Budget estimation: Saint-Petersburg


zipcar-iphoneCar sharing
is a business which demands heavy investments. Most of them are demanded for acquiring a car fleet and installing the necessary equipment. In in oder to make the picture more clear, we propose a rough estimation of the budget for the first year (Saint-Petersburg). We suggest to acquire 90 cars of different models, and we also expect Avis group to provide us with 10 additional cars. Also we have a rough estimation of the employees salaries expenses, rent of the office, etc. Quite significant investments are demanded for the marketing campaign. We suggest to place banners in various places, such as subways stations, subway trains, railway stations, airport and on the ground transport stations. Thus we will be able to reach the wide audience and attract potential customers to Zipcars

.BUDGET ESTIMATION: SAINT-PETERSBURG
The amount of investments needed for the first year for Saint-Petersburg as you can see on the table equals to EUR 1 465 163,5. This is the number which reflects the fact that establishing a car sharing company demands a heavy investment, especially the firs year when the car fleet and the equipment must be acquired and the technical system is to be developed.

Marketing mix: Place

Image

First, Zipcar will be integrated into St. Petersburg and Moscow only. Then, we are planning to operate in other big cities as well.

You will be able to find Zipcars near universities, business and shopping centers, airports, railway and subway stations.

When you want to use a car, simply open a mobile application and track whether there are any cars available nearby. After using, you can leave it wherever you want, but if the car is left on any of our special parking slots, you will receive free 15 min to personal account.

Our staff will monitor the location of each car, maintain the distribution among districts at daytime and at night, drive vehicles to its original locations.

Zipcar: Easy find, easy go, easy leave

Zipcar: Loyalty

Loyalty Program is needed on the one hand to get incentives and recognition to the customers who use Zipcar on the permanent basis and on the other hand to support the company’s long tern sustainability.

Hours of travel needed to get the special card (cumulated) Reduction from the base price Bonuses
“Happy Birthday” “Happy New Year”
Silver Membership Card > 20 hours -10 % + 15 min. +10 min.
Gold Membership Card > 60 hours -20 % + 30 min. + 20 min.

In addition, some promos and special conditions are going to be introduced.

Students – 10%
“Friends are welcome!” (introduce Zipcar service to your friend and get 20 minutes for free) + 20 min.
Leaving the car at the special parking slots + 15 min.
Recharging the car at the gasoline (the fuel costs are compensated) + 15 min.
Public Transportation card* + 60 min.

*Partnership with public transportation

Idea: If a person who is signed to Zipcar service, has decided to purchase the transportation card for public transport, he gets one hour for free to use a Zipcar service – “Start your journey on public transport – complete it with Zipcar”.

общ транспорт

  • Supplementing, not replacing existing transit networks
  • Locating Zipcar parking slots near mass transit stations

What do you think about these options? What kind of promos can make Zipcar carcharing service more attractive?

 

Marketing mix: Promotion

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1. Advertising

Since the service is new in Russia, first of all we have to introduce it to consumers. We have to show all the advantages of using the service as opposed to substitute services such as public transport, personal vehicles and taxi. Taking in consideration that our target customers are young modern people, we will use billboards, internet and social networks ads.

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2. Sales Promotion

We believe that if someone tries out service once, he or she will use it every day. So, our goal at the beginning is to attract new customers fast. We are planning to communicate with universities and business centers to promote Zipcar with emphasize on its advantages, such as free parking spots in the area and different bonuses. For instance, we will create mobile offices where potential customers will be able issue membership fast and easy.

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3. Public Relations

As our main promotion will be through the word of mouth, along with traditional PR promotion techniques such as outdoor, internet and print ads, we will create a “Zip-club” within our website, where our members will be able to chat and share their Zipcar experience. Also, many contests and our annual Zipcar racing will be held and announced there.

