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The secret behind Ola Cabs marketing strategy……


We are like Goslings. Nauralist Konrad Lorenz discovered that goslings, upon breaking out of their eggs, become attached to the first moving object they encounter.( which in most cases is their mother). But experiments have shown that any other species will do just fine. Like goslings we too make our initial decisions based on what’s available in the environment. This phenomenon in psychology is called Imprinting.
When we encounter a new product we accept the first price that comes before our eyes. ( this product is called an ‘anchor’ against which all the future products are measured )
But who decides these anchors ?
Answer – They are feeded to you ( Ohh )
Experiment time !!  This experiment was conducted with the marketing students of MIT Sloan School of management ( the most brilliant minds ) and it taken from the Book – Predictably Irrational ( Brilliant Book )
Every student was asked to write down the last 2 digits of their social security number. ( or say an ATM card number – mine is 89 ) Now these students were given a sheet of paper with 5 items ( Bottle of Vintage Wine the price of which was unknown , Cordless Trackball, Cordless keyboard and a mouse, a design book and a one pound box of Belgian Chocolates.) Now the students were asked to write this number against all items ( 89 in my case ) and answer whether they would pay that many dollars for the product. Every item had a YES/ NO Box.
Say I agreed to pay 89 dollars for a wine. I mark a YES for wine and NO for everything else.
Then the professor asked the students to bid for the other items. They did. At the end of the experiment, they ended up paying the amount they bid and getting the item. This is where it gets interesting. The gap in the prices between a wine and cordless phone or box of chocolates was sane ( this is called coherence ), but the price of wine was arbitrary.They accepted their social service number as an OK price.
The students with a small security number paid lesser and student with a higher security number paid higher for the same wine. Neither had any knowledge of the wine. But they accepted the anchor. Stupid as it sounds, the social service number became the anchor against which every other item was measured.
Just like Starbucks did. To disrupt the market, the product has to provide a new experience. It cannot have a reference point. Starbucks did that. It provided a new experience and you justified to yourself  that the coffee is worth 250 bucks. Because you had nothing to compare it with. But now all coffees in future are judged against starbucks.
Ola is providing you a new experience. Cab in 5-10 mins at the doorstep. Nice cooling, nice new cars. The interface is simple, call the cab on a click. No hassle.
Ola is becoming the anchor in the Taxi Space.
Now TabCab , Meerut and all other cabs are compared against Ola. In terms of experience and other features. They are pretty costly and hence nobody wants them anymore. Ola’s price is the anchor in this case which makes Tab Cab looks costly ( coherence as mentioned above ). We were ok with the same Tab Cabs just few 2 years back. Nobody cringed at calling a tab cab, but now we do.
Habits have to be cultivated . Smart companies create behaviors. Those companies never offered an incentive to shift from the regular cab to the Tab Cab. Maybe that wasn’t their vision, I don’t know. But they failed to create habits.
Ola is creating habits by offering these coupons. Ola is making you lazy. One click , gets you a cab. Habits are easier to cultivate when the change involved in behavior is minor. And once a habit is formed, its difficult to go back
This was mean. Very mean. Humans rarely chose in absolute terms. We don’t have an internal value meter which tells us how much things are worth. We only focus on the relative advantages of one over the other.
This was the advertisement in the Economist Magazine for inviting subscriptions few months back
Something is off about Item number 2. If that’s what you thought, you are right. It’s a decoy. They don’t want to sell it. They want to sell Item 3. Item 2 is a decoy which makes item 3 look better. Humans don’t like making decisions. Comparison makes it easy. That’s why most people chose Item 3.
So a decoy is a less attractive option which costs the same or slightly lesser. They don’t want to sell it at all. That’s why Ola has the Kaali – Peeli option in the app. To make the Ola cabs look better. Kaali Peeli is the decoy. Every time you click the Book a ride button and don’t book the yellow and black taxi, you strengthen the neural pathways in your brain which suggest Kaali Peeli is not a good option. That’s exactly how Ola is eliminating them.
Eventually, only Ola will remain. Atleast that’s the hope.
PS – I am not a marketing expert or a psychology expert. I just day dream and have idea sex. Maybe they have better reasons or maybe they did not think this way. I don’t know.

Article by: Rahul T

Write comments
  1. Hello abhi bro.,

    Hope you are fine..
    Do u know why promoter holding is reduced in Syncom formulation??

  2. Today people are feeling Uber is better than Ola. Because, Uber prices are cheaper!
    So, Ola cannot eliminate competition. Even Uber will not be able to do that.
    Cheaper taxis can be given for sometime only and when they increase the prices, people will quickly shift to other cheaper options.

  3. excellent cab services provider, nice job by cabs in india
    if any one want to book taxi for golden triangle tour visit here.