car rental
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Marketing environments for Europcar and Hertz _______________________________________________________
Table of Contents
1. Introduction................................................................................................................1
1.1. External Market Analysis of Rent a Car Industry Globally...........................2
1.2. Porter’s Six Force Model...................................................................................2
1.2.1. Buyers – Auto Insurance, Body Shops and End Customers...............2
1.2.2. Suppliers – Car Dealerships......................................................................3
1.2.3. Substitutions – Automobile Industry, Public Transportation, and Taxi
Services......................................................................................................................3
1.2.4. New Entrants – Travel Agencies, Car Dealerships, Automobile
Manufacturers............................................................................................................3
1.2.5. Rivalry Box – Rental Car Market..............................................................4
1.2.6. Complements – The Oil Industry..............................................................4
1.3. SWOT Analysis...................................................................................................4
1.4. Rental Car Market in UK and US.....................................................................4
1.4.1. Long-run Changes in Growth....................................................................4
1.4.2. Changes in Buyer Segments Served.......................................................6
1.4.3. Changes in Suppliers.................................................................................6
1.4.4. Buyer's Learning.........................................................................................6
1.4.5. Reduction of Uncertainty............................................................................6
1.4.6. Diffusion of Proprietary Knowledge & Accumulation of Experience. . .7
1.4.7. Process Innovation.....................................................................................7
1.4.8. Entries and Exits.........................................................................................7
1.4.9. The Moves in Accordance to the Changing Market Environment.......7
1.5. Comparative Market Analysis of Rent A Car Companies............................8
1.5.1. Europcar.......................................................................................................8
1.5.2. Hertz..............................................................................................................8
1.6. Competitive Position..........................................................................................9
2. Competitive Moves and Retaliation Likelihood Analysis............................11
2.1. Strategies for UK and US Markets................................................................13
1. Introduction
The obstacles are vast when local firm desire to go nationwide. Since that verdict
might escort to a marvelous boost in cost connected to establishing offices,
recruiting employees, making new set of connections with local body shops and
indemnity companies, commercial and broaden database.
The obstacle from partially e-trade to completely adapted e-trade form is
considerably slighter. For the bigger car rental organization, the establishment of
customers records is easy and also it remove the paper work system particularly
when they are equipped with online booking system, although acquiring this type
of method countywide need large amount of hard work for the knowledge of the
staff , involve high cost for updating whole system. Other probable complexity
could be less interaction with clients and extra threat apparent by clients.
The hurdles to market in an unfamiliar country for a car rental organization are
considerably very big. The setting up cost is very high and practices or
understanding of car rental business is also very vital. To start a car rental
business a large amount of investment is required to build and sustain the fleet of
rental cars. The fleets should be viable to those of current rental car companies
or serve a definite place of market. Most of car rental organization has long
lasting agreements with big corporation and indemnity organizations which
ensure the reachable of good clients.
This report is divided into two sections. The first section of the report describes
marketing environment of two car rental companies, i.e. Europcar and Hertz into
two countries, i.e. UK and US. The second section of the report describes
various strategies that these car rental companies should consider while
marketing their companies in these countries.
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Section A:
1.1. External Market Analysis of Rent a Car Industry Globally
1.2. Porter’s Six Force Model
1.2.1. Buyers – Auto Insurance, Body Shops and End Customers
The purchaser of the car rental market has an important negotiating command
because of the extremely flooded and cutthroat feature of market. There are two
types of customers one is of trade rank and other is the customers provided by
an insurance companies and body shops. Insurance companies require offering
clients with hire car selection during mishap while body shop clients require hire
cars when having their cars fixed. Because insurance companies and body
shops offers prime right to use by the ultimate clients, they are also treated as
our customers whom we should triumph over.
1.2.2. Suppliers – Car Dealerships
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The key traders are the individual car dealerships that supply cars for our rental
swift. Car traders will have tremendously high degree negotiating command since
they possess the cars and can effortlessly change leasing car service suppliers
(backward integration) or just discontinue working with us. On the contrary,
though, car dealership business has low attention and at the same time offers an
immense diversity.
1.2.3. Substitutions – Automobile Industry, Public Transportation, and
Taxi Services
Customers can replace rental car services with numerous options. Prospective
clients can purchase new cars to get ready for any case of tragedy. Clients can
also prefer to make use of public conveyance such as local buses, subways, and
trains. A further replacement service comprises cab and limo services for those
clients who only required carrying facility for momentary use only. Some of the
public conveyances are known as economical and suitable means to travel for
example BART, AC Transit, Cal Train and Muni in Bay, whereas private means
of transportation give much more relaxed and personal familiarity. All
replacement catches the attention of diverse clients. Car rental services provide
to people’s wants for confidentiality, comfortableness, ease and diversity as
lesser cost. So the power of replacements is feeble.
