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Summary

Full Report on Delivery Food Services for Marketing...

Description

Bryant University

Isabel Anglero Madison Ballou Foundations of Marketing 201-J Professor Sandra Potter December 15, 2016

Table of Contents

Postmates History………………………………………………………..…...…….……..... ….2 Positioning Statement…………………………...………………........……………..……. …....2 Target Segment Description…..……....…………………….……………...……….…. ….......2 Market Focus: California………………………………………………………………………..3 Financial Growth…………………………………………………………………………...……3 Perceptual Map …………………………………………………....…………….………..…....4 Four P Analysis a. Product …………….…………………………………....……………………....4 b. Pricing………………….………………….…………….……….....…….....…..5 c. Place……………………………………..…………………….…………...........6 d. Promotion ...………………………………………………………….…............7 Promotional ideas………………………………………………………………………….........8 Works Cited ....………………………………………………………………………...…....…10 Appendix…......………………………………………………………………...……...…….....11

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Postmates Brief History Postmates was co-founded in 2011, in San Francisco, California, by Sam Street, Sean Plaice, and Bastian Lehmann. Lehman is the CEO of the company. They started out as just a mobile app that would allow for same day delivery service. At the time of the launch, they only offered deliveries in San Francisco, Oakland, and Berkeley, all situated in California. Their initial idea behind Postmates was to provide a same day delivery process that could become a useful social interaction. Their website says it was “built by a passionate team of engineers, designers, operations, and growth specialists” which is what helped them become what they are today. (Postmates)

Positioning Statement “Postmates is an on demand delivery service that connects couriers and bike messengers within a city to anyone who needs to ship anything.” (Postmates) Postmates is revolutionizing the way goods reach customers by enabling any individual to order anything by the touch of a finger. Their transformative platform utilizing Urban Logistics, connects customers with local businesses who can deliver any product from any store or food from a restaurant within minutes. Postmates heightens the benefits of shopping local without the hassle of in store shopping. The brand is motivated to ensure their customers see them as an on-demand company that is convenient, trustworthy, and reliable. Postmates has several competitors including GrubHub who is the market leader in terms of ordering share. Yet, there is debate on whether or not they are truly the best. Unlike GrubHub, Postmates is technologically more advanced with their tech-enabled courier direction with their API, which allows businesses to leverage their fleet for deliveries. Also, Postmates specializes in on-demand delivery for other things besides food, which is a big advantage they have over all their other competitors.

Target Segment Description Postmates is available in a lot of cities across the US. Since this is the case, the target market varies in each place, but we will mainly be focusing on California, because it is where Postmates has the largest amount of cities available. Postmates in California targets working millennials, ages 20-35, with an income of 70k-75k+, which is mostly upper class. Their target market has a high income because Postmates is expensive and not everyone can afford to order from it regularly. Millennials are the bulk of customers for this service. Even though you can order through their website, most orders are done through phones, which Millennials are known to use and know a lot of.

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The users are usually young, hardworking professionals. The convenience of Postmates is what attracts these people to it. One can order something in a matter of minutes and it will be delivered in around an hour, which is favorable for busy, hardworking professionals. Postmate users could also be categorized as “foodies”, which are people with a refined taste in food. A lot of the restaurants Postmates offers are not usual fast food, even though they do offer Chipotle, but foods that fit a trend and are health-conscious. A lot of California users live a sort of expensive lifestyle, which is why they want to buy postmates and indulge in trendier food.

Market Focus: California Out of the 115 cities that Postmates is available, 42 are located in California, this is more than any other state. The market in California for Postmates is evidently their focus considering it is where the company originated. The market segment is divided in two in the state between Northern California and Southern California. In the Southern division are cities like Long Beach, West Hollywood, and Los Angeles. These specific cities are home to many celebrities who are seen on social media as avid users of Postmates. The Kardashians have publicly expressed their favoritism of the service for its convenience and fast delivery service. Although it is hard to express the exact makeup of the market in California since Postmates fails to release much to any of their information, it can be inferred by the number of cities that Postmates caters to in California that it is a major contributor to the growth of the company.

Financial Growth Postmates is growing quickly however in understanding the financial operation of the company, Postmates declined to share the revenue number earlier this spring. Postmates began filtering in outside funding before their initial launch with $60,000 in seed funding from Angelpad. According to investopedia, seed capital is the initial capital used when starting a business. AngelPad is an American seed-stage startup incubator that provides mentorship, seed money, and networking. Postmates later received close to two million dollars in angel funding; an affluent individual who provides capital for business startup as well. Once kickstarted, as of March 2015, Postmates has made a little more than $7 million dollars. This is not a lot however, as Postmates has high costs of software work and support. Additionally, these numbers are calculated with public knowledge as Postmates has declined to comment on its cash flow status and relationship with profitability. Although, many private companies decline to share this type of data, so it is not rare. It is not clear that the current revenue pace is profitable but

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the startup is still growing.1 However, it is evident that in order for Postmates to survive they have a high need for strong marketing strategies to increase their target market, keep their customers engaged, and build strong brand loyalty.

