Addison Lee is a private hire services company in the UK, founded in 1975. The business has been in operation for over 40 years offering a range of same day, international, mobile and customer focused delivery services provided through minicabs, taxybikes, coaches and private jets.
Originally known as a business to business company, Addison Lee has expanded its business to consumer offering, with 50% of the business going through the company app which was launched in 2009 and a quarter of traffic driven through the website (MarketingWeek, 2017).
As part of their rebrand strategy a bold new premium look and feel was unveiled in 2016, the new logo and colour palette in yellow, black and slate signifies their commitment to offering passengers quality and service (TheDrum, 2016)
Focused on enhancing the customer experience, Addison Lee has invested heavily in mirroring Uber’s London features, like off peak weekend fares, sharing your ETA and driver tipping, additionally, the company announced plans in September 2017 to increase the number of fleet drivers from 3,600 to 4,450 (Smith, 2017).
In increasing the consumer side of business, the company is dedicated to its personalisation strategy, where data is used to offer personalised deals via email or text based on previous journey behaviour. With the recent news that key competitor UBER has lost their operating license in London, Londoners will be seeking out travel alternatives, giving Addison Lee ample opportunity to expand its client base (MarketingWeek 2017).
As a newly appointed marketing assistant of the Addison Lee marketing team, you have been asked to write a report addressing the following task areas:
- Describethe Production, Product, Selling, and Marketing orientations
- Identifyand explain the orientation adopted by Addison Lee, and provide two (2) examples that demonstrate Addison Lee’s use of the approach
- Describemarketing environment analysis and discuss why it is important for Addison Lee, prior to setting a marketing strategy
- Considering the macro environment of Addison Lee, identifyand discuss one (1)
Economic factor and one (1) sociocultural factor that impact Addison Lee’s marketing decisions. Explain whether the factors create marketing opportunities or threats for Addison Lee
- Considering the micro environment of Addison Lee, identifytwo key competitors and discuss their potential threat to the business
- Identifyand explain two (2) internal environmental factors that could be considered as strengths or weaknesses of Addison Lee’s business operation
The Marketing Director has announced a new objective for the company:
To grow the Addison Lee car service business by 3% by targeting a younger demographic of 16 – 25-year olds by June 2018.
- Explainthe concept of market segmentation and its importance in planning a marketing strategy for Addison Lee
- Discusstwo (2) segmentation approaches that Addison Lee could adopt when segmenting the market for 16 – 25-year olds
- Using the 7ps, Identifyand describe Addison Lee’s current marketing mix using appropriate examples for each of the 7P’s
- Recommendchanges to the Product, Price and Promotion element of Addison Lee’s marketing mix (7ps) which will enable the business to achieve its desired objective, of 3% growth in their car service business by targeting 16-25-year olds
Task 1: Evolution of Marketing
Addison Lee is a UK based organization that is founded in the year 1975 and provides private hire services. The company is operating its business operations from more than 40 years and offering a variety of international, same day, mobile and client-focused delivery services via coaches, minicabs, taxi bikes and private jets. In 1975, company was founded by John Griffin as pace Croft Limited. It operates more than 4000 vehicles and earns more than £900m annual revenues (Addison Lee, 2017). This report includes different marketing aspects about Addison Lee on the basis of given case study. It describes the evolution of marketing, marketing environment of Addison Lee, marketing strategies and marketing mix for the company. At the end, it includes some recommendations to make changes in the 7Ps strategies of Addison Lee.
Production
In marketing, production is the process for developing the products and services with the objective of selling them to generate profits. In the case of Addison lee, production will involve the inclusion of new GPS system that is installed to track the vehicles of the company. Moreover, the company is introducing a mobile app that was introduced with the objective of shifting its business model to business to consumer (Armstrong, et al, 2015). These both are the major part of its production as both of them have brought up the sales of Addison Lee.
Product of the Addison Lee includes the hiring services, which are provided to the travellers in UK through taxi bikes, minicabs, coaches, jets etc.
When the products and services are introduced, it is vital to sell it to the targeted customers. Addison Lee offers its services through its website and mobile application, so it generates 25% of its sales from its website and 50% from mobile app. It is increasing its customer base from both the application and website. In addition to this, the number of downloads on Google Play Store has been increased since its launch that is the obvious evidence that the business of Addison Lee is growing and its sales strategy is effective (Baker, and Saren, 2016).
