THESIS: The Marketing Communication Strategy of Blue Bird Taxi To Maintain Market Leader Position After Using The Highest Tariff:
- Introduction & Book Cover : Part 1
- Research Originality Statement and Acknowledgement : Part 2
- Abstract : Part 3
- Table of Contents : Part 4
- Chapter I : part 5
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CHAPTER I
INTRODUCTION
1.1
Background
of the Study
In order to build a brand, a company must
pay attention to their competitors. In a competitive industry, many companies offer
their product in a similar category. These players have a certain market which is
divided into the market leader, market follower, market challenger and niche
market. Kotler & Keller, in their book Marketing Management, gave a hypothetical
market structure example that the market leader has 40% of the market share,
the market challenger 30%, the market follower 20% and niche market 10%.
The
market leader has the largest market share and also sets the industry price changes,
new product introductions, distribution coverage and promotional intensity. The
price changes of the market leader will affect the other competitors which will
also adjust their pricing. Some market leader uses an above-market pricing or the
highest price. This higher price is usually use for prestige products and to
increase a superior image.
This
competition condition can be seen on the Indonesian transportation industry for
the taxi market category. In September 2008, the market leader in taxi service,
the Blue Bird Group (BBG), has set their price as being the highest compare to other
taxi companies at that time. BBG taxi tariff starts at Rp 6,000,- compare to
their competitor, Express Group, at Rp 5,000,- as seen in Figure 1.1. This can
be seen in an article entitled “Prospective Business in a Narrow Market” or Bisnis
Legit di Lahan yang Sempit. (http://majalah.tempointeraktif.com/id/arsip/2008/08/25/EB/mbm.20080825.EB128058.id.html)
Although on January 2009, the Indonesian government announce a reduction on
fuel prices including Premium from Rp 5,000,- to Rp 4,500,- per liter, BBG
still maintain their high tariff pricing. Later on, in the mid of 2010, Cipaganti
taxi, a new and small taxi company with 100 taxis, also uses the high tariff
pricing of Rp 6000,-.
Figure 1.1
Taxi Tariff in Jakarta as of September, 2008
Source:
http://taksitaksi.wordpress.com
BBG
high tariff pricing is the result of BBG using a quality leadership strategy,
which offers better quality service to the customers but at the consequence of using
a higher price compare to the competitors. BBG Public Relations mentions that the
price increase is necessary in order to maintain their quality service for
their customers. To compete with other taxi companies that use a low tariff,
BBG will maintain their 4 points of service, which are safety, comfort, easy
access and personalize. (http://www.detiknews.com/read/2008/09/16/071126/1006759/10/naikkan-tarif-blue-bird-pede-pelanggannya-tak-pindah)
Since
2000, BBG have raised their tariff several times and some of their user has
switch and use other taxi company. In 2006, BBG Taxi lost 15% of their customer
after increasing their tariff from Rp 4000,- to Rp 5000,-. (http://202.59.162.82/cetak.php?cid=1&id=4602&url=http%3A%2F%2202.59.62.82%2Fswamajalah%2Fpraktik%2Fdetails.php%3Fcid%3D1%26id%3D46)
The new price of BBG taxi in 2008, should also change the market condition in
the taxi category because it made BBG the highest price taxi company at the
time. This also gave an image that BBG taxis are expensive. This was
acknowledge by BBG Public Relations in a news article at Kompas.com, which
mentions that BBG realize that there are indication that BBG price are expensive
but people should also see that their getting the best service with that price.
Some
people including the Yayasan Lembaga Konsumen Indonesia or Indonesian Consumer Foundation
wanted the taxi prices to be reduced following the reduction of fuel prices on
January 2009. Some BBG taxi driver also agrees if BBG lowers their price
because the drivers earning have dropped 50% after the price increase. (http://batakpos-online.com/content/
view/3268/58/) However, BBG is confident that their high tariff strategy will
work and people will use their taxi because of the quality that BBG offer. (http://www1.kompas.com/readkotatua/xml/2009/03/11/1857210/tarif.taksi.tidak.turun) This new high price tariff should also affected
BBG market share condition and may result in some of BBG customers to switch
brand to other taxi companies as their main preferences because they feel that
BBG price are expensive.
The
author chose BBG because BBG has a strong brand and they have built it through
the years and became the market leader compared to their competitors that have
come and gone. By using the highest taxi price in 2008, we can see the strength
of BBG brand to their customers.
