Market penetration of TNC services at the base of the pyramid

Case Study: Transport service digital platform/Transport Networks Company (TNC)

LAC was contracted by a market-leading Transport Networks Company (TNC) to carry out a nationwide study. This project was born from the need of the company to expand its service and platform into new market segments. The study subjects were people of low and medium-low socioeconomic levels.

In order to complement its portfolio of services, the personal transport company sought to understand the transportation context of the low and medium-low socioeconomic levels. In order to achieve this, an investigation and analysis were carried out in five of the country’s cities: Mexico City, Guadalajara, Monterrey, Mérida, and Tijuana. In each one, the market value was quantified, the main selection factors were identified, and the organizational and operational panorama was outlined for each type of public transport, both regulated and unregulated. It is worth mentioning some of the problems that surround the context: Mexican public transport is privatized and/or unionized; due to security measures, it is one of the most difficult markets to enter; some regard the service as a luxury commodity. Additionally, many members of this population do not have smartphones, so they could not use the platform.

Both primary and secondary research tools were developed, which made it possible to understand the consumption habits of this segment and to identify what the company should do to create a service according to its needs. The areas of the city where there was a significant concentration of the target population were geolocated and an origin-destination analysis was conducted, subsequently, this data was crossed with hundreds of other urban, social and political factors to be visualized in our Geographic Information System: City Intelligence. In this study, different procedures of highly innovative Big Data were used, as well as anthropological analysis methodologies and fieldwork to obtain information that no entity, private or governmental, had yet produced.

  • Mexico City: it has the most structured urban transport planning of the cities analyzed, as well as the most complete offer of public transport alternatives, which has led to less dependence on private vehicles. Regarding traffic, it has the lowest evaluation in all of the categories, but it is the city with the greatest presence of alternative transport for all socioeconomic segments.
  • Guadalajara: has the greatest drive towards improving public transport by extending the existing public transport networks. The expansion of the city led to poorly connected inner-city districts, and the gentrification of urban spaces. Irregular transportation has become essential in order to improve transit within specific marginal regions, especially motorcycle taxis.
  • Monterrey: there is a solid supply of public transport (urban buses), but its inefficiencies (and increased costs), the complex geographical layout and greater economic access to private transport have generated a strong trend towards private transport and an increased use of taxis.
  • Tijuana: is the city that is most dependent on private vehicles in comparison to the others. It has one of the most expensive and underutilized public transportation systems. The collective taxi has increased traffic congestion due to the small passenger capacity. Transport flows are strongly connected to the United States border, which motivates travel, and are reflected in the city’s over-saturated main thoroughfares.
  • Mérida: has one of the least structured transportation systems, public alternatives do not have clear schedules making planned travel almost impossible. There is a clear division between socioeconomic levels in the metropolitan area, and the marginalized classes live in the outer municipalities, creating a strong need for daily transit to the center of the city. Motorcycle taxis play an important role in centralized public transport and have become the main form of transit for carrying out daily tasks within the areas where they operate.

In addition to mapping the transport dynamics in each city, the study also succeeded in dissecting the journey of the target market through its travel phases: the first is carried out by public transport, since it is the phase where the greatest distance is covered at a low cost; the second phase connects the last point that the public transport serves and households, being periodically covered by unregulated transport. However, the observation was made that the current scheme of services was unattractive to the target segment, due to the cost of the service and the accessibility of the platform. Therefore, the client would need to look for a very different value proposition and concentrate on competing against the unregulated services that are in peripheral areas of the city and represent an interesting opportunity. The client could even promote a different service, using branded trucks or vans and offer the service via SMS or designated stops, if the complications intrinsic to the area and the operative structure are resolved. 

As a result of the study, the client was provided with substantial information that helped them to make pivotal decisions according to the future market that they wanted to reach and their medium-term objectives to increase the captive client base. In addition, the study enabled the needs of the desired population segment to be better understood, so that if the client wanted to approach the average Latin American public in the future, they would need to devise more accessible services and create a more innovative business model based on an app for smartphones. 

If your industry or your company in is the transport sector, with LAC research and analysis you can:

  • Identify the competitors in the area to be able to offer a quality and innovative service, as well as find out their strengths and weaknesses to build areas of opportunity in the value proposition.
  • Analyze the polygon where your competitors and consumers are located, in order to determine if this is the most appropriate area to successfully guide the expansion of your business.
  • Identify areas with similar behaviors and markets.
  • Define the characteristics of the consumers in the area where you want to grow your business.

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