Marketing orientation is the philosophy of company that is emphasized on finding and satisfying the needs of customers via its products. It has introduced a mobile application, ETA model, driver tipping service and sending personal mails to the customers about their offers and discounts. Moreover, it is offering discounted deals and altered its company logo to give a superior look.
Task 2: Marketing Environment
The orientation that is implemented by Addison Lee is targeted to overhauling the branding and marketing strategy of the company. The mission of Addison Lee is to gather the traffic from new target market. It has changed the brand logo that has different look. The company has done this to grab the attention of market (Andrews, and Shimp, 2017). It is making investment for enhancing the customer experience. To attain that, it is working on the information system and providing GPS service and ETA. Addison Lee is giving value deals and customized offers to its customers by sending them personal e-mails. It has emphasized on weekend fares and tipping the drivers. It is increasing number of vehicles to handle the increasing demand for private hiring services.
Marketing Environment and its importance to Business
Marketing environment can be defined as the internal and external factors, which affect the ability of the company to maintain the growth and develop relationships with customers. These factors affect the performance of organization and its position in the market. It is very important for the Addison Lee to conduct SWOT and PESTLE analysis for analyzing its market. When it is about developing marketing strategy, they should consider both micro and macro environmental factors. It is important because lack of awareness about environment can increase the chances of failure of business strategy (Dawson, 2014). It is very important to analyze the external factors, like; political, economic, technological, social and legal factors, which may impact the growth of company in a specific market. Furthermore, SWOT analysis assists in understanding the strengths, weaknesses, threats and opportunities of the organization. So, the managers and leaders focus on environmental analysis before creating a new marketing strategy.
Under environmental analysis, economic factors include such as; inflation rate, GDP and buying power of customers. These factors have large impact on marketing decisions of company. Addison Lee operates its business in London and it is one of the richest cities in United Kingdom the efficiency to adopt modern technologies (Keller, 2009). 80% of population in UK is from the urban area that shows that there is the good market for taxi hiring firms. Currently, rate of inflation has increased in the year 2017 as compared to year 2016 that is affecting the purchasing power of people. Due to this, people prefer to travel in public transportation than private taxies. It will have an adverse impact on the business and growth of Addison Lee in UK. Thus, it is a threat for the company.
Macro Environment Analysis: Economic Factors
These factors focus on the society, family, media and other social factors. These may affect the opinions, buyer behavior and attitudes of the customers. The country has urban population and customers are using advanced technologies. It forces the customers towards taxi hiring services in London. In addition, the people are getting the benefits of carpooling services through digital marketing. There is a perfect market for Addison Lee’s services (Luttrell, 2016).
From both the above mentioned factors, social factors are creating market opportunities for Addison Lee.
In London, there are two major competitors for Addison Lee, i.e. Uber and Hail. Both of these organizations have been offering the app and web based services and operating the business very well.
Hail is one of the biggest competitors of Addison Lee, which is owing to free rides and significant discounts that it provides to customers. It can force Addison Lee to offer the free coupons and discounts (Percy, 2014).
Uber was the biggest player in the London taxi hiring industry, but currently, the Uber’s license has been cancelled, which is a good sign for the growth of Addison Lee in UK. Before this, Uber was the biggest threat for the case company.
Strengths
One of the major strengths of the company is that it has diversified its service range and attracted various customers. By this, it has become one of the well-established brands in London. Other strength of Addison Lee is its mobile applications. When the people are going mobile and they have access to the smart phone, it was imperative that it introduces it application. In 2009, it launched its mobile app for booking the rides (Yuan, 2013).
Weaknesses
Addison lee has established its business in taxi hiring services, but still it is behind its competitors in the area of carpooling services. It is one of the major weaknesses of company as there is the increase in business of carpooling services. Apart from this, the organization has maintained its brand image in providing the better services. But, the organization is not taking the feedback from customers (Thorson, and Moore, 2013).
Market Segmentation and its importance
Market segmentation is the approach of categorizing the whole market in different segments on the basis of different characteristics, like; income, race, demography, age group, purchasing power etc. This process is used by the organization to target the rights customers as per the products. Under this, the company divides the customers according to the similar demands, choices and preferences. For strategic planning of Addison Lee, it is very important to segment the market. By market segmentation, the company will be able to target the right customers and implement the strategies accordingly. It will assist the organization in approaching the right set of audiences (Shimp, 2008).
