Country Market Report
Located in the westernmost part of Sahel on the Atlantic Ocean coast, Senegal is one of the key economic hubs in West Africa. Obviously, starting a business in Senegal is easy and affordable simply because the country has drastically reduced the capital requirements and the notary fees for company incorporation. One of the easiest businesses to take to Senegal is UBER – a technology-cum-transport platform where taxi drivers and or riders and their potential passengers or customers are connected through Smartphone apps. The following marketing plan will explore economic, political, cultural and regulatory factors when taking UBER to Senegal.
Economic conditions have the greatest influence on a business, its type notwithstanding. There are numerous economic circumstances that will determine the performance of UBER in Senegal. They include inflation rate, macroeconomic environment, unemployment rates, currency exchange rates and interest rates. Senegal has an estimated total population of about 15.4 million people with a total GDP of about 16.172 Billion dollars.(World population prospects , 2017).Globally, UBER hires drivers to respond to clients’ demands to be driven to their preferred destinations (Frue, 2017). In this regard, it is easier to schedule an appointment with an UBER crew since this mode is regarded as cheaper than traditional taxis. It is thus important to recognize that in Senegal, UBER will maximize its profits by operating in a sharing economy that is largely unexploited. There is an economic potential for UBER in Senegalese taxi transport sector as it will bring in new career opportunities (Frue, 2017) However, due to unfair competition against regular taxis, it is possible for UBER to face service restrictions or get banned from operating in Senegal.
There are several ways in which the Senegalese government intervenes in the general market and economy of the country. There are about 80 different political parties in Senegal and the country operates in a parliamentary system with a national assembly(.CIA, 2009) They have an independent judicial system and a president that is elected by the citizens. Like in any other country, political factors in Senegal include areas such as tax policy, trade restrictions, tariffs, labor laws, and political stability. First, taxi services are required to remit taxes to the government. This can be done by obtaining an employer identification number to business income r self-employment taxes and or employer withholding (Neeley, 2018). Senegal is, arguably, one of the most politically stable countries to invest in West Africa. However, UBER is likely to face political controversies in Senegal specifically in respect to taxi licenses, minimum wage laws in the taxi industry and commercial licenses as well (Neeley, 2018).
Every company has to remain in line with cultural requirements in the new markets the world over. To get accepted in the Senegalese market, UBER has to communicate its image as a global brand (Frue, 2017). This way, the Senegalese people especially in multi-ethnic cities such as Dakar can easily associate themselves with the company. All the same, as indicated above, the taxi-service provider ought to observe social events such as cultural practices or religious festivals of the local people in order to understand the market psyche and how to benefit from them.
In regard to the regulatory environment, there are numerous legal factors that affect the market environment as far as the Senegalese taxi transport sector is concerned. For instance, several laws such as environmental legislation, road and health safety, employment and consumer protection laws have been put in place to regulate the market (Neeley, 2018). It is highly likely that UBER will face bans or restrictions if it fails to adhere to the Senegalese labor and employee laws as well other technical usage laws (Frue, 2017). It is therefore essential to study and understand the relevant legal requirements before investing in the taxi business in Senegal.
Political and Regulatory Environment
Senegal has a conducive political climate as it is one of the most stable countries in West Africa. Senegal has well developed and ambitious plans for private investment such as infrastructure which makes it conducive for Uber to perform. Moreover, the country offers investment and growth opportunities for foreign investors (“Doing Business in Senegal: 2014 Country Commercial Guide for U.S. Companies,” n.d.). Business regulations and requirements in Senegal are lower making it possible for the cab to start a business easily. Using the ‘Emerging Senegal Plan,’ Senegal has stabilized its macroeconomic environment in reforming its economy. Uber has an advantage since the government of Senegal has prioritized improving infrastructure in Dakar such as the construction of roads across the country. Good roads will facilitate the business of cabs in Senegal.
The potential customers that Uber needs to serve are readily available in Senegal since it has a population of about 15.41 million as per the year 2016. Customers in Senegal are extremely priced sensitive, and UBER need to consider it as a big factor while entering this market. UBER is likely to have more customers in other cities of Senegal because Dakar is the only city with a substantial inner-city bus system. Moreover, the fares of this system are fixed despite being unreliable. The unreliability of these buses provides a good opportunity for Uber to penetrate into the market with ease.
Uber will face competition in Senegal from other taxi operators such as Ping, taxi-clando, car rapides and taxi-brousse. For instance, Ping will be the main competitor with its well-marketed vehicles with fair fees. Uber will need to evaluate the prices of various taxi providers before establishing the cab into business in Senegal.
Buyer Behavior Local and Global Competitors
Passengers in Senegal are more likely to welcome Uber services due to the current poor transport system in the country. For example, taxis-brousse and Peugeot 504 station wagons that provide transport services are unsafe for riding, uncomfortable due to overcrowding, and worse of it is that they are frequently unreliable for use. Uber is likely to solve these challenges facing passengers in Senegal. Lack of sufficient public transportation to the cities neighboring Dakar provides another opportunity for Uber (Demissie et al., 2016).
Uber faces global competition from several companies such as Curb, Lyft, Didichuxing. Therefore, Uber should move fast to establish a business in Senegal to increase its market share as compared to its competitors.
