GROUP ASSIGNMENT

24 MARCH 2021

THE FAILURE OF
UBER IN VIETNAM

PRINCIPLE OF MARKETING (MKT 101)

Lecturer: Ha Nguyen Anh Trang
Class BA1504
Group:
Nguyễn Châu Ngọc Khanh
Nguyễn Thị Thu Hoài
Cao Hoàng Mai
Lê Thị Thanh Hiền GROUP ASSIGNMENT – MKT 101 1
Hồ Đăng Duy Bảo
Nguyễn Thị Anh Thư
 Table of content
A. Opening…………………………………………….……………………………….3

B. Overview……………………….…………………….……………………………3-5

I. Introduction……...…………………………………….…………………………….3

II. How Uber works……………………………………….………………………......3-4

III. The story of Uber in Vietnam and South East Asia (ASEAN)………………….4-5

C. Issues………………………………………………….………….…………............5-9

I. Marketing research, segmentation of Uber in Vietnam.….…………………………5

1. Failure in selecting target customer………………………………………………..5-6

2. Failure in geographic segmentation (Abusing One-Size-Fits-All Model)….…...6

3. Failure in catching customer’s psychology…………………………………………6-7

II. Marketing environment ……………………………………………………………7-8

1. Competitor……………..………………………………………………………………7

2. Political environment……….………………………………………………..………7-8

III. Service problems……………….…………………………………………….……..8-9

1. Lack of motorbike rides service……………………………………………………….8

2. Driver’s map-reading skill ……………..…………………………………………….8

3. Payment method……………………………………………………………………..8-9

4. Legitimacy…………………………………………………………………………….9

IV. Solution……………………………………………………………………….......9-10

D. Conclusion…………………………………………………………………………..10

Reference list………………………………………………………………………..11-12

GROUP ASSIGNMENT – MKT 101 2

A. OPENING

Business enlargement worldwide is the dream of thousands of companies and an unavoidable and

intelligent step to gain publicity and increase revenue and profit. Entering a new market is not a

thorny and complicated objective. There is a saying that is in some way related to expanding business:

“high risk, high return“. However, the return only comes when the business well-prepared,

research, and plan an integrated marketing strategy. If not, it would lead to colossal defeat. A typical

example of this situation is Uber's failure in the Vietnam market. The essay would analyze and point

out some marketing blunders and recommendations for Uber in Vietnam.

B. OVERVIEW

I. Introduction

   Uber was established in March 2009

which is an American multinational

corporation that provides

transformation service through a

technology application. Now, Uber is

present in 71 countries and nearby

900 cities around the world (Uber

Source: personneltoday.com
Estimator, 2021). The idea of Uber was born on a snowy night in Paris in 2008 when Kalanick and

his friend Garrett Camp had trouble getting a taxi, both of them thinking of a smartphone app that

would make the car search process simpler. When he returned to San Francisco, Garrett Camp bought

the name UberCab.com and persuaded Kalanick to operate the company. UberCab was officially

launched in 2010 as a private luxury car service for the executives of San Francisco and Silicon

Valley.

II. How Uber work

To access Uber, customers must download the app, create an account, and enter their credit card

information. When they're ready to book a car, they simply open the app and select destination. The

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app will display the available drivers in a nearby location and usually reply within seconds that the

driver is on the road.

When the driver who has the right to accept or refuse a customer’s request comes to pick up the

customer, the customer can observe the driver's progress on the map. Uber's app allows customers to

see the driver's name and the driver's quality rate, which ranges from 1 to 5 stars. A customer may

reject a driver with a low rating. They can also contact the driver by phone.

At the end of the trip, the travel fee will be automatically deducted from the customer's account.

Email receipts are sent to the customer after the trip is complete, at which point customers are

encouraged to rate the driver. Uber keeps a less part of the total fare, the driver keeps the rest.

The uber price is determined at the time and distance of the trip as measured by GPS. Uber's ride-

hailing service is usually priced lower than a private limousine service. During rush hours, the price

can increase from 1.5 times to 7 times. The exact algorithm behind these changes has still not been

published.

III. The story of Uber in Vietnam and South East Asia (ASEAN)

Uber first entered the Southeast Asian market in 2013 with the same business model operating

successfully in the US, until 2014, Uber officially attended the Vietnamese market. Specifically, uber

first appeared in Vietnam in June 2014 in Ho Chi Minh City. By November 2014, this application was

launched in Hanoi and then moving to other cities in Vietnam like Da Nang or Nha Trang. However,

due to planning the wrong strategies, Uber did not really get the favor of Southeast Asian customers

in general and Vietnamese customers in particular.