Also, we position ourselves as a 100%green company that is helping to protect the environment by decreasing the number of personal vehicles. Therefore as a part of social responsibility program we will donate percentage of revenues to help nature.

4. Personal Selling

It is important for us to create valuable relationships with each potential customer. Also, we understand that each customer has her own desires and purposes for using Zipcar, therefore we propose loyalty programs and bonuses for our clients.

Mirketing mix. Price

It is reasonable to derive the tariff plan for Zipcar service in Russia based on market-oriented pricing model by setting a price based upon analysis and research compiled from the target market. Zipcar has already delivered its pricing scheme for American and European markets, however, it does not really suit the Russian reality. To come up with the pricing decision it was crucial to analize the competitors: in our case they were Anytime and Streetcar.

Anytime tariffs

2014-06-01 23-51-27 Каршеринг - Google Chrome

Streetcar tariffs

2014-06-01 23-59-24 Тарифы - Google Chrome

In order to get the insights and understand people’s expectation on price, the content analysis [comments on Anytime carsharing service] was conducted. Here are some interesting findings:

2

Once I did not manage to book the car because there were no100 RUR on my account. While I was transferring the sum – the car was booked by someone else…

Autokadabra 

1

I would like to use this service [carsharing], but it was confused by the necessity to hold the full sum of car rent on my account….

Vk.com

3

…you can get into traffic jam driving the shared-car, so in that case the per minute tarification is more expensive [than use of taxi service]…

Зарулем.рф 

The main reason to have only one tariff plan is to reduce any kind of ambiguity among clients. In order to avoid inconveniences of having high deposit, the payment for Zipcar – Russia service can be connected with clients’ bank accounts. The service is aimed to promote simplicity and convenience that is why there is differentiation in terms of price for the cars-to-share. The car fleet is represented by Hyundai Solaris HatchbackFord Focus Ambiente, Nissan Almena and Opel Corsa.

Occasional Driving Plan
Included with every plan: gas, insurance and up to 100 free kilometers per day
No deposit, No application fee, No annual fee
Per 30 min 200 RUR
extra 15 min + 80 RUR
Per hour 330 RUR
Day rent 3000 RUR
For each additional kilometerThe tariff for long distance (starting from 101st km and onwards) 7 RUR/km
Additionally:
Compensation for refueling/parking at parking point 15 min. free

 

Marketing mix. Product

Objective

Enable citizens who have driving license to have an access to a fleet of shared  in small parking lots and parking places around a city for the necessary period of time and to promote car sharing as an integral part of urban transformation.

zipcar users

It is proposed to implement fleet of the following cars:

Hyundai Solaris Hatchback

model-178-color-bejev

Nissan Almera

new_almera2

 

Ford Focus Ambiente

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Opel Corsaкорса

Concept of usage

In order to become a customer there are several simple steps:

  1. Make the contract online or in office
  2. Provide bank card information (for violation cases)
  3. present a passport and the driving license (with 1 year experience)
  4. obtain a plastic membership card- key in the office or at home by delivery.
  • 24 hours availability
  • Flexible Rental Timing
  • Flexible Pick up/ Return locations
  • Petrol included
  • Basic insurance covered
  • No booking fees
  • No peak hour surcharge
  • Conformation upon booking

Vehicle placement concentration

  • Airports and entertainment areas
  • Housing estates
  • Shopping malls/ Furniture Malls
  • Event areas (like expo)

The following video shows the usage process:

The value of the core product is consistent with the needs of the target market and established by its new idea on the Russian Market,  superior use of touch screens, tracking telematics, and mobile applications.

Service Strategy

The website and ZipCar application provide up-to-date information on rates, user guidelines, and vehicle locations that save the consumer’s time. Registration is designed for simplicity, security, and speed for maximum ease of use.

appz

 

Brand Strategy

“ZipCar” implies quick service that will get you wherever you want to go, acknowledging the target market’s need for instant gratification. In order to make people more aware about the brand, it is necessary to build a promotion plan.

