(Tiểu luận) executive reportgrab vietnam’s largest ride hailing application,strategies and prospects

Many established firms areexpanding services such as food delivery, service hire, and shopping services.Source:https://www.vietnam-briefing.com/news/vietnams-ride-hailing-industry-trends

FOREIGN TRADE UNIVERSITY

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EXECUTIVE REPORT

Grab - Vietnam’s Largest Ride-hailing Application,

Strategies and Prospects Subject: Principles of Marketing

Lecture: Nguyen Thi Thu Thao

List of student

Tran Ha Khanh Linh 2215127003 K61MJ1 100%

Le Dam Mai Thy 2215127007 K61MJ1 100%

Le Thi Nhu Quynh 2215127025 K61MJ1 100%Doan Nguyen Quynh Nga 2215127027 K61MJ1 100%

INTRODUCTION 2

1 SITUATION ANALYSIS 3

1.1 Market summary 3

1.2 Demographics 4

1.3 Market Growth 4

1.4 Market Trend 5

1.5 Macro environmental factors that have impacts on the business (According to PESTLE model): 5

1 Political + Legal 5

2 Economic 5

3 Social 6

4 Technological 6

5 Environment 6

1.6 Competition (Market Share) 7

2 COMPANY INTRODUCTION 7

2.1 Mission 7

2.2 Vision 7

2.3 Sale 7

2.4 Cost 7

2.5 Profits 8

3 MARKETING STRATEGY 9

3.1 TARGET MARKET 9

● CUSTOMER PORTRAIT: 9

● PAIN POINTS 10

● CRITICAL SUCCESS FACTORS 11

3.2 VALUE CHAIN COMPARISON 12

● VALUE CHAIN 12

● CORE COMPETENCE 13

● COMPETITIVE ADVANTAGES 13

3.3 POSITIONING 14

● POINTS OF PARITY 14

● POINTS OF DIFFERENCES 14

● VALUE PROPOSITION (PRICE, BENEFITS) 14

● PERCEPTUAL MAP 15

● BRAND MANTRA 15

3.4 MARKETING MIX 15

4 CONCLUSION 19

REFERENCES 20

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Ride-hailing services facilitate the connection between consumers and drivers toprovide transportation through digital platforms, such as mobile apps This decreasesthe time for consumers to search for a service provider and negotiate a price Similar

to other sectors in the digital economy, ride-hailing relies on network-based businessmodels, where firms benefit from establishing and connecting a network of consumersand drivers The value for consumers is derived from factors like the service quality,convenience of use, and digital banking innovations

Vietnam’s ride-hailing industry revenues could reach US$4billion by 2024, while it isforecasted to grow at a compound annual growth rate (CAGR) of 16 percent between

2020 and 2025 The industry has witnessed a surge in consumer demand, newentrants, and innovative products in recent years Many established firms areexpanding services such as food delivery, service hire, and shopping services

In the first half of 2019, the firm conducted 62.5 million trips, accounting for 74.6%

of the market share, and marginally contributing 73%

Gojek is steadily reducing the length of the Be Group, which is ranked second Be has12.4% of the local ride-hailing market, while Gojek, from Indonesia, controls 12.3%

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The following report looks at the ride-hailing industry and provides a comprehensiveoverview of Grab as well as an examination of its operations in terms of 4 parts:

The report finds that Grab's prospects in its present position are favorable since itoffers the shortest wait time, the greatest number of drivers, and the best technologicalquality

1 SITUATION ANALYSIS

1.1 Market summary

Asian companies predominantly rule the ride-hailing sector in Vietnam FollowingUber's exit from the Southeast Asia region, including Vietnam, Grab – a Singaporeansuper app – emerged as the leading ride-hailing platform in the country, holding over

70 percent of the market share Additional major players include Indonesian Gojek(formerly known as GoViet) and Vietnamese startup Be Group

The Vietnam Ride-Hailing Market is forecasted to grow at a CAGR of 22.10%between 2023 and 2028, reaching a market size of USD 2.61 billion by 2028 TheCOVID-19 pandemic disrupted numerous industries, including transportation, and

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impacted the Vietnam ride-hailing business However, when COVID-19 casesdiminish, the market stabilizes, and ride-hailing service use among passengersincreases.

The ride-hailing companies have improved options and expanded operations to beoffered in mobile applications The shift has the potential to enhance public charginginfrastructure and increase consumer exposure to EVs Consequently, Hanoi isexpected to grow at a higher rate than other cities in Vietnam

1.2 Demographics

1.3 Market Growth

The revenue of the ride-hailing and taxi segment in Vietnam increased slowly from

2017 to 2019 from 2.6 to 3.1 million US dollars before falling to 2.1 million USdollars in 2020 The plummeting of the revenue in 2020 was explained by the impact

of the COVID pandemic However, in the context of the epidemic and socialdistancing, to retain customers and maintain operations during the pandemic, manybusinesses have promoted the development of delivery and market and household

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services in 2021 The revenue of the ride-hailing and taxi segment in Vietnam willincrease in 2021 to reach 3,115 million US dollars, and growth was stable in thefollowing years and predicted to reach 4,5 million US dollars in 2025 The VietnamRide-Hailing Market size is expected to grow from USD 0.96 billion in 2023 to USD2.61 billion by 2028, at a CAGR of 22.10% during the forecast period (2023-2028).