After 4 years - a long "burning-money"

period, Uber decides to sell its business in

ASEAN to the competitor Grab. To be

specific, Grab got an acquisition the uber

business network in 8 Southeast Asia

countries such as Cambodia, Indonesia,

Source: carro.sg
Malaysia, Myanmar, Philippines, Singapore, Thailand ,and Vietnam., with $6 billion. In exchange,

GROUP ASSIGNMENT – MKT 101 4

Grab gave Uber 27.5% of its stake in this market (Russell, 2018). This acquisition has closed Uber's

journey in the Southeast Asian market, including Vietnam.

C. ISSUES

I. Market research, segmentation of Uber in Vietnam:

When a colossal enterprise starts setting foot in

a new market, the most ultimate advantage is

reputation. However, reputation or fame is not

everything; the critical factor for success in the

new market comes from comprehending and

deep insight into customers’ gain or demand-

Uber in Vietnam.
what they want to be heard and serviced. Thus,
Sources: https://www.techtimes.vn/2-tuan-nua-toan-bo-tai-xe-
uber-phai-chuyen-qua-grab/
it could be seen that one of the biggest reasons

explaining the question why Uber failed in the Vietnam market is Uber did not research carefully, and

the Vietnam market is far different from the US market.

1. Failure in selecting target customers:

As we know, Uber

specialized in

providing high-end

special car services or

premium service

classes. Besides, Uber

gave a unique value

Uber's app. Source: https://woxapp.com/our-blog/how-to-build-an-app-like-uber/

proposition to

promise with their customers: “The smartest way to get around”. Then, they provide customers

good services in transporting. Therefore, when Uber first entered Vietnam, they quickly grabbed the

top wealthy luxury card customers and believed that they would stay with them long-term. However,

the reality is way far from their expectations. The problem is that the value proposition, target

segments, and service offerings of Uber were not matched with most Vietnamese inhabitants.

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Vietnam is still a developing country, and according to Worldbank, Vietnam is a low-middle-income

country, and Per Capita Income in 2019 of a Vietnamese was $9000/ year (Worldbank, n.d., para.1).

Paying a huge amount of money for transporting is not what a low-middle-income person would top

priority. In addition, Uber's terms determined its targeted customers and segmentation is the middle-

upper class (accounts small scales and percentage in Vietnam population) will lead to many

consequences such as: not reaching the profit target and unsustainable development. Hence, Uber

cannot maintain its achievement.

2. Failure in geographic segmentation (Abusing One-Size-Fits-All Model):

We can see that Uber is a successful company relating to booking luxury cars in The United States

and could be considered as one of the trailblazes or the market leader regarded technology taxi

industry. When Uber expands its market in Southeast Asia in general and of Vietnam in specific not

only the company but also mass media publicity put numerous suspense for the enlargement.

Nevertheless, it turned out that Uber could bring out disappointing performance and failures. Unlike

other markets (the US or Europe market), Vietnam is discrepant: Vietnam is a country where people

are familiar with transporting by motorbikes. Thus, only serving luxury cars is not a suitable way to

serve consumers in Vietnam.

Moreover, Vietnam’s urban transport is heterogeneous and not always consistent with Uber’s core

service. For example, in Hanoi, motorbikes are common means of transportations to limit the number

of cars, but until 2016, Uber had introduced UberMotor (Môi trường và đô thị, 2018, para.13).

Because of failing to “localize”, Uber has always been seen as a foreign company. Making a small

comparison with Grab, they firstly cooperated with traditional taxi companies to catch customer’s

psychology and then change some marketing strategies to accustom to Vietnamese. According to

Vietnambiz, Uber just “copies and pastes” activities in the US to other markets. However, in fact,

they need to “copy, translate and paste” to be succeeded in new markets (vietnambiz, 2018,

para.7).

3. Failure in catching customer’s psychology:

When Uber firstly jumps into Vietnam’s market, they used the same way used in other markets to

serve customers. And the result is that they can not attract loyal customers. Otherwise, Grab shows

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that the service puts customers' safety first when allowing trip schedules, having emergency call

numbers in dangerous situations, etc (Anh, 2018, para.10). Small changes of Grab made them appeal

to more and more customers while Uber still remained the same.

