Meru Cabs A Spectacular Growth Story

Case Background:
Meru started operations in 2007 with a fleet of 45 cabs in Mumbai
By 2011 it had 5.500 cabs and operated in 4 cities Bengaluru, Mumbai,
Hyderabad and Delhi
Largest Radio cab operator in India and third largest in the world
Sales CAGR (2007-2011) was 79.2%, the highest compared to it three
other competitors Easy Cabs, Mega Cabs, Tab Cab
Radio cab industry was highly regulated and govt. regulations were state
specific
Market share of Meru cabs 37%






























Problem Statement:
The company is yet to break-even but it needs to find ways to sustain its
competitive advantage. For this the company needs to make decisions on
whether to expand into new cities, target different customers segment or modify
its business model. It needs to find a way to better manage drivers and be more
proactive in preventing failures.

Product
Sophisticate technology
Air conditioned cabs which use
green fuel
Mobile data terminal which had
a GPS system, a two-way GPRS
system and a digital touch
screen
Tamper proof digital fare meter
Indicators to signal whether the
cab is free or not
Regular servicing of cars
Assured Airport Service: It
was found that the cancellation
rates were the highest in airport
trips. To rectify this the
Assured Airport Service
service was launched where a
buffer of cans were stationed at
the office through alternate
arrangements.
Process
ERP - Oracle
Customer Acquisition
Bookings via call center
through IVR system or through
website
IVR also enables the customer
to find out he status of the cab
and it can also differentiate
between new and old
customers.
Booking Management
IVR -> Car Dispatch System ->
Match driver to booking
request -> Press Dispatch
Button -> System picks 5
drivers and the request is sent
to them -> Biding -> Winner of
the bid is selected -> SMS to
customer
Driver presses Reached
Button once he has reached the
destination and a SMS is sent to
the customer
Cab meter turned ON only when
the customer boards the cab
No waiting charges
Printed receipt to customers
Detailed tracking of drivers
Call center agents to inform
customers about delays due to
service failures
People
Rigorous recruiting and training
process candidate must be
willing to take risk
Certificates of excellence for
good feedback
Each driver feels like an
entrepreneur, invests in the
company and shares profit
Insurance and home loans for
the drivers
Housekeeping jobs for the
family members of the driver
Recommendations:

Due to the high fixed costs that the company has to bear in terms of repair
and maintenance and EMI for each car, the business model seems
unprofitable especially in states where the government regulated fares
are low. Thus, the company suffers from its inventory-based model. In its
future plans, the company may adopt an asset-light strategy like a pay-
per-use rental service to utilize any excess capacity that it has.
To increase the utilization of the cabs from only 75%, the company can
pursue a feature that allows cabs to star getting notifications of new trips
just as he is approaching the drop destination. This will help in getting
more trips per car thereby improving the earnings of drivers too. Meru
has the least number of trips per car, only 4, compared to its competitors.
To maintain competitive advantage, the company must continue to
remain technologically advanced. Features like the tracker service have
been very popular especially among women. The company must
periodically introduce technological upgrades that make the service
offering better. This is needed especially since the company doesnt
advertise heavily and relies on its product to sell itself
The company can try to improve its revenues from cabvertising to help
balance its revenues against the huge costs. It has the option of
advertising through voice-overs, LCDs and also on the body of the car. The
company can also use its GPS system and introduce location-based ads.
The current model of Meru is pickup and drop. Multi drop points could
increase the overall revenue of the company as well as the drivers. At the
same time, the driver idle-time will be reduced drastically.
Expand to Tier 1&2 cities- This will provide Meru with opportunities in
terms of increased revenues, bigger customer base, skilled drivers and
management personnel.
Link up with pubs to encourage people to call for cabs after drinks. This
will not only give the company business but will also help in projecting
itself as a brand that cares focusing on the empathy dimension of
SERVQUAL.
Submitted By,
Group No. 12
Harshitha | DM15217
Gaurav Dutta | DM15219
Rohit Rakshith | DM15247
Keerthi .P | DM15267
R.S.Pavithra | DM15134