Uber Lets You Hail a Helicopter in Brazil for $63

Prepared by Group J
Title

Uber Lets You Hail a Helicopter in Brazil for $63

Link

http://www.bloomberg.com/news/articles/2016-06-21/uber-lets-you-hail-a-
helicopter-in-brazil-for-63

Summary

Five years ago, UberCab made a splash in San Francisco by letting you hail a car
with your smartphone. Since then, the company, now known as Uber, has grown
significantly through the globe. Uber currently operates in 58 countries and is
valued at over $50 billion 6. Uber continues to expand their business by breaking
into new markets and offering unique services such as UberCopter.

Sao Paulo, Brazil, is well known for having horrendous traffic congestion. Traffic is
known to run for hundreds of kilometers. Uber recognized that there could be
benefits to flying people with helicopters above the traffic, which has the potential
to significantly reduce travel time.

Uber teamed up with Airbus, a European company, to begin a one-month trial of

UberCopter. This is a unique service that did not yet exist in Brazil, or anywhere
else in the world. Based on the above article, Sao Paulo has an abundance of
helicopters and has had an oil bust, which has led to less work for the air
taxi companies that cater to the oil industry. The average helicopter is only used
400 hours per year, which is only a fifth of its annual operating capacity. This
means Uber has the room to increase usage without adding additional helicopters to
its existing fleet of 400.

For this trial to be successful, Uber will have to convince people who think that
taking a helicopter is an ostentatious display of wealth and that most middle-
income people would be able to afford it. The average helicopter ride is between
$10 and $80 per person. As a comparison, a 10 km taxi ride in Sao Paulo costs
approximately $10 1, and people travelling by helicopter would more than likely be
going farther than 10km. In an emerging market that has a completely different
culture than North America or Europe, they will have to ensure that they listen to
consumers very carefully, and pay attention to the type of people who will use the
service, what they use it for, and any other preferences in order to make this a
successful venture.

Sao Paulo Brazil has 21.1 million residents, making it the 11 th most populated city
in the world 2. It is considered to be Brazils financial capital, home to the Sao Paulo
Stock Exchange. While many of the rich appear to be getting richer, the poor are
also getting poorer, and there is an increasing disparity between the two 3. There
are wealthy neighbourhoods, and there are favelas (slums) and tenements
(rooming houses) where the poor live as well.
Connection with Module:

Chapter 6: Global Information System and Market Research

The trial run of UberCopter is a very important first step in collecting primary data,
using direct sensory perception in order to evaluate the true market potential. They
will be able to observe, first-hand, how consumers in Brazil will react to the idea by
watching their reactions and asking them questions. Due to the fact that Brazil is an
emerging market with a completely different culture than North America or Europe,
the company will have to ensure that they listen to consumers very carefully, and
pay attention to the type of people who will use the service, what they use it for,
and any other preferences (which could be something as subtle as what the pilot
wears or whether or not s/he talks to the passengers).

Due to cultural differences and the income inequality in Brazil, Uber and Airbus will
need to be very careful not to use the Self-Reference Criterion to judge the
potential for UberCopter by imposing North American or European values and
beliefs on the consumers of Brazil while undertaking important data gathering
during their trial run.

Since there is no other company using helicopters as a taxi service anywhere in the
world, this is an incipient market, and there are no competitors anywhere to learn
from. Uber and Airbus will be forging new ground and will make their own mistakes
as they go along, as there is not yet a trend for people (other than the super rich)
to fly on helicopters to get where they need to go. Should Uber be successful, they
will create a latent market for this undiscovered market segment, which could turn
into an existing market. Being first to market would be very advantageous for the
company. They need to be careful and not move forward with the service unless
they see that the trend has taken off, or they are not likely to be successful.

Chapter 7: Segmentation, Targeting and Positioning

After Uber has collected data from their trial run, they must analyze the information
and make decisions as to what to do next. By developing their market segments,
they can target specific areas of Brazils population. This can be based on
demographics, income, population (which has already been done, as Sao Paulo is
the largest city in Brazil), age, gender, psychographics, behaviour, benefit or
ethnicity, or any combination of these. As Uber offered rides during their trial run at
low cost, they need to decide if that was successful, and if they will continue
offering low cost rides, or if they want to be more exclusive (which could further
divide the rich and poor of the country).

Uber needs to decide if the segment size will be large enough to provide growth
and good income potential for the future. Should they choose well, they need to
consider the potential for competition in the future, and how their strategy will deal
with that, and position themselves accordingly.
Questions related to the module:

Global Information System and Market Research

1. As Brazils population varies significantly between rich and poor people, how
can Uber utilize the information technology theyre known to use elsewhere
to attract and convince people to use the UberCopter?

Segmentation, Targeting and Positioning

2. What attributes or benefits could Uber promote in order to attract customers

in an emerging market such as Brazil? Explain.

Additional Sources:

1. http://thebrazilbusiness.com/article/taxi-fares-in-brazil

2. https://en.wikipedia.org/wiki/S%C3%A3o_Paulo

3. http://www.brazil.org.za/social-issues.html

4. http://www.bloomberg.com/news/articles/2016-06-21/uber-lets-you-hail-a-
helicopter-in-brazil-for-63

5. https://www.rt.com/business/346741-uber-launches-helicopter-brazil/

6. http://www.businessinsider.com/history-of-uber-and-its-rise-to-become-the-
most-valuable-startup-in-the-world-2015-9

7. http://www.reuters.com/article/us-uber-tech-brazil-idUSKCN0YZ2H0