1.2.4. New Entrants – Travel Agencies, Car Dealerships, Automobile
Manufacturers
there might be a few new customers are also involved in car hiring market such
as tour organizations, car company, and the car trader themselves. Tour
organizations have the capability to come into the market just because of various
connections to tourists, well known group of hotels, restaurants, and tour lodge.
They could easily approach to the car rental services on the basis of predefined
list of tour services
The biggest competitor risk is from the Car Company and traders themselves.
Because they have their own cars, they can easily offer their services on their
own or subcontract it to a new supplier. Though they required making straight
connection to the ultimate clients, they hardly face changement cost and as a
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result they have backward integration. For example, Toyota has placed aside a
particular unit for letting out Toyota brand cars.
1.2.5. Rivalry Box – Rental Car Market
There are numerous well-known national ranks of leasing Car Corporation. Key
player such as, Europcar, Hertz and a lot of other countrywide corporation have
attained a large amount of market shares, made effective trademark fair deal and
develop to give various assistance. Market outlet obstacles are also pretty
important promotes the player to brawl for market share. A complete study will be
discussed afterward.
1.2.6. Complements – The Oil Industry
The rental car industry is area under discussion of numerous forces of
accompaniment products. The car Businesses is directly attached with
automobiles is subject to the oil industry. The current oil price may perhaps put
off new car acquisition and increase claim for car rental services.
1.3. SWOT Analysis
Strengths: Positioning plan of action; local functions, less replacements
risk, large market efficiency and expansion
Weaknesses: rigorous rivalry; client information and immense purchaser
negotiation command, reasonably little mobility hurdles immense dealer
command.
Opportunities: improbable reprisal; nationalization; fresh technical growth,
anticipated positive modification in corresponding industry
Threats: probable fresh admission; the gathering of information
1.4. Rental Car Market in UK and US
1.4.1. Long-run Changes in Growth
Demographics: increasing populace of “mobile” public Baby boomers is
entering crest rental years (55-64) in UK. Younger age group of drivers will
boost by 35% in the subsequent (10) years in US. 39% of internet car
rental customers explain the feature of rental car choice as a primary part
in their obtaining and rental judgment.
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Population 18 & older purchased a product or service online.
2000- 2.1% (UK) and 3.3% (US)
2005- 25.7% (UK) and 29.4% (US)
2010- 32.3% (UK) and 36.7% (US)
Trends in Needs: increasing requirements for car rentals. Increasing
requirements for journey for either professional or commerce intention.
Leisure and industry tour augmented between 2005 and 2010 collectively
in UK and US. Improved individual automobile will result in more collapse.
Amendments in comparative Position of replacement: Automotive
companies will have personal acquaintance of increased struggle with
minimum cost and better features. A maximum number of people will have
their personal vehicles; though, automotive companies are not a direct
alternate. Tour organization, particularly non-car-rental conveyance
arrangements, is presenting less preference by public because now
people prefer to self drive on roads rather than guidance by the trainers.
People will prefer to have direct contacts with car rental companies rather
than through middleman like tour groups. An individual who cannot afford
to pay car rental charges for long distance, he prefers to take public
means of conveyance due to the suitability and economical, though its
contribution in short-distance transportation market is decreasing, as a
result of very low price of car rental services. Airfare increased by 5.9% in
2006.
Amendments in the position of corresponding items. Rising petrol /gas
price is predicted, but it will leave an impact on whole transportation
industry uniformly. It could be expected that insurance company will
minimize their premium rent, which is again predicted to expect to promote
car-rentals. Considerable modification in body shops is not predicted.
Increments in various sectors have been observed by 9.1% in the last 12
months those sectors such as Hotel/Motel revenue accommodation was at
4.5% vs. 2009.
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Diffusion of the buyer Group. Car-rental is not long-lasting goods or
service, and it is far away from absolute diffusion. There is still enormous
prospective.
Product Change.
Digitalized E-business.