II. Marketing environment:

1. Competitors:

a) Difference views on cooperation:

Commonly, as entering a new market, a company usually chooses to cooperate with parties to create a

symbiotic ecosystem (authorities, users, drivers, car dealers, etc.). Uber went the opposite way and

increase competition which led to failure briefly. It was Uber who later admitted that it was not easy

to compete with local competitors (cafebusiness, 2020, para.10). With the aim of establishing an

independent system to replace traditional taxi companies with private car drivers. Many companies

had made waves of protesting against Uber in many countries as well as in Vietnam.

b) Underestimate competitors:

Even though Uber had entered Vietnam’s market before Grab appeared, Grab is the leader. The

reason comes from promotional codes that Grab gave for consumers to stimulate the use of the app

even when users have not booked a car for a long time, as long as they download the app on their

phone. In contrast to Uber, there is no notification and promotional code was sent, which made

consumers feel “abandoned” after a short time of not using the app. Because domestic taxi companies

have a deep understanding of Vietnam’s market, this means that Uber has to create a clear and

complete marketing strategy to exist and compete with others. In fact, Uber did not do that and lost its

market share.

2. Political environment:

Along with Uber’s reputation, Uber is also known as face to many questions of legal issues. Uber got

involved in many lawsuits from many countries in the world. In Vietnam, Uber also created some

problems. Uber entered Vietnam’s market with a “business license” relating to a “software company.”

But in fact, they just focused on finding drivers and improving online transportation. More than that,

they were willing to “subsidize drivers when they get penalties by the Government for traffic law

violation” (intothebusinessvietnam, n.d., para.11). Also, according to intothebusinessvietnam,

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“Uber drivers join in passenger transport without a taxi license” (intothebusinessvietnam, n.d.,

para.12). Following the law of Vietnam, people are banned from driving any means of transportations

without having a driven license. Therefore, Uber infringed the traffic laws of Vietnam.

III. Service problems.

1. Lack of motorbike rides service:

In 2015, there were almost 43 million motorbikes in Vietnam (Vietnamnet, 2015). Almost every

member of a family has their own transport (usually bicycle or motorbike). From business point of

view, the workforce for motorcycle rides service is huge. Due to the crowded city, people prefer to

travel by motorbike. Motorbike is the most popular vehicle in Vietnam. The “Xe Om” is one of the

traditional transport services in Viet Nam. Grab knew how to catch the vibe by launching motorbike

service and Uber only followed this type of service years later. In 2014 Uber launched in the Vietnam

market, they only have Uber car service ( UberX, Uber Black, SUV) which is quite expensive

compared with Vietnamese budget. On the other hand, their competitors already offered motorbike

taxi rides, they gained large popularity and profit with this service. In April 2016 Uber launched

another service - Uber MOTO to take another bite of the ride-hailing market ( Nguyen, 2016).

Unfortunately, Uber came too late to the party, Vietnamese were already get used to other railding

apps.

2. Driver’s map-reading skill:

A social researcher said that most Uber drivers in Ho Chi Minh city are outsiders. They are not good

at reading maps, and it takes a lot of time to pick a customer up. The drivers have to learn how to read

a map and make a personal call for the customer to know where they’re at and confirm the place and

time to pick the customers up ( Mykhe1097, 2016).

3. Payment methods:

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When Uber entered the Vietnam market, they kept the same method of payment which is pay by card,

visa, master, american express,... Uber did not study the Vietnam market well, they did not offer cash

payment ( Manuel, n.d.). Most of Vietnamese would book other apps instead of Uber, because Uber

doesn’t accept cash payment. Vietnamese people prefer to pay by cash after using the service.

Moreover, paying by credit card can be out of control. Vietnamese people are not familiar with using

credit cards. Therefore, many users choose other ride-hailing apps (Grab, Go-Tek,...) over Uber. 

4. Legitimacy:

This information is really important that affected almost all the chances of Uber to develop in Viet

Nam and the whole Southeast Asia. Uber entered Vietnam in June 2014. On the economic front, the

company faced one big problem: a car shortage. Unlike in developed countries with abundant cars, car

is a luxury item in Vietnam, and high-end car owners often do not want to run "taxis", making it

difficult for Uber to establish a network vehicle grid. Where Uber goes, there are legal hurdles. By the

end of 2015, Uber was involved in 173 lawsuits. Also, up to this point, the traditional taxi driver

protests against Uber occurred in major cities around the world, including Paris (June 2015), New

York (July 2015), Chicago, London, Brussels, Toronto, Sao Paulo, Rome, Warsaw, Melbourne,

Queensland (September 2015), . . . Figure below shows the legal obstacles Uber encountered until

April 2015, which means that could be even worse after the protests mentioned above.

