How Ola and TaxiforSure caught Meru napping and less

How quickly perception of winning companies change. There was a time when Meru cabs was “the choice” for most travellers. Meru competed with the traditional taxi union operators and won based on promptness and easy availability.

New players like Ola, Taxi for sure etc entered seeing Meru and turned the game on Meru itself. They not just provided the same quality but at half the price at which Meru charges passengers. Meru initially ignored these new players only to get rolled over:

Neeraj Gupta, founder and managing director of Cabs, was under the impression that other cab services in India such as Olacabs and might go out of business.

“We started off thinking we would be creating business, which would be a game-changer and we would be converting an unorganised market into an organised one in the legal way. Then, there was the so-called market disruption with players coming in and creating an app where any car or tourist taxi can be attached and one can avail of the services. We thought this might not last long and the government would come hard on it; we decided we will continue doing what we are doing and wait and watch,” said Gupta.

Speaking at the Entrepreneurship Summit organised by the Entrepreneurship Cell of the Indian Institute of Technology Bombay, Gupta added he realised the need for capital for turning things around. Meru Cab Company plans to raise $100-150 million to fund expansion needs and technology upgrades.  “We’re talking of a large market being created. We were a traditional taxi company and we realised we also need to change. The market is going bigger and getting converted into an industry. So it is a good thing. At times, we wondered if this segment would ever get organised and if people would look at it seriously. But with new players in, there is more awareness and consumer want to use these services,” said Gupta.

A nice case on game theory. In the game parlance, Meru did not provide any threat to these entrants and assumed the incumbency factor will remain. But the new players were smarter and converted the niche available to them into a wide margin. They cut prices sharply at the same quality capturing the market.

Now Meru has to catch up to these new guys. What will it do? Cut prices further? I would imagine most taxi firms are already operating at marginal costs and cannot lower prices further. So at best it can match them. Or Meru can change its strategy and make the service a premium offering just for the high-end passengers.  Keep watching the taxi space in India..

2 Responses to “How Ola and TaxiforSure caught Meru napping and less”

  1. Ashish Says:

    http://stratechery.com/2014/uber-fights/

    You might find this link interesting

  2. rohitmital005 Says:

    I always book cab online with these popular car rental companies because they provide best cab service in India.

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