1.4.2. Changes in Buyer Segments Served
In US, principal consumer sector covered used to be “city-home” rental, at-airport
rentals. Afterwards automobile guarantor and auto maintenance shops were
involved into the customer group. While, the conception of “rent-a-car” has
extended to a broader one that might denote rent-all-kinds-of-vehicles in US
1.4.3. Changes in Suppliers
When the phase of trade have downing trend, purchaser of cars mostly decide to
buy the cars afterwards and vice versa. A trader bears the tough competition
from internet auctioneers in US. Taking a vehicle on rents is more preferable
than investing on the vehicle, because of the low salary or revenue of the month.
In current trend the used cars have turn out to be more profit making tool. In
recession basically demands arise for “used” cars than that of new cars.
1.4.4. Buyer's Learning
With the technology Upgradation in every field such as an online trade has made
the car rental trade information crystal clear. Customers can easily get the
information about the cost, charging rules and so many different type of
information of car rental prior to the booking. Efforts to compensate practices of
purchaser have also been made by comprising a huge range of car forms, each
of which may have completely diverse features.
1.4.5. Reduction of Uncertainty
Still it has been observed that a lot of doubts exists which safe minimal risk
bearing company to take entry in market place simply, such as the threat of
trading with used cars, maximum investment of capital, not knowing about the
perception and choice clients etc. In the upcoming time, the vagueness due to
online credit card deal is predicted to be mainly less apparent.
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1.4.6. Diffusion of Proprietary Knowledge & Accumulation of
Experience
The achievements of ventures have been studied, although the complete
process is not easy to emulate. It is mainly because of the truth that their
achievements depends on making good links with its associates and have strong
contacts.
1.4.7. Process Innovation
Using of technologies tools (GPRS, GPS, Wifi, RFID and etc) have made easier
to check the site of cars, ensure about the vehicle, and helping as theft
prevention. More and more cost-effective, trustworthy, technologies information
swap increases the expansion of web-based trade channels.
1.4.8. Entries and Exits
This industry has a static feature. The prime people of this industry are predicted
to make sustainability of their market proportion. Local and minor organizations
will appear.
1.4.9. The Moves in Accordance to the Changing Market Environment
There are six approaches to deal with the changing market environment:
Go countrywide from provincial: Have the benefit of superior finances of
scale.
Go for online business offer on the stop, suitable, perfect and proficient
customer services through using strong efficient technology tools like MIS.
Dealings with car traders: “Take the Risks”
Dealings with auto guarantor and auto maintenance shops: make Strong
Relationships
Dealings with tour groups: propose Packages; shared customer database
Onward addition
Better service: advance, ease, swiftness, lesser price, more quality, more
forms and better practice
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1.5. Comparative Market Analysis of Rent A Car Companies
1.5.1. Europcar
Enterprise is a classic case of Group A. It has begun its business provincially and
it has an aim to reach only off-airport market and it has handled to continue
increasing and lastly turn out to be the nation’s #1 car rental company through
efficient inside supervision and outer approach.
Strengths:
Countrywide exposure, rising economies of scales, large proportion of
market, effective brand picture
Spotting on one section, experts potentials, huge order
Weaknesses:
Allocation of everyday jobs (franchising), huge outlet cost
Drenched, extremely cutthroat, and non-rising market
1.5.2. Hertz
Hertz is a good illustration of Group C, the trendsetter. They have started with the
idea of “outfitting the cars with wireless technology, making a peaceful booking
method and tactically introducing the cars around prime cities and region”. It has
already got exposure in10 cities in North America and it is anticipated to develop
itself countrywide in coming period
Strengths:
Suitable and low-priced service, well-organized digitalized management
and organized systems
It also has extended itself throughout the worldwide with its allied
overseas places.
Weaknesses:
Less market proportion, huge capital requirements for brand image
building and promotion
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1.6. Competitive Position
In order to analyze the Compétitive Position of Europcar and Hertz in US and UK
Respectively, Strategic mapping technique is employed where the car companies
are divided in groups (ABCD). The figure below explain the overall market and
competitive position of Europcar and Hertz :
Hertz is positioned with Group C, where organizations are relatively new, working
regionally and targeting to give an exception service, with wide uses of
information technology. Their main competitors are from Group A, Europcar,
where the biggest car rental companies are. Main organizations that related to
this group comprise of ventures, Hertz, and Europcar. They have taken main
portion of markets, with well-organized trademark and contact with supporting
companies. Every organization has several goals, but they all give services to
cover the whole market. Most of the company has used the internet base
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business for booking and having good organized records, though, written work by
the personal has still not taken the place of technical methods. Group B has the
tiny, local, badly managed local car rental services. They will wind it up through
the shutting down its unit or replaced by some bigger companies. Group D have
chief car rental supplier from airports, such as Fox and Payless. The airport car
rental position is extremely cutthroat and drenched. A mid-sized airport may
contain as several as 7 car rental counters.