 

 

Entry Mode: ZipCar in Russia

     Adopting the car-sharing model to the Russian marketplace is a challenge in and of itself. According to Ansoff’s matrix the direction of the Zipcar Company is a market development as the existing product (carshing) is planning to be introduced in the new market (Russia).

      Avis Budget, which had acquired Zipcar, focuses on strategic acquisitions and business development transactions to increase the opportunities for sales and growth in earnings and its acquisition of the Zipcar is a move to both complement and diversify portfolio (The Next Web, 2013).  Avis, being the part Avis Budget, actively operates in the Russian market providing the car rental service. So, in that case, joint venture Zipcar – Avis, can be considered as the possible entry mode, impling shared control and risk and split ownership.

entry

         Zipcar has to raise the required capital and then proceed to sign the contracts and build the infrastructure. The more vehicles and locations Zipcar can support, the more accessible this new service will become to potential customers allowing for faster growth. By combining with Avis, Zipcar can significantly increase growth potential and position the company to better serve a greater variety of consumer transportation demand which can be constrained by fleet availability. Zipcar fleet can be formed with Hyundai Solaris Hatchback, Ford Focus cars (supported by Avis) and Nissan Almena, which are manufactured in Russia and there is no extra costs  for transportation.

Issues to consider entering the Russian market:

Operations Management

Business Collaborations

Zipcar’s Fleet   Fleet Management System

Zipcar Technology Team:

  • Maintain ZipCar Systems & GPS
  • ZipCar Website and Mobile App
  • Fleet Management System

Car Servicing

  • Partnered Car Servicing Centers
  • Maintenance Crew

Frontline Crew

  • Customer Service Staff
  • Call Service Center
  • Car Relocating Team

Car Park Lots Managementfile3049

  • Renting/Purchasing Car Lots

Petrol Discounts

988d4437-6596-434e-900f-6237be129793

cooperation with Lukoil (118 gas stations in SPb, 109 in Moscow)

Insurance

  • Collaboration with insurance firm
  • Additional insurance for customers while using

Car-and-Calculator000020623323XSmall

Micro-analysis: SWOT

Strengths:

  • Cool and modern brand image
  • Unique technological platform
  • A lot of experience in the industry (1)
  • “Save-the-Earth” strategy
  • Avis is already operating in Russia (2)

 

Weaknesses:

  • No experience in emerging markets
  • Low brand awareness in Russia

 

 

Opportunities:

  •   Increasing environmental concerns
  • Government support of eco-cars and development of infrastructure (3)
  •  Partnerships with government and car plants (4)
Threats:

  • Increasing rivalry and substitute services (car rent, taxi, public transport)
  • Russian consumers are not familiar to car sharing
  • No infrastructure
  • High level of corruption and bureaucracy

Notes:

(1): Zipcar is a leading company in US. It enjoys first-mover advantage and therefore are well-aware of specifics and pitfalls in the car sharing industry. This experience might be helpful in expanding to another markets

(2): Avis is operating in Russia for more than five years, since Zipcar is its subsidiary that has no experience in emerging markets, it would be easier for Zipcar to enter Russian market with Avis’ experience

(3): From 2014, Russian government implement new legislation in order to support and promote the use of electro-cars. For instance, zero-tariff on the import of such cars and more facilities for service (charging and service stations). That might be crucial if Zipcar decides to continue its “green strategy” and will try to raise electro car culture in Russia.

(4): Since car sharing business requires of the company to own a wide-range car park, one of the possible solutions is partnerships with car assembly plants. Ford, General Motors and Nissan are successfully operating in Russia and might be considered as potential partners. Also, following from the previous point, Zipcar might be supported by government as a part of promoting electro-cars program.


To sum up: Although today car sharing is not well-spread service among Russian people and many things should be overcame in order to build profitable relations with customers, there are a lot of opportunities for the industry here. Moreover, Zipcar has several strategical advantages that will help it to become successful in Russia.

