Friday, December 20, 2013

Uber Taxis:Smart Pricing as distruptive innovation channel

In my last edition of Resonance Newsletter, I had written about the growing popularity of Bitcoin.Similar to Bitcoin's principles of determining the currency value based on the market transactions, I spotted the innovation from Uber Taxi.
Uber Taxis is a taxi service offered in Newyork and now present in 50 countries including Australia.In a established and crowded industry like the Taxi Services,Uber has found its market share by using smart pricing + app based technology+ great customer service as their foundation for their operating model.
Uber uses a pricing model called 'surge pricing' where the prices are set based on the demand for taxis at any point in time.
Based on the demand ,Uber's algorithm sets the price and many times it has been found in off-peak hours it turns out to be cheaper than normal taxis and during special events/ peak hours the prices are astronomically high.
Though there are laws against such pricing models which in US is referred to a 'price gouging',I believe it is an interesting model to creative disruptive innovation.End of the day,customer pays is she is willing to use the service at high price.
Share Markets,Airline Tickets,Last Minute hotel offers are other industries which adopt similar approach.
Closer look of this model is definitely a Resonvate pattern to think and resonate.

Resonvate : Innovation thinking propagated by Resonance which is based on the  premise that innovation can be enabled by looking at concepts, practices and industries from dissimilar disciplines

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