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CASE STUDY

ANALYSIS
easyCar.com
MISSION STATEMENT
“AT EASYCAR WE AIM TO OFFER
YOU OUTSTANDING VALUE FOR
MONEY. TO US VALUE FOR MONEY
MEANS A RELIABLE SERVICE AT A
LOW PRICE. WE ACHIEVE THIS BY
SIMPLIFYING THE PRODUCT WE
OFFER, AND PASSING ON THE
BENEFITS TO YOU IN THE FORM OF
LOWER PRICE.”
BRIEF INTRODUCTION
 EasyCar - member of easyGroup family of
companies .

 Founded by the flamboyant Greek


entrepreneur Stelios Haji-Ioannou.

 EasyCar is into Car rental services.

 EasyCar’s approach was built on the


successful easyJet model.

 EasyCar, founded in 2000 on a £10 million


investment
BRIEF INTRODUCTION
 Single vehicle type rented at each location.

 Did not work with agents.

 Aggressive pricing resulted in achieving a


fleet utilization rate > 90 percent.

 Broke even in the 3rd year of its operation by


generating £27 million

 Company’s goal for 2004 was to reach £100


million in revenue and £10 million in profit.
CASE OVERVIEW
 The case discusses about the success story of
easyCar.com, which is into car rental services.

 The case also highlights the structure of the car


rental industry in Western Europe.

 The case provides inputs on the pricing,


promotional and process aspects of
easyCar.com

 It also provides a SWOT analysis of the company


and the road ahead for easyCar.com
THE RENTAL CAR
INDUSTRY
 Western European rental car industry
consisted of different, semi-integrated,
national markets.

 Presence of national, regional and


international companies across most major
European markets.

 Rental car industry composed of two broad


segments:
 a business segment (35%-55%), LESS price
sensitive, concerned about service quality,
convenience and flexibility.
 a tourist/leisure segment (45%-65%), large part of
this segment was VERY price sensitive.
THE GROWTH STORY
 EasyCar opened its first location in
London on 20th April, 2000.

 In the same week, opened locations in


Glasgow and Barcelona also, all three
very popular easyJet destinations.
 Fleet consisted of only brand new
Mercedes A-class vehicles.

 Vehicles initially were rented for


€15/day plus a one time car preparation
fee of €8.
THE GROWTH STORY
 Deal signed for a total of 5,000
Mercedes A-class vehicles costing a
little over £6 million.

 Why only Mercedes? This is what


Stelios had to say “The choice of
Mercedes reflects the easyGroup
brand. EasyCar will use brand new
Mercedes cars in the same way that
easyJet uses brand new Boeing
aircraft. We do not compromise on
the hardware, we just use
innovation to substantially reduce
costs.”
THE GROWH STORY
 EasyCar quickly expanded to other locations
popular with easyJet customers.

 Introduction of Vauxhall Corsa, a new vehicle,


costing easyCar £2 a day less than Mercedes A-
Class, savings passed onto customers.

 By January 2003, many other type of vehicles were


used.

 EasyCar planned to expand its fleet of 7000


vehicles (January 2003) to 24,000 vehicles across
180 rental sites by the end of 2004.

 EasyCar also changed its policy for 2003, to tap


new segments and to achieve its ambitious future
sales goals.
EASYCAR OUTLETS
 Facilities in total of 17 cities in 5 European
countries.
 Facilities were primarily near bus and train
stations.

 Looking out for sites that offered lower lease


costs.

 Prime airport locations were avoided.

 Airport locations were kept open 24hrs a day.


EASYCAR OUTLETS
 Physical facilities were kept to a
minimum.

 High fleet utilization rate (i.e. >90%) an


advantage.

 To expedite the process of opening of


new sites, easyCar focused on hardware
and operational readiness.
THE PROCESS

Customer were
required to Processing a
Customer have
bring customer took
to come before
prescribed around 30
booking time
documents minutes

The vehicle
Customers were was to be The vehicle
expected to returned within were rented
thoroughly clean a prearranged with more or
the car. 1 hr of time less empty fuel
period. tanks.
THE PRICE
 Differentiated itself with its low price.

 Pricing played a key role in achieving high fleet


utilization rate.

 The Company followed Demand based Pricing and


strategy it followed was Synchro-Pricing.

 Able to rent at € 5/day, available only on weekdays.

 EasyCar price was less than half than its major


competitors.

 Payment was to be made in full and in advance and


was nonrefundable.

 The total price paid by the customer was higher in


many cases depending on a number of factors.
THE PROMOTION
 2002 – focused on posters and press advertising,
spent £1.43 million.

 Advertising focused on the low price.

 According to founder Stelios: “You will never see an


advert for an easy company offering an experience-
its about price. If you create expectations you cant
live up to them you will ultimately suffer as a result.”

 Used its fleet of vehicles as a promotional tool.

 Took advantage of free publicity whenever


opportunity presented itself.

 2003 – Budget raised to £3 million, planned to


advertise on television.
STRENGHTS
 Company is Financially strong.
 The business model which proved to be
successful in airline industry was yet again
successful in rental car industry.
 The founder is highly competent, aggressive
and clear with his ideas.
 Cost reduction though disintermediation.
 Demand based pricing approach to attain
maximum utilization.
 High use of latest technology and
technological equipments.
 The first car it rented was Mercedes A class,
then it went to less costly car segments.
 Transparency of various costs to the
customer.
 Break even in the third year.
WEAKNESS
 It offer only one kind of car at a
location.
 The process of picking up the car
is time taking.
 Lots of documentation
formalities.
 Very low advertising strategy.
OPPORTUNITY
 The rental car industry is seen as ripe
for consolidation.
 Rental for one hour and booking for
one hour can be used as Taxi etc.
THREAT
 Legal Challenges.
 Ruling by Office of Fair Trading.
 Legal criticism against company
policy of posting pictures of
customers whose cars were 15 days
or more overdue.

 Established Competitors.
QUESTIONS