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An Introduction to Car-sharing & Zipcar

Back in 2000, in lieu of overcrowding in the US automotive rental market, Zipcar implemented a blue ocean technique and established its car-sharing business because the dominant different to automobile ownership. Compared to car leases companies that charge users on a per day basis, Zipcar offers customers the flexibleness of deciding the variety of hours and distance of automotive usage. In addition, unlike automotive rental firms which require clients to choose up the vehicles from their offices, Zipcar allows members to select up a car from their nearest parking heaps positioned at strategic points throughout metropolitan areas.

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The added convenience over the standard automobile rental business model, coupled with Zipcar’s first mover’s benefit within the US market, led Zipcar to be the biggest car-sharing company on the planet, with a complete of 570,000 members and eight,000 vehicles.

Zipcar’s Service Proposition – 4 Simple Steps to Driving a Zipcar Firstly, new customers are required to use for a Zipcar membership which costs about USD60 yearly.

Secondly, users proceed to reserve a specific automobile mannequin at their preferred nearest location, by way of cellphone, online or the Zipcar cell application. Thirdly, customers proceed to their reserved cars and unlock their cars by having an RFID scanner situated on the car’s windscreen scan their assigned Zipcards. Lastly, customers return their cars to designated parking tons and shall be subsequently billed on a per-hour foundation, with out having to pay for gasoline or insurance coverage costs.

Zipcar’s Four Market Segments

The bulk of Zipcar’s operations is situated throughout the US, although it does function in selective cities of Canada and the UK.

Its revenues come from the next four market segments. Individual Membership| Servicing people who prefer car-sharing to urban car possession as a result of significant cost savings| Universities| Working with universities to handle the shortage of parking heaps by providing car-sharing to staff and college students and lowering the variety of vehicles on campus| Businesses & Government| Working with companies and native governments to meet environmental targets by offering staff entry to Zipcars and inspiring car-pooling| FastFleet System| Selling its proprietary and trademarked car-sharing administration methods to organizations interested in implementing an inside car-sharing program| Opportunity for Zipcar to Enter the Growing European Car-Sharing Market In 2006, the European Union (EU) announced plans to drastically cut back greenhouse gasoline emissions and the carbon footprint across European nations.

Under the brand new EU power policy, European nations are required to report their annual carbon dioxide (CO2) emissions. As such, given their capability to minimize back the automobiles on the road and consequently the greenhouse gas emissions and carbon footprints, car-sharing providers flourished in Europe. According to Frost & Sullivan, the income from car-sharing in Europe is more likely to hit $2.6 billion EURO ($3.four billion USD) by the 2016. This determine even exceeds the projected US car-sharing income in 2016 of $3.three billion USD. Given that the European car-sharing market is more doubtless to be more profitable than the US one, Zipcar should not miss out on the opportunity to increase its operations to Europe.

Our Recommended Goal for Zipcar and Reasons for Recommending It Despite missing a first-mover’s benefit, we advocate that Zipcar sets its sight on penetrating the European car-sharing market, specifically Germany and Switzerland, and seizing market leadership in the lengthy term. Our group proposes using creative collaboration strategies as a workaround to Zipcar’s lack of first-mover’s benefit when coming into the aforementioned markets. These strategies shall be additional elaborated upon in Component #2. Our advice of seizing market management in Switzerland and Germany is predicated on the following causes. Firstly, Zipcar’s acquisition of UK car-sharing market chief (Streetcar) in addition to its minority stake in a Spanish car-sharing start-up (Avancar) offers a solid geographical platform for growth across Europe.

By tapping on the information base concerning the European car-sharing scene Streetcar and Avancar constructed up over the years, Zipcar might higher perceive the differences in shopper preferences between European car-sharing prospects and their US counterparts without any incurring any market research expenses. Zipcar might then tweak their car-sharing providing and achieve larger ranges of market-fit. Secondly, Germany and Switzerland make up 35% and 19% of the European car-sharing market respectivelyv. Apart from the UK, which Zipcar is a market chief in because of its recent acquisition of Streetcar, the remaining European nations solely make up single-digit market shares amongst the European car-sharing market.

Since Germany and Switzerland make up almost half of the European car-sharing market, entering these two markets as a substitute of other geographic markets ought to give them the greatest Return on Investment (ROI). Thirdly, by focusing on high-growth car-sharing markets like that of Switzerland and Germany, Zipcar can reap substantial economies of scale and scope, which will lead to a decrease cost structure, as it will increase the scale of its car fleet to fulfill the rising demand for car-sharing in these nations. For example, Zipcar could negotiate bulk insurance deals at cheaper charges with insurance corporations. Seeing as how Zipcar’s current revenue margins have been eroded by rising working costs like hovering prices of petrol, it is necessary that Zipcar explore value financial savings via economies of scale and scope to make sure long-term sustainability of earnings.

