Case Questions:

1. How would you characterize the service Zipcar provides? With which companies or services

does it compete? What role does it play in its competitive landscape?

SOLUTION: In order to provide an analysis for the services provided by Zipcar, I would provide a
Porter’s 5 forces analysis for the same.

A. Bargaining power of suppliers:

Numerous conventional car rentals are on the market. Such suppliers, however, are not effective
and some charge high prices. Only Zipcar stands out as the rental agency which is most accessible ,
affordable and effective.

B.  Barriers for new entrants in the market

Zipcar has a unique business model that enabled consumers to book cars online, access parking
spaces, return the car and pay for services provided without delay, as well as a proprietary wireless
technology that facilitated connectivity between Zipcar and its clients. In order to balance this
strategy, new entrants needed a lot of resources and expertise to prevent them from entering the
market. Compared with other rental firms, Zipcar charges low long distance fares. It will be hard for
new entrants to charge those rates.

C. Threat of substitutes

There are several alternatives to car rental services in the industry. Indeed, if Zipcar fails to fulfil their
needs, customers can easily choose to turn to other rental services. Buyers may use personal
vehicles, family automobiles, public transit, or taxis.

D. Bargaining power of buyers

Buyers have medium bargaining power because they have an option to turn to other rental services
unless Zipcar meets their needs. There are many investors in the market but very few have the
power to manipulate market forces. However, the growing number of online buyers can in future
influence market prices.

E. Rivalry

In terms of prices, many car rental companies are competing with one another in the industry.
Businesses provide the same services. The market has no quality or product distinction. The synergy
between the zipcar business model and information technology is very significant. Zipcar is using
information and technology to fuel growth by helping the business deliver better and more effective
service

At the same time, In its pricing policy the car rental industry is also very flexible:

 Short term rent, from one day to more days

 A one year or more long-term lease

 Quite short term rental for less than one hour and several hours
The information described above indicates that car rental firms are very versatile in their
approach and are likely to join in.

2. What would you say are the critical success factors for Zipcar?

Some of the most important factors which contributed to the success of Zip Car are given
below:

a. Differentiation:

1. System of Ordering of Cars:

The convenience based model was not tapped much before the advent of Zipcar.
The customers were provided with the facility of having the flexibility of ordering a
car as per their need from the comfort of their homes. Members can reserve Zipcars
online or by phone, 24 hours a day, seven days a week. Reservations can be made
minutes or up to a year in advance

2. Partnership With University

The company has presence on over 230+ college campuses at universities across
North America. Members can reserve Zipcars online or by phone, 24 hours a day,
seven days a week.

3. Fast Fleet

Fleet management model is imperative for continuing the growth for Zipcar.

b. Availability: Cooperation with car suppliers to supply their fleet. Provision of specific car
according to customer ordering.

c. Marketing

Some other factors include:

 Acquisition and retention of knowledgeable leadership and staff

 Implementation of the developed Zipcar technology

 Ability to appeal to a financially savvy and environmentally conscious

customer

 Data analysis, leveraging it to find optimal utilization trends, member

demographics and spending patterns

 Many people are drawn to the discount rates of Zipcar, and the fantastic
discounts they offer. The model has given an outstanding offer for its
members on their car rental services, but it has also helped the company
create an impressive reputation

3. What mechanisms does Zipcar have in place to manage behavior? What, specifically, are
these mechanisms intended to accomplish?

The method Zipcar has to control customer behaviour is the company's pricing policy. The
company will provide the consumers of such vehicles with an opportunity. These pricing
 strategies are intended to achieve repeat business service use and to increase the
percentage of customer retention. Another aim of using this mechanism is to increase the
speed of customer acceptance by retaining a lower pricing facility for subscribers.

The second method for monitoring the actions of the car users is the automatic tracking
system for the use of cars and card readers to prevent unauthorised car usage. The
automatic card reader recognises the subscriber and matches the registration data sent
from the central repository to his profile. Consumer behaviour's net effect is that drivers are
mindful of returning the car on time and believe that the automatic control system is built to
be intelligent. And they are frustrated by the reckless driving of vehicles.

4. What adjustments, if any, would you recommend that the company make to these
mechanisms?

1) Give the customer email an hour before the expiry of his reservation. In case customer
can-not confirm vehicle return, prepare a contingency plan for customers who will use that
car.

2) In typical plans, the penalty scheme affects customers' late return behaviours.

3) Introducing hybrid car scheme to reduce cost for gasoline and partnership with insurance
company

4) Introduction of Customer Relationship Management and Loyalty programs

5) Advisory Board: Create a greater knowledge base by establishing and developing an

advisory board

6) Increase revenue by altering the pricing structure to represent a customer who uses the
cars less often but for longer periods.

7)Continuing to seek multiple revenue sources reduce risk to Zipcar. Focus on rapidly
growing this income, enabling Zipcar to expand rapidly

8) Cost drivers of lower Zipcarand raise their member base through the use of partnerships.
One example involves a collaboration with various car park companies to reduce the total
parking costs

9) Using customer reviews not only to attract customers but to keep building a strong brand
and a strong company

10) The most important thing for Zipcar to concentrate its energies on is improving
technology