Uber should still use segmentation to determine the prices of transport in Senegal. Pricing positioning strategy will attract customers from other companies in Senegal. Since Senegal plays a major role in sports especially football, Uber should use sports in Senegal to market itself. For example, Uber might sponsor jerseys of some football teams in Senegal with its logo printed on them. Moreover, during events such as sports, Uber should provide special discounts to fans going to the venues and help them get to these venues faster.
Senegal is one of the most developed countries in Africa when it comes to road development. The country is characterized by paved roads that stretch out from one corner of the country to another (Demissie, Phithakkitnukoon, Sukhvibul, 2016). This automatically implies that transport by road is the major means of transport in this African nation. In order for UBER to do exceptionally well as it has do in other countries, the company needs to have regional strategies that cater for the needs of its future clients in line with their geographical locations.
Two major regional strategies will prove effective in entering Senegal as illustrated below;
Dakar the capital city of Senegal already has numerous taxis that are quite cheap hence UBER has great competition that it will need to overcome if it is to make any progress. The best way to go about this is to use the already existing taxi companies by rebranding them. Research shows that most taxis in Senegal do not have meters therefore customers get to negotiate fares. If UBER contracts these taxis, then rebrands and repairs things such as meters and the state of the cars, UBER will efficiently harvest the new market.
The rest of the county, that is, outside Dakar is mostly under the public means of transport. The buses and vehicles used are quite uncomfortable and unreliable for passengers. This is a raw market that is not heavily invested in by private contractors. UBER in this case can directly export its business model into the country.
Market entry in a new country is an important process that needs proper analysis before any decision is made. The kind of market entry mode that any company chooses determines the amount of control that the company will have in the new country (Gubik & Karajz, 2014). The type entry mode selected also comes with its own risks and disadvantages therefore, careful selection of the entry mode to be used should be done.
As of today UBER has done exceptionally well in most African countries especially Kenya. This proves that the business model can actually perform well in African nations and so UBER has minimal risks to incur. In entering Senegal, UBER will majorly base its operations in Dakar since this is the major business center in the country. A study conducted on the city shows that Dakar has numerous taxis that cruise through its streets on a daily basis.
To successfully enter such a competitive market, UBER has to use the licensing entry mode. This is a contractual strategy where the licensee (UBER) gives some or all of its rights to the existing taxi companies. This will be done through signing a contract where the existing taxi companies will take up UBER branding therefore operate as UBER Senegal at a certain fee. At the end of the day, UBER will be in a position of making a lot of profits at a low cost since it will use a small amount of money in starting off. The licensing strategy works to UBER’s benefit in the following ways;
· UBER will not fight with the already established taxi service providers instead it will work with them. One of the most common causes of failures during offshoring businesses, is the lack of triumph over the local service providers in the country that a company offshores its businesses to (Ang, Benischke & Doh, 2015). Most customers tend to hang on to what they are used to, they fear what they do not know. If UBER uses the local taxi services, Senegalese people will trust its services quickly. This translates to less cost on advertising.
· Licensing gives UBER a quick and speedy entrance into the Senegal market. This is because it will use already established structures. It is much easier to develop an already established business than to begin one from scratch (Gubik & Karajz, 2014).
After considering the consumer demands for transport services, I found that UBER industry will thrive well in Senegal since there was no such organization in the country. In order to achieve the long-term competitive advantage of the UBER industry in Senegal, it is necessary that a relevant market strategy is formulated to direct the industry and orient it to the objectives of the beginning and sustaining the business practices in the country. The marketing strategy will guide marketing as a bridge between the industry and the customers (Booms & Bitner, 1981).
Pricing system for the UBER industry considers many factors in the country such as the existing mode of transport and its operation such as prices and routes are taken, the country’s population, income distribution, urban centers and its population and the behaviors of consumers. Since the company is new in the country and the need to market the company, customer satisfaction approach will take the lead. The company will strategize on bringing value to the customer and meeting the customer needs conveniently. UBER system will then operate on a digital-based system where the customers must acquire the UBER app, check the vehicle near them and order for it using the app (Wallsten, 2015). The app will allow the customer to create their personal accounts which they will use to pay the fare. The charges will be $ 3 and will apply for all the vehicles during the day and $ 5 during the night. The amount charged is moderate and for the start, the company might not realize a lot of revenue but in future, there is an expectation of improvement.
Service strategy: as I had mentioned before, the customer is the target of the business. The operation of the company targets to bring value to its customers and to achieve that, comfortability of the vehicle is the key. Only vehicles which are in good state and well maintained fitted with entertainment devices such as screens will be allowed to operate with the industry. Vehicles should be Spacious and well-conditioned. Convenience and security of customers will be upheld and the company will ensure that the customers are protected from danger whether to their lives or property.
Distribution: due to the population distribution and the kind of services the industry will offer, the areas the company will operate will be in urban centers only. The operation will not exceed ten kilometers so that it only offers services to customers within the urban center and its environs. As of now, the business will run at Dakar, Touba, Saint-Louse, Thies, Ziguinchor, and Pikine. The above cities and town as will have different operating procedures based on the characteristic of the population in each center.
Promotion of the industry: in order to ensure that the company remains relevant in the market, the company will carry out marketing campaigns. A group of market analyst and consumer behavior will carry out mass campaigns across the named urban centers and sensitize the population on the existence of the company. During the first week of operation the company will take customers for free and also every new account will be offered a free first travel. This will promote the company and the service offered.it will also offer the customer the picture of how the company operates and targets to bring value to the customers. Other benefits which will be accrued to customers are insurance cover. Loyal customers will also receive annual rewards based on their regular use of our services.
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