The Effect of Competitive Advantage on Customer Attraction to Ride Hailing Apps. A Case Study of Usiu-Africa

Abstract

The purpose of this study was to establish the effect of competitive advantage on attracting customers to a ride hailing app basing on USIU-Africa students. The research questions of the study investigated on: the extent at which cost leadership influences customer attraction to a ride hailing app, the effect of differentiation on customer attraction to a ride hailing app and the influence of focus strategy on customer attraction to a ride hailing app. The descriptive research design was used to obtain data that defined the characteristics of the purpose of this study by measuring the features in the research questions. A structured questionnaire was used to collect primary data from the target population of USIU-Africa students. The researcher used simple random sampling technique to attain the sample size of 173 students across the three education levels: undergraduate, masters and doctorate. Descriptive statistics such as mean, standard deviation and inferential statistics, which include: correlation analysis and regression analysis, were used to test the influence of competitive advantage on attracting customers to ride hailing apps. Analysis of the first research question determined the impact of cost leadership on customer attraction to a ride hailing app. The findings revealed that majority of respondents are attracted to their preferred ride hailing apps because of low prices. From the findings Uber emerged as the most preferred ride hailing app demonstrating the firm has embarked on gaining competitive advantage by having the lowest cost in the industry. One of the ways which Uber offer customers low prices is through discounts which most of the respondents agreed attracts them to the ride hailing app. The study also revealed that most of the respondents agreed the price charged represents the value of money. This indicates though the preferred ride hailing apps offer services at a lower cost they endeavour to offer quality standard services. Examination of the second research question established the effect of differentiation on customer attraction to a ride hailing app. Based on most of the respondents agreed their preferred ride hailing app has better features compared with the rest. This signifies the firms have invested in offering unmatched services to deliver superior value to a wide range of customers to become the preferred brand of choice in the industry. Based on the outcome of the survey most of the respondents indicated the drivers of their preferred ride hailing app are readily available, they are professional and the cars are in good condition. This depicts the ride hailing apps have assimilated the functioning processes between the customers and the drivers to offer superior services and achieve competitive advantage through differentiation. Investigation of the third objective determined how the focus strategy influences customer attraction to a ride hailing app either through low cost or differentiation focus. The result findings demonstrated focus strategy has an impact on attracting customers to ride hailing apps either through the low-cost focus or the differentiation focus strategy. This is based on the result findings that indicated most respondents are willing to switch to the cheapest app also to the app with the best services. The respondents willing to switch to the cheapest app represent the extremely cost-conscious customers while those who were willing to switch to the app with the best services represents the customers who are in pursuit of the best value in specialty services which come at a high price that they don’t mind paying for. The study concludes that while cost leadership, differentiation and focus strategies does influence customer attraction to ride hailing apps, a combination of all three brings forth a higher competitive edge. However, it was noted that cost leadership strategy has the greatest impact on attracting customers to ride hailing apps. It was recommended that for the ride hailing apps to achieve competitive advantage they need to: pay attention to proprietary technology to produce the most efficient services in the market and sell it at the lowest price, use technology to attain the cutting edge of innovation that will help limit easy imitation of the firm’s distinctiveness and extensively scan the environment and possess intimate knowledge that will help identify the best niche to concentrate on either low cost or differentiation. For further studies, there is a need to undertake a study to establish the effect of competitive advantage on attracting drivers to partner with the ride hailing apps