Competitive Advantages that Helps Zipcar Fulfill Long Term Goal Firstly, as a car-sharing firm that owns the biggest automobile fleet on the earth, Zipcar has developed quite a few patented applied sciences and invests closely in research and development to uncover new improvements which may strengthen its technological management. For instance, its patented “Z3D Knowledge Center” know-how is capable of synchronizing and displaying real-time data like reservation cost, vehicle location maps on numerous shopper touch-points like the web website, Zipcar mobile utility and telephone reservation system. Looking forward, Zipcar is planning to make use of its proprietary wireless data network to be the primary car-sharing provider to implement in-car Bluetooth and even Internet Wi-Fi companies.

Secondly, over time, Zipcar has been building a major amount of brand equity. Today, Zipcar is a brand that is synonymous with automotive sharing and environmental conservation. Its powerful model and trustworthy model name is underscored by the numerous awards it has gained through the years. For instance, Advertising Age Magazine named Zipcar in its 2009 listing of “Top 30 World’s Hottest Brands”. Given its highly effective model, Zipcar will find it simpler to realize the belief of potential collaborative companions. However, transferability of these competitive advantages throughout geographical boundaries may be held back by differences in consumer behaviours and competitive panorama.

For instance, Europe and the US have radically totally different GPS networks and Zipcar would possibly encounter challenges in implementing its patented GPS-reliant “Z3D Knowledge Center” technology in Europe. The extent to which Zipcar could leverage on its aggressive benefits will finally rely upon the effectiveness of its deployment strategies. Potential Pitfalls that Zipcar Should Look Out for When Pursuing its Goals While penetrating the European market, Zipcar must be wary of the risk it’d face within the US market from an rising form of car-sharing the place on-line communities like Zimride enable individuals to form automotive pools with others who reside near them.

It is essential that Zipcar hedge against this more and more well-liked type of car-sharing by not overcommitting its monetary capital to the European market, and allocating a set portion of its annual advertising finances to the US market, to find a way to differentiate itself from Zimride because the superior car-sharing offering through using artistic advertising initiatives and even gross sales promotions.. Challenges Faced as a Second-Mover into the Germany and Switzerland Market We established in Component 1 that Zipcar’s next logical course of action shall be to compete for market leadership in Switzerland and Germany.

However, this will be an uphill task, as Car2Go and Mobility, the respective market leaders in Germany and Switzerland, have leveraged on their first movers advantage to erect vital limitations to entry. Firstly, as first movers, Car2Go and Mobility have established themselves as technological leaders and have formed buyer expectations relating to car-sharing technological features. For occasion, Car2Go has put in patent-pending electronic dashboards in their automobiles, which permits users to get directional help by way of GPS know-how, in addition to keep monitor of distance travelled and its resultant costs. Zipcar on the opposite hand, is within the midst of implementing such technologies and would possibly come across as an inferior option to sure group of consumers.

Secondly, Car2Go and Mobility have pre-emptively secured scarce belongings vital for success of a car-sharing business. Being first on the scene, they have secured strategic and limited parking tons around the cities as their designated car-sharing parking lots. Facing the above second mover’s disadvantages, will in all probability be problem for Zipcar to enter the new markets in the conventional manner. As such, our staff recommends utilizing artistic collaborations strategies, tailor-made specifically for Germany and Switzerland separately. Entry into Germany as a Second-Mover by way of Collaboration with a Railway Operator * Reasons Why Zipcar Should Collaborate with Deutsche Bahn AG By collaborating with Deutsche Bahn AG (DBAG), the government-owned railway operator, Zipcar will acquire swift entry to scarce sources in type of car-sharing parking lots.

In the city areas, most of the limited viable parking heaps have already been converted into Car2Go’s designated lot due to their first mover’s place, leaving near none for model spanking new entrants. Being a state-owned public transport operator, DBAG holds strategic state-owned land areas in urban districts, which could be transformed into designated Zipcar parking heaps. This is made attainable by a German legislation allowing authorities authorities to authorize the conversion of state-owned land into car-sharing stations and plenty. As such, Zipcar avoids the prolonged process of buying parking tons on their very own prior to beginning operations, during which Car2Go would have continued to strengthen its market management in the absence of Zipcar.

* Reasons Why Deutsche Bahn AG Would Want to Collaborate with Zipcar The DB brand is synonymous with being the “frontrunner on climate protection”. By collaborating with Zipcar, which “takes a hundred,000 vehicles off the road and reduces carbon dioxide emissions by one hundred fifty million kilos annually”, DB could tap on Zipcar’s credibility and confirmed observe report of being environmentally friendly to boost its brand fairness as shoppers start to carefully affiliate the 2 brands over time. Besides, prior in-depth studies in European nations have shown that collaboration between car-sharing and public transport firms have resulted in greater profit margins for each party. * Executing the Collaboration and Achieving Long Term Market Leadership This collaboration will search to combine completely different transport options, giving citizens in Germany the choice of catching a prepare for the main a part of a trip, earlier than picking up a Zipcar at a specific station and drive for the final a half of the journey.

