Zipcar case

Submitted by
Sourav Pilania
51B
MBA(IB)
 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?
Ans :- Zipcar is the world's largest American membership-based car sharing and car club service offering
company providing car reservations to its members, billable by the hour or day. They positioned
themselves as not a rental service but ownership. The customer does not have to invest in owning the car,
pay the insurance premium, pay for maintenance and users can get to experience of different varieties of
cars of their choice. They 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. Zipcar members have automated access to
Zipcars using an access card called a “Zipcard,” which works with the car's technology to unlock the
door, where the keys are already located inside. The cars are dropped off at the pickup location after use.
Zipcar competes with companies which provides mobility and shared mobility services such as Cab
service, public transport (bus, train, metro etc.), automobile companies and car rental services.However
its main competitor is a Seattle based company called ‘Flexcar’
It plays a role of reducing costs and providing flexibility & convenience to the customers in the
competitive landscape. Zipcar understood the fact that consumers desire different vehicles in different
situations. For example: X is okay with driving a van to her workplace but she desires to have a luxury
car while going out for a date. But owning multiple cars is not feasible and hence Zipcar came out with
multiple offerings to attract both occasional drivers and regular drivers. Zipcar also offers customers
flexibility to choose the date and time in advance thus giving them more control over the mobility which
is not present in public transport.
2. What would you say are the critical success factors for Zipcar?
Ans :- Factors leading to critical success for Zipcar are :-

 Innovation & Novelty: Zipcar was one of the first to come up with the concept of car
sharing, building a new industry for many potential car users

 Cost Benefit - Zipcar provides a cost benefit to its users as the charges for amenities like
fuel, insurance,age surcharge parking are all covered under a base fee .

Owned Car Zipcar Car Rental

Car Payment: $315
Finance charges: $62
Insurance: $134
Maintenance: $76
Parking: $175
Total: $843/month
Daily Rate: $60.00 Daily Rate: $43.00
(or $8.5 by the hour) (No hourly option)
Gas charges: $0 Gas charges: $10
Insurance waivers: $0 Insurance waivers:
$21.95
Age surcharge: $0 Age surcharge: $30.50
Parking: $0 Parking: $8.00
Additional Fees: $0 Additional Fees: $4.00
Total: $60 Total: $86.95
  Ease of use: The main aspect making Zipcar one of the top competitors. Zipcar took out all the
confusing facets of renting a car and buying a car, and streamlined the whole vehicle sharing
operation. Quick one-minute registration, no questions over gasoline or taxes, no physical point
of sale, these are the features that help Zipcar reach the target car users.

3. What mechanisms does Zipcar have in place to manage behaviour? What, specifically, are
these mechanisms intended to accomplish? [05]
Ans :-
Mechanism that helped Zipcar manage consumer behaviour are -
1. Zipcard: Customers were given a Zipcard upon signing up for Zipcar which drove loyalty and
reliability among consumers.
2. Ease of use: Users could make a reservation either through their website/app (online) or by
calling their customer service (offline). By doing this they were able to target both tech savvy and
non tech savvy section of the society.
3. Ownership sentiment: Zipcar was able to get consumers to take care of the car as their own,
users were liable for filling up petrol and were even allowed to wash the vehicles to get free
1hour as the reward
4. Rewarding customers for washing the car before the dropoff: This developed a sense of
belonginess among users for the car and the brand. And while doing this Zipcar made sure that a
clean and tidy car was delivered to the next user.
5. Scheduling system: Zipcar vehicles can be reserved as early as the year before the vehicle is
requested by the owners. The reservation can be done with a simple call or with an online
booking system that brings flexibility to the customers.
All these mechanisms were intended to inform and positively direct the consumers to try the service and
later adopt this in their daily routine. Hence developing a sense of belonginess, responsibility and
reliability among users.
Also, Zipcar tried to reduce effort variability for the users by charging penalties to customers who
returned their car late. Effort variability has impact on service and quality, either directly or indirectly. In
effort variability, customers expend varying degrees of energy on tasks needed to receive service. It
affects other customer’s experience if proper effort by previous customer was not put like in the Zipcar,
returning of car on time.

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

 Notification alerts: Zipcar may send notification updates via SMS one hour before the
customer's booking expires. If the customer cannot return the vehicle, then the back-up car might
be provided to the customer who was going to be using the vehicle.
 Flexible reservation choice: The customer may be offered flexible reservation choice for a few
cars in the city but at a premium, so that consumers may not have to stick exclusively to the
reservation timings
 Referral Scheme: Referral program can be launched for consumers who have become
responsible drivers to recommend new customers who are in their network& will most likely be a
responsible driver.
 Rating System: Member rating system should be developed similar to what Uber/Ola has. They
should be evaluated on punctuality, vehicle maintenance and frequency of use. Members of
higher rating can be given occasional free upgrades and other benefits. Members with low rating
can be given cars at a higher tariff.
 Trial Encouragement: Customers could be offered some free rides to increase trails and
sampling of the service and to give the customer a taste of what the service is all about. This
would help in bringing the prospective customer into the Zipcar ecosystem.