Meso-analysis : Carsharing in Russia

Intensity of competitive rivalry: LOW

There is a mutual impact between car sharing activities and the car rental business. New business models are being introduced and, as traditional car rental companies continue to provide hourly rental services and car sharing options.

There are key international companies operating in the category of car rental (Table 1). However, despite the significant growth (car rental value sales grew by 14% in 2013) and the presence of international car rental brands, the category of car rental is considered to have not reached its full potential.

Table 1. Car Rental Brands by Key Performance Indicators, 2013

Utilisation (%) Fleet size (‘000cars) Avg.# of Transactions Per Car Avg. Rental Duration
Avis 91.8 0.2 83.7 4.0
Dollar Thrifty 53.2 0.6 46.3 4.2
Eleks-Polyus 34.3 0.3 29.8 4.2
Europcar 72.5 0.3 66.2 4.0
Hertz 69.2 1.5 56.1 4.5
Others 7.9
Sixt 78.7 0.6 59.8 4.8
Total 11.5

Source: Euromonitor International

In case of car sharing, there are only TWO officially registered companies, which operate on Russian market: Anytime  in Moscow and Streetcar in Saint-Petersburg. Continue reading

Macro-level analysis of car-sharing industry in Russia

In order to assess the potential of car-sharing implementation in Russia we need to make a PESTEL analysis.

Political factors

Governmental plans
There is a plan of traffic jams reduction by 2016. By 2016, the authorities intend to increase the average speed by 17% through a variety of measures (source – Financial Times).

–Taxes and duties
Russian government has introduced higher vehicle tax rates depending on the engine power and proposed to rduce this tax for electric cars. The import duty on eco-cars was removed.

Subsidies
Regional subsidies for ecological projects.

Economic factors

There is a real income growth by 2.5%. Growth of real wages accelerated in February to 6% compared with 5.2% in January 2014, for the first two months, an increase of 5.6%. The unemployment rate remains approximately the same (5.4%).

Gasoline prices started to increase more for the recent time.

gas prise
Annual increase of gas price

Social factors

Environment
There are several ecological societies with successful propaganda of emission reduction (people start to care more about ecology).

Car Usage Culture
According to Russian Public Opinion Research Center, 42% of Russian citizens drive a car. And this indicator continues to grow  by about 2-3% per year. However, in big cities, such as Moscow or St. Petersburg 44% don’t drive to work due to trafiic jams.  Moreover, there is still a trend among the population to drive their own car.

Technological factors

Growth of internet expansion

File:Allocation of IPv4 Address Space RU.svg
Allocation of IPv4 Address Space

Using the internet and social networking sites such as Facebook, Vkontakte are the hottest trends of
this decade.

Progress of applications development

There is a significant increase of using mobile devices, such as iPhone and Android or Windows-based one. Thus, people have become to use different applications almost everyday, especially booking for plane, train or cinema tickets, hotel room etc.

– Infrastructure
Lack of parking places in major cities, which is a serious problem as well as traffic jams in big cities.

Environmental factors

There is a huge amount of emissions, which causes air pollution and bad ecological situations, especially in big cities. The following graph shows us that passenger vehicle emissions comprise two-thirds of that total. What is
more, vehicle emissions are one of the fastest growing sources of greenhouse gas emissions.

sources of emissions

Sources of Emissions

 

Legal factors

There are environmental regulations – special standards for emissions and gas quality, governmental plans to cut the emissions. Moreover, every vehicle should have an obligatory regular technical examination.

In addition, there is a problem of bureacracy for doing such a business in Russia.


To sum up the most important factors, which causes an opportunity for car sharing implementation in the Russian market are political, legal and environmental factors, which encourage eco-projects and technological development which helps to deal with customers easier. However, there are also obstacles, such as already existing lack of parking places and high importance of car ownership for people.