Zipcar is one of the most revolutionary business ideas that has come along in a long time. Zipcar, along with Uber, have been instrumental in leading the consumer’s choice to not pay for expensive parking and car transportation options in big cities, (Zipcar Case Study: An Overview, 2016). Zipcar’s target is the consumer who perhaps is not a long term resident in the city they are residing that does not want to invest in the responsibility of owning a car and all of the expenses that come with owning a car, (Zipcar Case Study: An Overview, 2016). This is precisely why Zipcar began in a city such as Boston that has a very large student population that only wants a car for the occasional grocery run or road trip, (Zipcar Case Study: An Overview, 2016). That being said, Zipcar’s business model come with a great deal of liability in relation to insurance for damaged vehicles and the like. This is precisely why the company had to be very careful as it expanded to other large cities in the United States that have strong mass transportation systems. Additionally, Zipcar did not have the necessary inventory of cars to keep up with their business model. This is precisely why Avis decided to purchase Zipcar to allow Zipcar larger access to inventory and to also curtail one of their main competitors that allows those who cannot afford daily car rentals, but rather permits for hourly rentals, (Kell, 2013).
Marketing Concepts:
Marketing Concept I: SWOT Analysis:
Given that Zipcar was one of the first in the market with their revolutionary idea, the company does possess the key advantage to producing staying power in the industry if they invest their efforts to keep their business model ahead of the curve. Pertaining to Strengths, Zipcar’s main strength is that they were one of the first companies to come up with an hourly and more affordable/accessible car rental option for the city dweller who has a quick grocery run or simple errand that is not easily served by mass transportation, (Hart, 2003). While Zipcar does have an enormous advantage in the market, it is their duty to remain current and relevant. This is precisely why that one of Zipcar’s main Weaknesses is that they have a business that could be usurped by any prospective company whether they are a competitor or one that bought them. For example, Avis, by purchasing Zipcar, eliminated a competitor who provided better rates than their business did, (Sundararajan, 2013). Zipcar’s branding challenge is to remain true to its original brand under new leadership and to also differentiate themselves from competitors who are trying to take a sector of the hourly car rental marketplace, (Sundararajan, 2013).
Pertaining to Zipcar’s Opportunities, Zipcar does have an opportunity in being acquired by Avis in that the company has access to a large inventory of vehicles that they did no previously. This will be an enormous asset to their business of keeping their customers happy with a plethora of vehicles to choose from for their affordable rental options. Zipcar’s main Threat comes from their potential to be taken over even as a primary founder in the marketplace, (Sundararajan, 2013). Zipcar has to use their founder position in the market to remain one step ahead of their competition. Thus, by Avis acquiring Zipcar, Zipcar has an enormous advantage against new market entrants that they did not possess previously.
Marketing Concept II: Branding:
One of Zipcar’s primary challenges is going to differentiate themselves from any prospective competitor that comes along in future years. Zipcar’s threats come from other identical companies that have an affordable car rental option, but also from Avis’s competitors such as Hertz and Alamo that could implement a similar business model by giving a startup access to a fleet of rental cars at an affordable price, (Sundararajan, 2013). Branding is critical to avoid this from transpiring. Zipcar has to show their target consumer why Zipcar is the best option in the market, which will be a challenge with their business model being so easily duplicated, (Hart, 2003). Zipcar’s best branding strategy is to take advantage of their consumer who is looking for an affordable car rental option that does not have the resources to complete the full day car rental with all of the corresponding taxes and fees. This consumer is located in one of the largest cities in the United States that has an extensive mass transportation network and who has exorbitant parking costs that exceed their income’s ability to pay for a car in the city. That being said, this consumer needs a car on occasion to perform daily task. Zipcar’s branding message has to appeal to this consumer and show them why Zipcar is worth a space in the limited budget that they possess. Zipcar also can target other income demographics, but their primary should be the student studying in Boston or the recent graduate who cannot afford to keep transportation in the city.
The Future of the Firm:
Zipcar has an enormous potential to remain strong in future years. The reason for this is that Zipcar takes away an enormous headache for the consumer who cannot afford the $400 hold that car companies place on their credit card for the day, (Hart, 2003). By merely paying a monthly membership fee and having a small hourly fee, this consumer is greatly benefited by Zipcar. What is going to make or break Zipcar’s future is their possibility of differentiating themselves in the market with their branding strategy. If they do this well, they will absolutely keep their niche because they are one of the first companies in the industry and now also have Avis’s access to automobiles from their rental car fleet.
Concept/Lesson Learned:
Zipcar, along with Uber, teaches the student a great lesson regarding the future trend of the marketplace. There has been a trend of eliminating the expense of a car for one’s budget. Companies such as Uber and Zipcar are pioneers in eliminating the need for an expensive car in the larger cities that have mass transportation. This will be an interesting subject to track in future years because there will likely be a great decrease in car sales due to those who want to make a positive carbon footprint and those who want to cut their monthly overhead by not paying for a car.
How This Applies to Your Career or Major:
This case is very relevant to any business student that is considering a career in marketing. The reason for this is that branding is an enormous piece of the marketing puzzle and Zipcar does a great job of showing the business student the importance of differentiating your product from the competition in the eyes of your target consumer. By doing this, it keeps your company as something that your consumer needs rather than something that they want. Any professional in the business world needs to be apprised of this concept and apply it to their day-to-day job and Zipcar was a great case to teach this concept.
Overall, this case is a sensational lesson for the recent entrant in the business field because it shows a business that built a market niche from the ground up. This was useful to me because it made me understand the critical components to creating a customer need and maintaining that need for many years. The concepts of liability due to auto insurance, start up costs, technology costs, mergers/acquisitions, and marketing seen in the Zipcar business model are a great way to teach the business student how the overall corporate picture is painted and how to apply that to other companies in the business world.
References
Hart, M., Roberts, M., & Stevens, J. (2003). Zipcar: Refining the Business Model. Harvard Business Review. Retrieved from: https://hbr.org/product/zipcar-refining-the-business-model/803096-PDF-ENG
Kell, J. (2013). Avis to Buy Car – Sharing Service Zipcar. The Wall Street Journal. Retrieved from: http://www.wsj.com/articles/SB10001424127887324374004578217121433322386
Sundararajan, A., (2013). From Zipcar to the Sharing Economy. Harvard Business Review. Retrieved from: https://hbr.org/2013/01/from-zipcar-to-the-sharing-eco
Zip Car Case Study: An Overview. (2016). Course Materials. Retrieved from: Course Syllabus.
