Kasta, a small industrial town hosted a steel plant and its associated ancillary companies. Most of its residents were steel plant employees from different states of the country. While the town offered employment opportunities, it lacked an airport. For those wanting to fly, the nearest airport was in Michaelganj, 100 kms from Kasta. To reach the airport, people rented taxi services available at Kasta, and Prabhu was one such taxi-service provider.
Prabhu’s rates were reasonable - a trip to airport cost Rs. 2200, but for a round trip, the fare was Rs. 3000. Yet, it was not just the affordability that made him popular, his reputation for punctuality and reliability was unmatched. When it came to ensuring the safety of women travelling alone, he would always be the first choice. Such was his trustworthiness that even the steel plant would solicit his services when expecting solo female visitors. Moreover, whenever residents encountered issues with their personal cars, they would turn to Prabhu for help.
However, the world shifted when the COVID-19 pandemic struck. Travel restrictions and safety concerns limited Prabhu’s trips to Michaelganj for over a year and a half. Financial strain followed, with accumulating interest on his home loan. He was weighed down by debt, but things improved once COVID-19 travel restrictions were lifted. Having faced financial hardships during COVID-19, he sought to offset his losses by raising the fare. Yet, he was aware of the stiff competition in town, where many others offered services at a similar fare as his.
Prabhu decided to increase the taxi fare for all future trips. He planned to charge Rs. 3000 for a one-way trip to the airport, and Rs. 1000 more for a round trip.
Which of the following facts will BEST help Prabhu’s regular customers in accepting the increase in fare?
Which of the following facts will BEST help Prabhu’s regular customers in accepting the increase in fare?
- Because, the cost of living has gone up in Kasta.
- Because, Prabhu is punctual and reliable.
- Because, Prabhu is facing financial hardships.
- Because, Prabhu offers repair services to residents’ car-related issues.
- Because, Prabhu serves many top officials of the steel plant.
The Correct Option is B
Solution and Explanation
Step 1: Understand Prabhu’s unique value proposition.
Prabhu’s popularity stems from his punctuality and reliability, which make him the preferred choice for his customers.
Step 2: Analyze customer perspective.
Regular customers value trust and reliability more than cost. Prabhu’s financial struggles are
unlikely to concern customers directly, but his services’ quality is critical.
Step 3: Evaluate the options.
- Option 1: General cost increases may not justify a specific fare hike.
- Option 2: Emphasizing punctuality and reliability builds confidence in his service.
- Option 3: Customers may not empathize with personal financial struggles.
- Option 4: Repair services are unrelated to taxi fares.
- Option 5: Serving top officials is irrelevant to fare hikes.
Final Answer: (2)
After Prabhu increased his charges by 30%, the revenue flow was promising in the beginning, especially from the steel plant’s official trips. After a few months, he noticed a dip in private bookings. On exploring further, Prabhu realized that while women travelling solo still preferred Prabhu’s service, some of his regular customers were choosing his competitors when travelling as a family. However, he knew that his competitors, while charging lower than him, were still tardy and sometimes cancelled at the last minute.
Which of the following options will BEST help Prabhu to retain his revenue flow?
Which of the following options will BEST help Prabhu to retain his revenue flow?
- Revert the pricing of services to its prior rate.
- Give 50% discount for personal trips.
- Stick to his current increased charges.
- Charge a premium when women travel solo.
- Charge a premium for the steel plant’s official trips
The Correct Option is C
Solution and Explanation
Step 1: Identify the issue.
The drop in private bookings indicates that Prabhu’s higher charges have become a concern for families and private customers.
Step 2: Evaluate customer behavior.
Private customers prioritize affordability. Offering discounts for personal trips can attract these customers while retaining the increased charges for other segments.
Step 3: Assess options.
- Option 1: Reverting prices may signal inconsistency in business strategy.
- Option 2: Discounts can specifically target private customers and address the booking decline.
- Option 3: Sticking to current charges won’t resolve the revenue issue.
- Option 4: Charging a premium for women travellers may alienate this loyal segment.
- Option 5: Steel plant trips are already consistent and may not need further price adjustment.
Final Answer: (2)
Saroj, the new Chief Financial Officer (CFO) at the steel plant, used the services of Manoj when he first travelled from the Michaelganj airport to the plant. Manoj was a rival of Prabhu in the taxi service business at Kasta. Manoj, upon learning that Saroj would be responsible for hiring taxi services for the steel plant, charged Saroj only Rs. 1500 for that trip. Further, he assured Saroj to charge the same for a one way-trip and additional Rs. 500 for a round trip to the airport.
Upon realizing that the plant utilized Prabhu’s services for all official trips to the airport, Saroj contacted Prabhu to discuss the rates offered by Manoj and inquired why the plant should continue using his service when Manoj provided the same at a lower price. Prabhu realized that Manoj charged an extremely low price just to push Prabhu out of his business in the Steel Plant.
Which of the following reasons given by Prabhu will BEST help his cause?
Upon realizing that the plant utilized Prabhu’s services for all official trips to the airport, Saroj contacted Prabhu to discuss the rates offered by Manoj and inquired why the plant should continue using his service when Manoj provided the same at a lower price. Prabhu realized that Manoj charged an extremely low price just to push Prabhu out of his business in the Steel Plant.
Which of the following reasons given by Prabhu will BEST help his cause?
- Prabhu should warn Saroj that Manoj’s offer is not sustainable.
- Prabhu should request Saroj to talk to a few of his colleagues before taking any decision.
- Prabhu should introduce Saroj to Ms. Nidhi Tawde, his regular customer.
- Prabhu should offer to lower his price to the one offered by Manoj, exclusively for the steel plant.
- Prabhu should tell Saroj that Manoj is unreliable and tardy, and women are unsafe with him.
The Correct Option is
Solution and Explanation
Step 1: Analyze the competition.
Manoj offers lower prices but may compromise on service quality and sustainability. Prabhu must differentiate his services on reliability and long-term feasibility.
Step 2: Evaluate Prabhu’s response options.
Focusing on Manoj’s unsustainable pricing allows Prabhu to appeal logically and professionally to Saroj.
Step 3: Assess options.
- Option 1: Highlighting Manoj’s unsustainable pricing addresses Saroj’s business concerns effectively.
- Option 2: Requesting discussions may appear indecisive.
- Option 3: Involving other customers lacks direct relevance.
- Option 4: Matching prices undermines Prabhu’s service value.
- Option 5: Personal attacks on Manoj could harm Prabhu’s reputation.
Final Answer: (1)
Top Questions on Caselets
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