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Section B:
2. Competitive Moves and Retaliation Likelihood Analysis
An eruption of combat is improbable, because the cost of retribution compensate
the benefit. For big nationwide organization such as a car rental company,
- The offices of this organization has no strong connection with each other,
individually they take their gains, so the company cannot say that it has a
unity among its offices.
- They perform in local or national level that means a little price deduction
will result in high amount of loss. It is not cost-effective because area
outside cove Area will also be benefited.
- The price deduction in car is difficult to be noticed as this market is largely
varied and rental deviation is among various forms of cars.
But it should be anticipated that a more number of organization which would
accept the e-trade plan and do more hard work to give good services and
technological advancement ,although it’s a danger to invest in this as their
anticipated proceeding will not take place very soon
The relative benefit will be very much enhanced buyer convenience in terms of
on time car provision. In 20 to 30 years, when recent technologies are hugely
acknowledged in end user market, increasing requirements for digitalizing car
rental service are also predictable. clients will be proficient to use the Internet at
anyplace and any moment, our user-friendly e-trade forms will offer a way fulfill
the desire of clients for car rental within the lee time and minimized human
errors. Moreover, these companies should presently target to make technological
control and gather the experience and skills for the upcoming extension of the
national car rental organizations.
The cutthroat benefit that Europcar fetches to key car rental group is that there is
wonderful information presented for possible clients. Possible clients have open
right to use the schedule of car rental charge and clients get complete benefit of
the cost clearness. The company should not possess any vehicles is competent
to have their charge tremendously lesser their opponents. Moreover, the
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company should not price receptive and can under slash all the other leasing
organization.
On the other hand, the cutthroat benefit that Hertz has as an internet auto/share
leasing organization is the savings from sustaining an implicit store front in place
of a corporal one. The company should not bear any cost for establishing any
branches because it has movable branches and it does not bear any asset cost
too. For big leasing organization like Avis, whose conventional income forms are
based on offering leasing cars to airline passengers the incomes are controlled
by the duties imposed by governments and airports allowances are levied on
their stalls situated in the airports. These additional expenses are then allocated
to the buyer, usually not mention in the advertisement for the leasing. On the
Web, the company would be capable to offer an appropriate price quotation
without omitting any extra charges and be capable to access to wider audience
than through the conventional methods. As an outcome, online leasing will
extend their supply channels ahead of tour packaging with hotel series and
airlines. Online e-trade has also eliminated the requirements for a booking
mediator and because there is a car booking technology is user-friendly; costs
eliminated in operation charge are interpreted as profits to the consumer. In
addition, clients are capable to take pleasure about the practice of hiring a car of
their preference at the ease and comfort of their own homes, without killing their
timing and too much official procedure. The client will not merely be capable to fill
in the information themselves online and select and prefer the car that most suits
their requirement, but the client can take the delivery of car at any moment and at
any suitable place and will go and choose the car. No other organization will offer
such kind of comfortable some opponents might pick you up but none of them
give delivery of cars at your office, home and body shop or where ever you need
the vehicle delivered.
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2.1. Strategies for UK and US Markets
Focus
The company should concentrate on core Area to stay away from vis-à-vis rivalry
with countrywide corporations and the threat of expanding business too speedy.
Europcar will also be capable to attain two things simultaneously cost control and
demarcation to situate itself from the severe rivalry in the UK market. On the
other hand, with use of on-edge expertise, Hertz will be capable to supply steady,
economical, suitable services to clients in the markets of US.
Targeting
The companies should make a goal of that section which gives stable and
balanced entry of clients. The purchaser in such type of cluster usually requires
rental cars for daily or particular reason rather than random and irregular uses
such as tour and relaxation.
PRM
The company should have an effective contact with its dealer both globally and
locally. Because Europcar mainly relies on dealerships in UK, it can reimburse
traders a maximum proportion of rental income. It will also provide commission to
auto-insurance organizations and body shops. On the other hand, Hertz will also
assign its orders among diverse traders in cove region to deteriorate the dealer
negotiating command. Car producers also have functioning dealings with
numerous big leasing car organizations. This may stimulate car producers to
block their dealerships with working with Hertz in terror of damaging dealings
with big rental car organizations. So it is also essential to construct associations
with organizations.
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