Demographic:
Socio-cultural Factors
It is the most important and common segmentation approach that is used by an organization. Demographic characteristics include sex, age, occupation, income, education level, religion, social class and ethnic status. At Addison Lee, this approach can be used as they have targeted the market on the basis of age group, i.e. 16-25 years old. People are in this group will come under an income level, thus giving a segmentation group to the organization. At the same time, the company can consider some other factors, like; family size, income, sex etc., which will assist the organization in targeting the right people for its taxi hiring services (Young, 2014).
This approach of market segmentation is very innovative in the nature because it only emphasizes on why the customers purchase the products. This approach shows the behaviors of people towards products, which may include the loyalty, usage and benefits of services. By considering this approach Addison Lee needs to take the feedback and response of customers and modify the services accordingly. The company can consider the benefit responses on the basis of brand image, economy and resale value of services (Oh, and Oh, 2017). The usage response categorizes the users based on medium, heavy and light users and then targets them. Thus, for the given objective, i.e. “to grow the Addison Lee car service business by 3% by targeting a younger demographic of 16 – 25-year olds by June 2018”, above segmentation approaches are beneficial and will assist the company is attaining the objective.
Product
Product strategy of the company includes the design, value, quality, technology and packaging of the products, which are offered by it. Addison Lee is offering the private hiring services in London, United Kingdom (Skok, and Baird, 2005). Product of the Addison Lee includes the hiring services, which are provided to the travellers in UK through taxi bikes, minicabs, coaches, jets etc.
Price
Pricing of a company may include different strategies, like; penetration, skimming, value based and cost based, which are adopted by the organization to sell its products and services to the customers. Addison Lee is implementing price skimming strategy, under which it is penetrating the marketplace by keeping the prices lower and in this way it is skimming the market. There are some premium options, which are available to Addison Lee (Bitsch, et al, 2017).
Place
The company is operating its business operations in 350 cities since its establishment in the year 1975 (Addison Lee, 2017).
Promotion
Task 3: Marketing Strategies
For promoting the services, company is providing various discounts and offers by customized deals and giving free and loyalty rides to its regular customers. The company is providing free coupons for the first time users and giving referral benefits (European Commission, 2016).
People
At Addison Lee, the management is well-experienced and drivers are well-trained about the values and ethics of company and it also made familiarized with the technology, which are getting used in the cabs and taxies. Human resources are the major aspects at Addison Lee.
Processes
Addison Lee utilizes its mobile application and website for its business operations. The customers can book their ride using the app on their smart phones and drivers track their location. After taking the ride, they can pay their bills using debit card, credit card, cash, Apple Pay, PayPal or Addison Lee’s wallet.
Physical Evidence
Currently, Addison Lee has changed its logo to give it a premium look. It has different vehicles, like; jets, Toyota Cars, taxi bikes etc. for its target audiences that enhance the brand image among people (Young, 2014).
Addison Lee should make focus on the pushing its mobile app to each smart phone user in the state, it is running in. The company should completely operate its business on the basis of app model and stop investing money on company’s website maintenance. It should diversify its service range and make the carpooling services stronger, which will assist the organization in increasing in customer base. With its hiring services, the company should offer free rides and quality services to retain the customers (Wallsten, 2015). It should fix built-in screens in its taxies and cars, which will make it easy for the drivers to follow the navigation map and route. In addition to this, it should install the computer gaming system in the vehicles, so that children can enjoy the ride. It will assist the organization in attracting the customers towards its services.
It is the major important part of the marketing mix strategies. Addison Lee should make focus on the pricing strategy and it should implement the cost based pricing, that will be instilled with the occasional coupons and discounts to its first users and rewards to the regular customers.
The company should promote its services on the social media, like; Facebook, Twitter, Instagram etc. The organization need to make focus on its promotion among its targeted audiences. It should target the young people, i.e. age group of 20 to 29 years, as they are using social media and networking sites more than others (Rose McGrory Social Media Ltd, 2017). It can be evidenced by looking at below graph:
Figure 1: Social Media Users in UK
(Source: Rose McGrory Social Media Ltd, 2017)
It should allow the customers to post their reviews and feedback about the rides and give ratings on social media sites. It will assist the organization in enhancing its brand image and its hiring services (Addison Lee, 2017).
Thus, Addison Lee is offering the hiring services by using new and innovative ideas. The report shows that marketing environment and its strategies are beneficial for the growth and success of organization.
References
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