Perceptual Map

Premi um

Ubere ats

Caviar

GrubH ub

Postm ates

Low Price

High Price

Amazo n

Basic Service

Minimum

Delivery Fee

Service Fee (of total)

Postmates

None

$6

9%

Grubhub

$10

None

13.6%

Ubereats

None

$5

None

Caviar

$15

$2-$9 (distance dependent)

18%

Amazon

$20

None

None

Four P Analysis Product Postmates is a mobile app, provided by iOS and Android, that delivers certain 1 Wilhelm, Alex. “Analyzing Postmates’ Growth.” Techcrunch. Web. https://techcrunch.com/2015/03/04/analyzing-postmates-growth/ 4

products once someone orders. (Postmates) In the app or their web page, the customer can choose from a big amount of restaurants or stores, which depend on his or her location. Once the customer decides on what restaurant or store he or she would like to order from, they can choose what they want to order and the details of the order. After, they add the items to the app cart, add their payment method and contact info, and click “Get It Now” which completes the order. Once the order is placed, the customer can track their order as it is getting done. They are connected to the driver and can track their progress as they drive to the restaurant or store and them to their home. The app let’s the customer be specific of their order without any trouble and provides the feature of watching how much time the delivery will take. The benefits that the Postmates app provides is that it is very easy to use and extremely convenient. With this app, people could get anything they want delivered to them without having to wait in traffic and risk wasting time from their busy lives. This is why the service is perfect for young professionals because it essentially makes their lives easier. Something that could potentially harm them is the estimated delivery time. According to an article in Business Insider, titled “Best Lunch Delivery Service”, Postmates was the slowest to deliver out of its other competitors such as Grubhub, UberEats, and Amazon. (Carson) Besides being the slowest one, the app has had trouble with the estimated delivery feature, which sometimes shows less time than what it actually is. UberEats has the same feature but according to the article, theirs was a lot more accurate. In another article by Business Insider that ranks 9 food delivery apps, they rank Postmates #6 because of their delivery charge. This is another big flaw that Postmates has and may lead to a future loss of profit and customers. Compared to its competitors, Postmates has the highest delivery fee out of all. This could potentially harm them in the future as all of the apps evolve. Pricing For Postmates, when it comes to price, it greatly varies depending on the restaurant or store the customer chooses. Besides that, they have certain flat rates that are charged to any customer who orders something from their app. As mentioned before, they have a flat delivery fee of $6 for regular customers. Even though this is what almost everyone is charged, Postmates offers two subscriptions: Postmates Plus and Postmates Plus Unlimited. (Postmates) For Postmates Plus, the customer has to pay $2.99 to unlock all of the Postmates Plus merchants, though you only pay it once. These are merchants that partner with Postmates to offer low costs and a flat delivery fees. When the customer 5

unlocks Postmates Plus, the delivery rate is $2.99 or $3.99 for any order. Postmates Unlimited could be considered a more official subscription. Customers who choose to pick this subscription, pay $9.99 each month to get free delivery on all Postmates Plus merchants order that are over $25. A 9% service fee is also applied to the purchase price of the items that are in the cart. Whenever Postmates is at “peak time”, which means they are having a lot of customers that are ordering stuff, they initiate “Blitz pricing”. This makes the order cost more in total, depending on how much demand they are getting, because of the peak time. (Postmates) Postmates is using odd/even pricing as a their pricing strategy. This strategy is kind of a psychological pricing method based on the thought that there are certain prices that are more appealing to buyers than others. At the moment, Postmates is using this by placing their prices at odd numbers, such as $2.99 for the Postmates Plus merchants unlocking or the $9.99 each month to get free delivery. This tactic is something smart to do because it might get them more customers but there are a few things wrong with how they price their options. We believe that the price for the subscription of $9.99 is way too high to pay monthly, especially if it’s only free delivery on orders over $25. This isn’t a smart pricing strategy because they have other competitors which offer free delivery on orders at any price point, without having to pay any extra money. Also, it is highly likely that a customer will be making orders so many times a month that are over $25. The only advantage we believe this has, is that since Postmates not only delivers food, it could be for customers looking for other things to receive, besides food (such as clothing or novelties). Besides this, it isn’t clever to keep this price point, because instead of gaining customers, they could potentially lose them. Even if they offer this, customers still have to pay the 9% fee for every order. This is also a disadvantage because Grubhub, which offers free delivery, and Amazon which also offers free delivery and no service charge, could get Postmates customers due to the fact they have lower prices and no major difference on the merchants and restaurants they offer. For the other prices, we believe it is fair and reasonable for what they are offering. It allows for over 20 merchants, depending on the city, for a low price of $2.99 and lower delivery as well. They could potentially still lose money, because their competitors offer lower prices for delivery, and some none at all. Place As of December 2014, Postmates operated in 18 U.S. cities. As of today, Postmates operates in over 300 major cities in the United States. THe ability for Postmates to operate all over the United States is definitely an advantage however, they 6

