Car rental has become a necessary commodity in the United States and around the world. There are many, however, that do not need a vehicle for an entire day, but rather for just a couple of hours. Many times, these are college students living in states where one must be 21 to 25 years old to be able to rent a car through a tradition rental agency. Others just want to be able to take care of their rental needs by themselves and not deal with bureaucracy, but rather just be able to serve themselves and get their business done.
Zipcar follow’s much of what is demonstrated in Porter’s five forces model. There is awareness of rivalry for car rental dollars. The substitute that is the greatest threat is the traditional day rental car agency. The buying power that can be best reached are the college markets and those who only need a rental for a short period of time. The supplier power that can best be addressed is that the supplies are often where the demand for services is greatest. At this time there are no real outside threats to this short term car rental model .
Some of the network effects of zipcar are the advertising on the car itself. Seeing the website on the car raises the curiosity of potential consumers who may not have heard of the product. Storefronts help to increase visibility and awareness of the service. College students discussing the service through social media is another success feature. Zipcar has yet to reach the critical mass point, but its popularity continues to grow, especially in locations near college campuses that have a high percentage of on-campus housing and where often students do not have a need for a car except for a few hours at a time. As the demand increases in these areas, additional cars can be placed at convenient spots around campus. At college campuses near cities, it may often be possible to place the cars in urban areas during the week and move them to college campus locations during the weekends, when students are more likely to use the service. The network effects have been valuable in this age group as a means to grow the industry .
As the CEO of Zipcar, my most threatening competition would be in major cities where cab companies are available. In order to sustain a competitive advantage, I would have to focus on my target market as I continue to grow my company. The company is still too young to try and go out and win over every consumer, every person in every age bracket. Yung professionals have been a relatively successful market, but in the inner city, if someone is just trying to get from one place to another, a cab may be just as effective. My target market in urban areas might continue to be college students. These youngest adults are still too young to be able to rent a car through a traditional car rental agency. For many, every dollar counts, and cab fare is expensive. If a trip to do an errand or two, especially in an area where parking is available, would be cheaper by zipcar, this target audience will save the money and use the service. Eventually, older consumers will see the benefit of the product and buy into the service through the positive publicity and the ease of use demonstrated by the youngest generation of users.
References
n.a. (2010). Strategic Management. Retrieved from Knowlwdge to power your business: http://www.quickmba.com/strategy/porter.shtml
Seeking Alpha. (2012). Zipcar's Emerging Competitive Advantages . Retrieved from http://seekingalpha.com/article/686681-zipcars-emerging-competitive-advantages