The customers of DBAG are a perfect goal phase for Zipcar to increase its service providing to, as these frequent railway commuters are unlikely to personal a automobile. Hence, Zipcar should launch initiatives that convert railway commuters into Zipcar members. For instance, Zipcar might execute joint advertising campaigns with DBAG promoting joint-package pricing programs the place consumers get pleasure from discounted charges for railway train rides and Zipcar’s automobile sharing providers. Zipcar also can leverage on the unique advertising channels DBAG presents by posting advertising collaterals in railway stations and inside trains themselves to educate commuters about its car-sharing offer. Given that numerous Germans take the railway every single day, this serves an efficient platform for Zipcar to reach out to an enormous goal group.

These advertising collaterals should also make the partnership between DBAG and Zipcar obvious, through slogans like “Zipcar – the common public car from DBAG”. Knowing that the service is jointly-offered by their established and trusted public operator, customers might be extra receptive to Zipcar’s supply. In the interest of user convenience and expediting the adoption price, Zipcar should clearly indicate on the DB railway transport route map which stations supply car-sharing services. Zipcar also needs to station workers at railway stations offering reliable info relating to car-sharing. Entry into Switzerland as a Second-Mover by way of Collaboration with Universities Mobility, the Switzerland car-sharing market chief, is involved in a collaboration with the Swiss Federal Railways. Hence, Zipcar can not use the same collaboration strategy as what we proposed for Germany and we propose Zipcar collaborate with local universities as a substitute.

* Reasons Why Zipcar Should Collaborate with Switzerland Universities Zipcar lacks a knowledge-base concerning the Switzerland car-sharing market, significantly shopper preferences and strategic places the place car-sharing is in high demand. By collaborating with local universities that serve an importance supply of learning, Zipcar might quickly build up its knowledge-base through interactions with tertiary college students, as in comparability with venturing into the market alone without any type of market intelligence or analysis. Universities are also perfect collaboration partners as school students are usually open-minded youths who kind the vast majority of the “early adopters” who are wanting to attempt new innovative ideas like car-sharing.

* Reasons Why the Switzerland Universities Would Want to Collaborate with Zipcar The collaboration with Zipcar achieves a strategic fit – discount of carbon footprint. Switzerland is among the main environmentally pleasant nations due to steady governmental efforts to advertise a green life-style. Zipcar’s mission statement of decreasing world carbon footprint will resonate nicely with these government-linked universities. In addition, most Switzerland universities, especially these situated within the city, face parking management points because of the lack of land and face an institutional want to reduce back automobiles parked on campus. Collaboration with Zipcar supplies a cheap manner of solving the above issues, given Zipcar eight-years’ value of partnership expertise with US schools, during which they achieved a confirmed monitor report of slicing down the number of vehicles and traffic congestions in various campuses.

* Executing the Collaboration and Achieving Long Term Market Leadership Initially, Zipcar ought to focus on promoting mass adoption amongst university college students. As it’s a rite of passage for most European graduates to buy a automotive once they go away college, it is crucial for Zipcar to get students to experience the advantages of car-sharing first-hand and heat them as much as the idea of a car-free lifestyle publish college years. Since most university students have restricted spending energy, Zipcar ought to tailor its advertising initiatives to convey the cost savings college students will take pleasure in as a Zipcar member, due to their lack of a need to pay for automotive insurance, parking and rising gasoline costs. Zipcar may additionally wish to emphasize a narrative of comfort, where students’ matriculation cards may double as Zipcards that unlock Zipcars.

Taking into consideration that university college students are mostly Millennial (adults belonging to Generation Y), who’re progressively getting more environmentally aware, Zipcar may additionally spotlight the actual fact it presents a number of hybrid automobiles, like the Totyota Prius and Citroën C1. Upon attaining mass adoption status, Zipcar ought to convert graduating college college students into life-long Zipcar members, by providing incentives of decrease annual membership charges and loyalty points. By targeting a selected target section (i.e. college students) instead of competing head-on with Mobility for the same group of consumers, Zipcar can steadily develop its market share and eventually emerge in an excellent position to challenge for market management.

Bibliography

i Baan, J., Mack, D., Murphy, T., Sharma, S., & Watson, L. (2011, 08 22). Zipcar to set the Pace in Race for “Young Urbanite” Market. Glendale, Arizona, USA. ii Edgar Online. (2011, 04 14). Edgar Online – ZIPCAR INC. Retrieved 10 22, 2011, from Edgar Online: http://www.edgar-online.com iii Garthwaite, J. (2011, four 14). Car Sharing Startups Bask in Zipcar’s I.P.O Glow. New York, USA: New York Times. Retrieved 10 22, 2011, from NY Times.com: http://wheels.blogs.nytimes.com/2011/04/14/car-sharing-start-ups-bask-in-zipcars-i-p-o-glow/ iv Zipcar Inc. (2011, 01 01). How It Works. 4 easy steps to freedom from automotive rental and ownership – Zipcar. Retrieved 10 22, 2011, from Zipcar: http://www.zipcar.com/how/ v Zipcar Inc. (2011, 01 01). Rate & Plans, car sharing as an alternative of car rental and owning a automobile – Zipcar. Retrieved 10 22, 2011, from Zipcar Inc: http://www.zipcar.com/dc/check-rates

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