Transcript
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.
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1.2.2. Suppliers – Car Dealerships 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 3
connection to the ultimate clients, they hardly face changement cost and as a 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
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rental customers explain the feature of rental car choice as a primary part in their obtaining and rental judgment. 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
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months those sectors such as Hotel/Motel revenue accommodation was at 4.5% vs. 2009. 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 6
perception and choice clients etc. In the upcoming time, the vagueness due to online credit card deal is predicted to be mainly less apparent. 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 9
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. Focus
Strategies for UK and US Markets
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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