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Meru Cabs A Spectacular Growth Story

Case Background:

Meru started operations in 2007 with a fleet of 45 cabs in Mumbai

By 2011 it had 5.500 cabs and operated in 4 cities Bengaluru, Mumbai,

Hyderabad and Delhi Largest Radio cab operator in India and third largest in the world

Sales CAGR (2007-2011) was 79.2%, the highest compared to it three

other competitors Easy Cabs, Mega Cabs, Tab Cab

Radio cab industry was highly regulated and govt. regulations were state

specific

Market share of Meru cabs 37%

Problem Statement:

The company is yet to break-even but it needs to find ways to sustain its

competitive advantage. For this the company needs to make decisions on

whether to expand into new cities, target different customers segment or modify

its business model. It needs to find a way to better manage drivers and be more

proactive in preventing failures.

Product

Sophisticate technology

Air conditioned cabs which usegreen fuel

Mobile data terminal which hada GPS system, a two-way GPRSsystem and a digital touchscreen

Tamper proof digital fare meter

Indicators to signal whether thecab is free or not

Regular servicing of cars

Assured Airport Service: Itwas found that the cancellationrates were the highest in airporttrips. To rectify this theAssured Airport Serviceservice was launched where abuffer of cans were stationed atthe office through alternatearrangements.

Process

ERP - Oracle

Customer Acquisition

Bookings via call centerthrough IVR system or throughwebsite

IVR also enables the customerto find out he status of the caband it can also differentiatebetween new and oldcustomers.

Booking Management

IVR -> Car Dispatch System ->Match driver to booking

request -> Press DispatchButton -> System picks 5drivers and the request is sentto them -> Biding -> Winner ofthe bid is selected -> SMS tocustomer

Driver presses ReachedButton once he has reached thedestination and a SMS is sent tothe customer

Cab meter turned ON only whenthe customer boards the cab

No waiting charges

Printed receipt to customersDetailed tracking of drivers

Call center agents to informcustomers about delays due toservice failures

People

Rigorous recruiting and trainingprocess candidate must bewilling to take risk

Certificates of excellence forgood feedback

Each driver feels like anentrepreneur, invests in thecompany and shares profit

Insurance and home loans forthe drivers

Housekeeping jobs for thefamily members of the driver

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Recommendations:

Due to the high fixed costs that the company has to bear in terms of repair

and maintenance and EMI for each car, the business model seems

unprofitable especially in states where the government regulated fares

are low. Thus, the company suffers from its inventory-based model. In itsfuture plans, the company may adopt an asset-light strategy like a pay-

per-use rental service to utilize any excess capacity that it has.

To increase the utilization of the cabs from only 75%, the company can

pursue a feature that allows cabs to star getting notifications of new trips

just as he is approaching the drop destination. This will help in getting

more trips per car thereby improving the earnings of drivers too. Meru

has the least number of trips per car, only 4, compared to its competitors.

To maintain competitive advantage, the company must continue to

remain technologically advanced. Features like the tracker service have

been very popular especially among women. The company mustperiodically introduce technological upgrades that make the service

offering better. This is needed especially since the company doesnt

advertise heavily and relies on its product to sell itself

The company can try to improve its revenues from cabvertising to help

balance its revenues against the huge costs. It has the option of

advertising through voice-overs, LCDs and also on the body of the car. The

company can also use its GPS system and introduce location-based ads.

The current model of Meru is pickup and drop. Multi drop pointscould

increase the overall revenue of the company as well as the drivers. At the

same time, the driver idle-time will be reduced drastically.

Expand to Tier 1&2 cities- This will provide Meru with opportunities in

terms of increased revenues, bigger customer base, skilled drivers and

management personnel.

Link up with pubsto encourage people to call for cabs after drinks. This

will not only give the company business but will also help in projecting

itself as a brand that cares focusing on the empathy dimension of

SERVQUAL.

Submitted By,

Group No. 12Harshitha | DM15217

Gaurav Dutta | DM15219

Rohit Rakshith | DM15247

Keerthi .P | DM15267

R.S.Pavithra | DM15134