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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