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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