have yet to fully cover the map with their service. They only have 46 metropolitan markets lacking in the midwest and in places such as Rhode Island on the East coast. One of their most popular cities of consumers is Los Angeles. Postmates launched in Los Angeles in the summer of 2014 and was determined to serve anything-food, clothing, video games-whatever- in less than an hour. The delivery zones includes Sherman Oaks, the Pacific Palisades, Silver Lake, Culver City, Venice, West Hollywood and many more. At the time, it was one of the most wide-reaching delivery services L.A. had seen. Postmates then launched same-day delivery in West L.A. available 24/7 supplied by citizen couriers with vehicles and extra time on their hands. The most challenging aspect about the Los Angeles expansion is that it is spread out like five cities in one. Postmates chose a specific area in L.A. to begin to roll out because of the craziness of downtown L.A. to Santa Monica. ALthough Postmates, is available across L.A., this does not prevent situations such as soggy sandwiches and late order from occurring. This is a placement issue depending on where an individual places their order from. If they are far from the courier, there is more of a chance that the food may not arrive in the best condition. This is one of the most controversial aspects for Postmates and it's competitors. With the rise of social media consumers are not afraid to share the good, bad, and ugly regarding the service they received. This is dangerous for all companies as the reviews can hurt the brands and prevent some consumers from investing in the service. Promotion Currently, Postmates utilizes their Blog, Twitter, and Facebook to promote their service. These external social media platforms help to bring awareness to the company. The platforms are flooded with pictures of delicious foods that make your mouth water, ultimately making you hungry and in need of their service. The most significant promotional tool that they utilize is their app which is what connects the consumer to the service. Most of their social media platforms promote the application that can be downloaded off of the iTunes Apple Store. Additionally, Postmates hosts a blog on their website to share the top ranked restaurants that their consumers purchase from including the best fast food to new market launches. The most recent was an announcement sharing that Postmates is launching two new markets: Indianapolis, Indiana and Louisville, Kentucky. Postmates now serves over 300 cities across the United States and remains committed to delivering the best of each. Postmates utilizes hashtags such as #NOLA to market directly to particular consumers by location. FOr example, most recently, Postmates utilized Facebook to share NOLA’s district donuts sliders brew that has over 100 flavors, rotated daily and made from scratch. This post is a prime example of the best ways, thus far, Postmates 7

is promoting their services. Additionally, Postmates often uses discount codes such as “$10 off your first delivery” to also solicit customers. The discounts are truly what draw consumers in and Postmates definitely understands this tactic as there are always promotional codes available. The use of discount codes is certainly a smart move by Postmates as most people think a service fee as well as delivery fee aren’t worth the service however, money off makes the customer think they are getting money off the fees and their order. However, the use of only social media to promote Postmates is lacking. The hashtags definitely help target particular areas that the company offers its services, however, almost all companies nowadays utilize social medias their secondary methods of promotion. In regards, to Postmates’ competitors they are similar promoting their services. GrubHub is also utilizing Twitter, Facebook, and Instagram. UberEats has a significant amount of promotion through their Uber cars in which Uber consumers are educated about UberEats often when using Uber transportation. This is certainly a competitive advantage. Promotional Ideas Because of the politics, regulations, and interests that make up each city, Postmates needs to adapt their launch plans to suit the unique topology of each new market. It is this ability that is lacking and needs to be understood when going into a market to comprehend who the suppliers are, who the special interests are, and account for those dynamics. Since Postmates caters to so many different cities, it should study the culture of each one as well as what their target market in each of those cities looks for. This is will make Postmates highly competitive. In order to increase promotion it is crucial for Postmates to create an identity for themselves. This may include creating a line of cars that are partial to Postmates, or even promotional bikes the couriers may use. A car that is recognizable and identifiable to the face of the brand will increase the knowledge of the service. People will see the car on the street and if it is eye catching, it will intrigue consumers as well as possible new couriers. If new couriers are interested in working for Postmates this will mean more and more promotion by cars for Postmates which will increase demand. This promotional tactic is key for them because it will allow them to grow and expand greatly. This might also be an opportunity to partner with car brands that will promote the company and help them expand into new markets. Another promotional idea that Postmates could easily implement is adding promotional discounts on holidays. In addition to there already frequent coupons, 8

establishing special deals on particular holidays will increase people’s use of the service. Adding a promotional discount on holidays could possible mean that big groups of people will make big orders. This will promote the company between families and friends which will result in an increase of customers for the future. An extremely successful tactic used by Uber includes referring a friend to the program. If put into action, Postmates will encourage first time users to utilize the app in order to redeem their free or discounted order and pass one on to a friend. Each customer who signs up will get a custom code they can give to their friends and family. This will not only engage them with the company but will provide a free or discounted order to achieve brand loyalty. Everyone loves coupons and this is clearly a marketing strategy Postmates already realizes. They should implement this program or a similar one because it will help them gain brand loyalty and customer satisfaction. A more basic and easily attainable marketing strategy would to place ads promoting Postmates on platforms such as Netflix, Spotify, YouTube, and Pandora; the most popular media tools Millennials use. This will not only bring awareness to more Millennials, which is the majority of their target market, but also to other groups that might be interested in the service that Postmates provides. Postmates could also possibly market on college campuses. Sometimes students will be...