Kim and Mauborgne (2004) proposed Blue Ocean strategy referring to the simultaneous pursuit of differentiation and low cost to open up a new market space and create new demand. It is about creating and capturing uncontested market space, thereby making the competition irrelevant.
Uber is one of the example to illustrate Blue Ocean strategy. According to Uber official statement, there were over more than 100 million trips in past 10 years in Hong Kong. Using Hong Kong market as an example and by applying the Eliminate-Reduce-Raise-Create grid, it is noticeable that Uber eliminated the standard pricing of traditional taxi while the app will suggest the most economic way to travel and customers can feedback their doubts in app even after finish the trip. Meanwhile, Uber raised the service standard by adding rating system for both drivers and customers. Driver is allowed to choose their own orders while traditional taxi drivers is infamous for declining customer requests such as crossing tunnels or using which tunnels. In addition, Uber allows users to pick “Uber Pet” for pet-friendly car as many of traditional taxi refuse to allow customers to bring pets. To certain extent, Uber also eliminated the drivers with attitude problem. It also reduced the complexity of traditional way for reserving car and created the convenience for consumers, basically they can rent a car anytime and anywhere via the application. Comparatively, the traditional way to book a cab needs to call to taxi centre while the centre will coordinate the request to mass blast to the driver. Once the driver took the order, the driver will receive the customer phone number and share the car plate to confirm. However, all the driver information and comments are displayed in the app while the customer can browse instantly.
Although the point-to-point transportation market are dominated and nearly saturated, Uber still managed to take advantage of existing market by adapting the blue ocean strategy locally. Hong Kong traditional taxi industry almost dominated the whole market for the longest time while complaints and dissatisfaction were accumulated at the same time. Uber Hong Kong are making use of new technology and successfully reconstructs the market boundaries to fulfil customers requests in a better way. Uber survey indicated that more than 70% of respondents said Uber brings a positive impact to their life. This leads the success of Uber Hong Kong, not only establishing the brand in the market but also attracting new customers to try the service by adding extra value.
The success of Uber had raised the attention of traditional taxi industry. The traditional taxi industry are actively launching different policies and measures such as “Polite Taxi Promotion” (的士禮貌運動) to build back the industry image. Despite the effectiveness of those policies, it is no doubt that the “fightback” of traditional taxi industry will create another round of competition. However, it would be nice for customers to have more options to choose.
Reference:
香港01. (2024, June 7). 的士禮貌運動｜大使銅鑼灣派單張籲待客以禮 的哥：有禮貌係基本. 香港01. https://www.hk01.com/%E7%A4%BE%E6%9C%83%E6%96%B0%E8%81%9E/1026426/%E7%9A%84%E5%A3%AB%E7%A6%AE%E8%B2%8C%E9%81%8B%E5%8B%95-%E5%A4%A7%E4%BD%BF%E9%8A%85%E9%91%BC%E7%81%A3%E6%B4%BE%E5%96%AE%E5%BC%B5%E7%B1%B2%E5%BE%85%E5%AE%A2%E4%BB%A5%E7%A6%AE-%E7%9A%84%E5%93%A5-%E6%9C%89%E7%A6%AE%E8%B2%8C%E4%BF%82%E5%9F%BA%E6%9C%AC
Wong, P. (2024, June 25). A Decade of Uber in Hong Kong : More than 80% of uber riders thinks that “uber brings benefits to Hong Kong.” Uber Newsroom. https://www.uber.com/en-HK/newsroom/hk10/
Kim, W. C., Mauborgne, R. (2015). Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant. 美國: Harvard Business Review Press.
I am really impressed by analysing the case of using Uber as an example of the blue ocean strategy in Hong Kong. It is interesting to see how the Eliminate-Reduce-Raise-Create grid works and how Uber shook things up in the market. Seems like it shows the strategy might affect both riders and the traditional taxi industry.
ReplyDeleteIn addition, it is new for me to know about how digital platforms trying to use technology and innovative business models to address long-term problems in traditional industries. It demonstrates consumers will benefit from improved services if the blue Ocean is implemented properly.
Thanks for sharing such a fascinating view of how the strategy can change an industry.