The legal status of Uber in Vietnam is similar. Ho Chi Minh City Taxi Association repeatedly

proposed to the Department of Transport. The city banned Uber's business because it believed it was a

disguised taxi business. Uber runs out of business in the area it is registered in. In June 2014, Uber

received its business registration license as a software company; However, in reality, this company is

also active in the transport sector when recruiting and training drivers, regulating reward and

punishment, protecting drivers for violating traffic laws, etc. Another minus point that shows the "taxi

owner" nature of Uber is that the company intentionally sets the fare to be deducted from the

passenger's bank account. These actions go against Uber's defense that Uber only provides software to

connect the driver and the passenger under the free agreement of the parties. As such, Uber operates

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beyond the field in which it is registered. Second, even if Uber became a taxi, Uber did not qualify as

a taxi company. Uber drivers transport passengers without a taxi license or commercial instructions as

required.

IV. Solution:

With regard to some problems of Uber, they can improve their market segmentation by:

1. Searching the marketing thoroughly: Uber did not do researches about Vietnam’s market; they used

the same marketing strategy for many markets, including Vietnam. As a result, they were passive in

accessing the market. Only when we select a suitable marketing strategy to introduce and promote

products can we understand what to do. In other words, the understanding market is understood:

competitors and target customers.

2. Learning from competitors: Uber can learn from the way Grab changed its marketing strategy to

adopt a new market, such as apply cash payments or create a line of means of transportations from

motorbike to cars to serve many kinds of customers.

3. Creating Vietnam Uber, not Uber in Vietnam: Entering a new market means that a company needs

to search the market and become a part of that market. But Uber had not done that. They just jumped

directly into the market without gain knowledge about the cultural market of that country. Uber used

the same marketing strategy for all kinds of markets from America to South East Asia, including

Vietnam. We all know that each country is suitable with different styles. Therefore, it is easy to

understand why Uber failed in Vietnam. They focused on building their brand rather than building a

brand that fits Vietnam’s market. Thus Vietnamese still see Uber as a foreign company and hesitate to

use Uber’s services.

D. CONCLUSION

With the above evidences, Uber has completely failed to develop and expand its business in the

Vietnamese market. From small mistakes to big mistakes, Uber's failure to recalculate business

policies has led to enormous losses for them. Culture is something that has been maintained in

Vietnam for a long time and they respect it, so Grab has been prioritized in this industry. Uber has

been taking steps slower than Grab and that's why it's been replaced, problems with business law

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and strong opposition from traditional drivers pushing Uber away. As a result, Uber was acquired by

Grab and expanded the ride-sharing industry for green-shirted drivers.

References List

Manuel. (n.d.). Retrieved from Culture Bridge: https://culturebridge.asia/uber-grab/

mykhe1097. (2016, April 5). Retrieved from Into the Business Vietnam:

https://intothebusinessvietnam.wordpress.com/2016/04/05/think-about-uber-in-the-case-of-vietnam/

Nguyen, N. (2016, June 2). Business. Retrieved from VN Express:

https://e.vnexpress.net/news/business/uber-in-vietnam-ride-sharing-service-needs-the-right-time-to-

launch-3413323.html

Russell, J. (2018, March 26). Retrieved from Techcrunch: https://techcrunch.com/2018/03/25/gruber-

official/

Uber Estimator. (2021). Uber cities. Retrieved from Uber Estimator: https://uberestimator.com/cities

Vietnamnet. (2015, July 7). Retrieved from Vietnamnet: https://vietnamnet.vn/vn/kinh-doanh/dan-

viet-so-huu-xe-may-nhieu-thu-2-the-gioi-252388.html

Worldbank. (n.d.). Retrieved from worldbank:

https://www.worldbank.org/en/country/vietnam/overview

Môi trường và đô thị. (2018). Retrieved from Môi trường và đô thị:

https://www.moitruongvadothi.vn/kinh-te-moi-truong/doanh-nghiep/thay-gi-sau-that-bai-cua-uber-tai-

thi-truong-dong-nam-a-a25301.html

vietnambiz. (2018). Retrieved from vietnambiz: https://vietnambiz.vn/rut-chan-khoi-dong-nam-

achien-luoc-dinh-cua-uber-49978.htm

Anh, T. (2018). Retrieved from Thời nay: https://nhandan.com.vn/baothoinay-hosotulieu/bai-hoc-tu-

vet-xe-do-320190/

cafebusiness. (2020). Retrieved from cafebusiness: https://cafebusiness.vn/uber-that-bai-tai-thi-

truong-dong-nam-a-va-bai-hoc-cho-nhung-buoc-di-tuong-lai-1622.html

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intothebusinessvietnam. (n.d.). Retrieved from intothebusinessvietnam:

https://intothebusinessvietnam.wordpress.com/2016/04/05/think-about-uber-in-the-case-of-vietnam/?

fbclid=IwAR3JaJcySqxD1HenzI7KCAxmcX8Ho98uukBE9Q_zT4LvBKrd33MVOxLtEvM

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