The Ministry of Transport has stopped the pilot phase of Grab and established a newlegal corridor, Decree 10/2020, effective April 1, 2020, to promote competition andpromote long-term business operations

2 Economic

Vietnam has achieved significant achievements in economic development andimproving people's lives However, as the majority of Vietnamese people are still atthe middle and low income with an average GDP per capita of 3,759 USD, Grabdifficulty determines what types of services suit their budgets when forming businessstrategy Then, they solve problems by adapting products and services to the localarea, offering low-cost services to the market Grab can still conduct business inVietnam and be profitable that suits the economic situation and affordability ofconsumers

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3 Social

In 2014, GrabTaxi was launched in the Vietnamese markets of Ho Chi Minh and

Hanoi However, regarding VTV statistics, the number of motorbikes in Vietnam in

2018 reached more than 58 million vehicles and account for 86% of motorbikes

participating in traffic in 2019, showing that the demand for motorbikes in Vietnam

is the main one Grab has quickly deployed GrabBike service to integrate into

society

While Uber allowed only people with credit cards to use Uber's services in order tocontrol cash flow, the habit of using cash at that time was still the most popular inVietnamese consumer culture Thus, Grab lets consumers pay in cash when enteringthe Vietnamese market, which makes them more willing to use the service Finally, alarge number of consumers have been sucked away by Grab

4 Technological

According to Statista's survey in May 2021, Vietnam is in the top 10 countries withthe highest number of smartphones in the world, about 61.3 million As the cost ofusing 3G, 4G and Internet in Vietnam is the cheapest with 3,000 VND/GB ofhigh-speed 4G, Grab can strongly approach customers In the 4.0 era, onlinepayment methods are gradually expanding, Grab deploys many other methods such

as ATM cards, credit cards, Momo and Moca e-wallets to help customers payconveniently and quickly Especially the birth of GrabPay, GrabPay Credit, Grabchatshows that Grab thoroughly applies technology to services

traffic congestion, and other environmental factors in the countries However, thecompany has shown a commitment to addressing these issues through initiatives byreducing its carbon footprint and promoting sustainable transportation solutions.

1.6 Competition (Market Share)

In Vietnam, Grab remains the leading platform accounting for 73% of the marketshare in 2019 The following positions are Be with 16%, Gojek with 10% respectively

2 COMPANY INTRODUCTION

2.1 Mission

In 2019 in Jakarta, Indonesia, Grab set the goal of implementing the mission

"Technology for Community" according to the roadmap to 2025

2.2 Vision

In 2018 in Ho Chi Minh City, Grab officially announced: "Smart city aims for a futurethat includes seamless transportation, food delivery, logistics, and non-cash paymentsfor Southeast Asia people through one app.”

2.3 Sale

Grab Vietnam's revenue in 2018 reached 2,194 billion VND and increased to 6,384billion VND in 2022 In recent 5 years, Grab Vietnam has generated about 19,067billion VND in revenue

2.4 Cost

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2.5 Profits

In 2022, Grab Vietnam achievedrevenue of 6,384 billion VND and pre-tax profit of

329 billion VND Previously, Grab Vietnam's first profit was in 2020, reaching 243.4billion VND

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Primary Target Market Secondary Target Market

Gender Male & Female Male & Female

Income Middle - Moderate High Income Low - Middle Income

Occupation Self-employed, Working Adults,

Unemployed & Retirees

Students, Part-timers & Working

Adults

Psychographic Self-Actualiser, Innovators, Esteem

Seekers & Strivers

Adventurer, Contented Conformers,Extrovert & Sociable

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Grab’s users in VietnamCre:Statista

- Demographic:

Grab's overall target is Vietnamese people of both genders First segment is the 25-50age range, who are middle to high-income earners such as self-employed, workingprofessionals, jobless, and retirees The second target market focuses on those aged 18

to 24 with occupations such as students, part-time workers, and employed

- Geographic:

Grab capture their target audience all densely populated urban cities in Vietnam like

Ho Chi Minh, Hanoi, Bac Ninh, Quang Ninh, Hai Phong, Hue - Da Nang, Lam Dong,Bien Hoa - Vung Tau City, Ho Chi Minh City, Can Tho City, Depending on thelocation, Grab applies transportation services with different prices (Lich.H., 2017)

- Psychographic:

Grab’s primary target market under psychographic factors will be self-actualizers (A.Maslow, 1943), who prioritize their wants to enjoy the ride, not just as a means oftransport On the other hand, the secondary target market are pleased conformerswhereby they prioritize their needs over wants, where the rides are essential

● PAIN POINTS

After conducting a survey to find out customer’s pain points, here are the results:

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- Driver Availability: Depending on the time of day and location, users may sometimes

find it challenging to secure a ride promptly, leading to longer wait times

- Safety Concerns: Users may worry about the behavior of drivers and the security of

their rides, especially commuting at night

- Surge Pricing: High demand periods often makes rides more expensive, which affect

cost-conscious customers

- Payment Methods: Issues with cashless payments or misunderstanding the payment

process can lead to difficulties for customers

- Inaccurate Addresses: Users providing inaccurate pickup or drop-off locations

causes confusion and delays for both drivers and passengers

● CRITICAL SUCCESS FACTORS

As Tam et al (2018) studies about Grab overtaking Uber: There are three turningpoints with provided by three success factors to explain Grab achievement over time

as follow:

- Partnership with local taxis: Grab firstly encountered the company with 30 taxis,

the first partner and the first group of drivers using their platform At first, therewas no local ride-hailing regulation, Grab played a vital role for linking betweenlicensed taxi drivers, private freelance drivers, and customers by themselves asthey attracted more drivers and built trust from local ventures (Lee, 2014)

- Solving real social pain points: Grab originally addressed safety and service

quality issues in the industry Unlike Uber mainly serving high-end customers(Tam et al, 2018), Grab accepted cash payments and produced real-time locationsharing, an emergency button to contact the nearest police station

- Positioning brand consistent with target customers: Grab positions itself as a

casual brand, Grab wanted people to remember them with a distinctive green color

It ranges from the brand identity to the drivers' uniform, giving the viewer a sense

of closeness and friendliness

- Technological innovation: Grab makes use of technology to provide clientsinstant trip booking, position-tracking of the car, fare and simple payment

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3.2 VALUE CHAIN COMPARISON

+ Includes the development

and maintenance of the Grab

app, as well as the

infrastructure required to

support the platform

+ Be is making efforts toattract more drivers byestablishing a community of

Be drivers with manypreferential policies It can besaid that this is a highlight ofBe

+ Managing andonboarding drivers,ensuring the availability ofvehicles, and coordinatingthe delivery of goods andservices

Operations + The coordination of

transportation services

between drivers and

passengers helps manage ride

requests and ensures smooth

platform operations

+ Be Group has VietnamProsperity Joint StockCommercial Bank (VPBank -Code: VPB) - one of BeGroup's strategic partnersbehind financially supportingthis start-up and operations

+ Matching of drivers withpassengers or deliveryorders, managing the digitalplatform, infrastructure,and ensuring a smooth,efficient service experience

Outbound

Logistics

+ The distribution of data and

information between drivers

and clients to provide

real-time updates on ride

requests, driver locations, and

arrival times estimation

+ Exchange and givefeedback between theconsumer and Be Groupduring the service usage viathe Be application

+ Gojek's digital platformfacilitates the coordinationand tracking of the timelyand accurate transportation

or the delivery of goods

Marketing

& Sales

+ Focus on attracting and

retaining both drivers and

+ Focus on attracting bothdrivers and customers touse the platform viaadvertising campaigns,referral programs,partnerships withmerchants, and promotions

Services + Providing a seamless and

convenient experience for

both drivers and passengers

with customer support, dispute

resolution, and ensuring the

safety and quality of the

transportation services offered

+ Cooperate with airlines,hotel groups, bus, train, toprovide multimedia solutions,one schedule, one payment tobecome Vietnam's nationaltransport platform in thecoming years

+ Offering motorbikeride-hailing (GoRide),courier (GoSend), andpersonal shopping(GoMart) services

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● CORE COMPETENCE

- Connect many drivers, wide coverage everywhere:

+ Increase convenience for customers in terms of traffic jams and rush hours,

many Grab drivers in many places save time traveling and waiting forcustomers

- Technology Capacity:

+ Grab integrates many features on one application, such as food-drinks

ordering, delivery, driver connection as well as offers a range of payment andfinancial services with mobile wallets, digital payments, even financialproducts like insurance and loans

- Reasonable Service:

+ Unlike traditional taxis with fixed human resources, Grab is creative in

applying the sharing economic model, using available resources, Grab driversare freelancers and have the means, so Grab does not need to pay a lot ofmoney to buy a car for consignment

=> These factors help Grab become Southeast Asia's leading super app, with a wideuser base and a valuation of over $10 billion By offering multiple services through asingle app, Grab aims to provide a seamless and integrated experience to its users

● COMPETITIVE ADVANTAGES

- Strong Regional Presence:

+ Grab operates in multiple countries across Southeast Asia, includingSingapore, Malaysia, Indonesia, Thailand, Vietnam, and the Philippines Thisextensive regional presence gives Grab a wide customer base and allows it toleverage economies of scale

- The number of the driver is large:

+ Comparing in terms of income and bonus discounts between Grab, GoJek,

and Be in the market, Grab will be slightly better because Grab's cost per ridewill be higher Because of high fares, Grab drivers' income is also higher thanthat of their two competitors Hence, the number of recruit drivers of Grab isvery large

- Safety and Security:

+ Prioritizes safety and security measures for both passengers and drivers It

implements features such as driver background checks, real-time GPS tracking,and an in-app emergency button These measures help build trust andconfidence among users

- Customer Loyalty Programs:

+ Grab has implemented customer loyalty programs such as GrabRewards, that

offer benefits and discounts to loyal customers to foster customer retention

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