operate. JGJ, Inc. should investigate offering pick-up routes/programs that do not need waivers to be accepted into the program. The only qualification that will be needed is a birth certificate proving the consumer is over 65-years of age.

            JGJ, Inc. should create a mobile app, but also have an automated service via a telephone that will connect customers to drivers. JGJ, Inc. must have a vehicle selection that caters to elderly individuals such as vehicles that can carry medical equipment. The employees of JGJ, Inc. need to be able to assist elderly individuals getting into and out of the vehicles.

            Overall, JGJ, Inc. should be a mix of ridesharing and bus transportation services. According to Figure 1.1 below, JGJ, Inc. is going to strive for offering the lowest cost out of its competitors, but a high quality of care for it’s niche target market.

Figure 1.1 – Positioning Matrix for JGJ, Inc.

Complete buyer profile of the target customer

The ideal consumer will be a senior citizen over the age of 65-years old. They will most likely be members of the retired community. They will be looking to cut costs on their day-to-day activities due to relying on 401-K’s and Social Security as their sources of income. Their incomes will be approximately $20,000 per year (Brandon, 2021). The ideal consumer will be looking for value propositions of cost reduction, cost avoidance, and emotional contribution (McDonald, 2016, p. 41).

 

References

Arevalo, T. (14 Aug. 2020). “Ride-Sharing Industry: Facts, Statistics, and Trends (2020).” Carsurance. Retrieved from carsurance.net/blog/ride-sharing-industry-statistics/.

Brandon, E. (11, Jan. 2021). “How Much You Will Get From Social Security.” U.S. News & World Report, U.S. News & World Report. Retrieved from money.usnews.com/money/retirement/social-security/articles/how-much-you-will-get-from-social-security#:~:text=The%20maximum%20possible%20Social%20Security%20benefit%20for%20someone,35-year%20career%20to%20get%20this%20Social%20Security%20payment.

Bryant, S. (28 Aug. 2020). “How NYC's Yellow Cab Works and Makes Money.” Investopedia, Investopedia. Retrieved from www.investopedia.com/articles/professionals/092515/how-nycs-yellow-cab-works-and-makes-money.asp.

Davis, L. (7 Dec. 2020). “Lyft vs. Uber: What's the Difference?” Investopedia, Investopedia. Retrieved from www.investopedia.com/articles/personal-finance/010715/key-differences-between-uber-and-lyft.asp.

Helling, B, et al. (3 Dec. 2020). “How Much Does Uber Cost? – A Comprehensive Guide.” Ridester.com. Retrieved from www.ridester.com/uber-rates-cost/.

Keshner, A. (14 Sept. 2019). “Here's How Much More Lyft and Uber Rides Could Cost under California's Gig-Worker Law.” MarketWatch, MarketWatch. Retrieved from  www.marketwatch.com/story/heres-exactly-how-much-more-expensive-lyft-and-uber-rides-could-be-under-californias-gig-worker-law-2019-09-12.

Kiefer, B. (15 Oct. 2015). “How Lyft Is Positioning Itself against Rival Uber.” PR Week, PR Week Global. Retrieved from www.prweek.com/article/1338421/lyft-positioning-itself-against-rival-uber.

Kopp, C. M. (28 Aug. 2020). “Understanding Product Differentiation.” Investopedia, Investopedia. Retrieved from www.investopedia.com/terms/p/product_differentiation.asp.

“Lyft Revenue 2017-2020: LYFT.” (n.d.).  Macrotrends. Retrieved from www.macrotrends.net/stocks/charts/LYFT/lyft/revenue.

McDonald, M. (2016). Malcolm McDonald on marketing planning : Understanding marketing plans and strategy (2nd ed.). Philadelphia, PA: Kogan Page. Retrieved from https://search.ebscohost.com/login.aspx?direct=true&AuthType=sso&db=nlebk&AN=1406073&site=ehost-live&custid=s8876267

“The Best Way To Call Lyft & Uber Without A Smartphone.” (n.d.). GoGo, gogograndparent.com/.

“Uber Technologies Revenue 2017-2020: UBER.” (n.d). Macrotrends. Retrieved from www.macrotrends.net/stocks/charts/UBER/uber-technologies/revenue.

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