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Guest Post: Is the Go-Jek-Grab price war already over? | DealStreetAsia

About a month after Go-Jek entered the Singapore market running a “promotion” campaign offering fares about 30-50% cheaper to customers, and attractive drivers incentives, it’s changing gears.

It has now introduced dynamic pricing and increased the prices by about 30% for customers. Incentives for drivers have also been cut. As expected, there were howls of protest from the newspapers and the Go-Jek facebook community.

You had me at Promos
When Go-Jek first entered the Singapore market, Grab had announced that they wouldn’t fight a price promo (“promo”) war.

There were two schools of thoughts back then. In Today article dated 9 Dec 2018, Associate Professor Lawrence Loh from the NUS Business School said the era of competing on price alone is “numbered or even over”, and Go-Jek must take a longer-term view to retain customers by offering a wider array of complementary services.

On the other hand, transport economist Walter Theseira of the Singapore University of Social Sciences said that how the competition plays out in the industry hinges on whether Go-Jek grows slowly but steadily, or pumps streams of money into gaining market share aggressively. “If Go-Jek somehow throws a lot of money at the market, achieves good market share and shows signs of putting Grab in an uncomfortable position market share-wise — for example, Grab finds that drivers are leaving en masse or its market share is slipping dramatically — I do think that Grab will not have much choice but to respond.”

Price Promotions are so yesterday
All companies have used price promotions at one time or another to gain market share. For the ride-hailing industry, drivers and riders have no loyalty and will switch to get better pricing or the faster option to their destination.

Keeping that market share and breeding brand loyalty is not something achievable with just promos and incentives. Grab has wisened up to this fact since its drubbing post-Uber merger where it incurred consumer and driver wrath by withdrawing promotions. As Grab’s Lim Kell Jay had said, “Handing out promotions is unsustainable, and that riders and drivers are going to be pissed when they are withdrawn”

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Guest Post: Is the Go-Jek-Grab price war already over? – DealStreetAsia.

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