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?

 

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

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Streetcar tariffs

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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

 

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

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

Insurance

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

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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

Prospects for internationalization: ZipCar in Russia

Mega trends like growing urbanization and changing mobility trends have triggered interest in both existing car owners and new buyers. As the place of business becomes concentrated around inner city centers, private car owners feel the pinch of escalating fuel prices, rising parking charges and negative subsidies in form of tolls and congestion charges. And even if they are ready to pay this all, they will still face the challenge of finding a parking space at all.

Frost & Sullivan Industry Analyst, V. Shankar


Car-sharing services position themselves as offering an economical, convenient, and socially conscious alternative to car ownership (Forbes, 2014).

Zipcar, a membership-based car sharing company based in the US, is the pioneer in the car sharing industry.  Zipcar expanded into new markets using strategic mergers and acquisitions to become a global leader. Introduced first in Europe and later in North America, carsharing has demonstrated a rapid growth in the first years. However, according to MarketLine, in North America and European carsharing markets, the CAGR dropped from 64.0% and 26.0% respectively, in the 2006-2008 period, to 33.0% and 12.0% respectively, between 2010 and 2012. At the same time the Asian market increased with a CAGR of 40.0% in the 2010-2012 period, having previously contracted between 2006 and 2008. The fastest growth was witnessed in 2008-2010, with a CAGR of 155.0%. On the one hand, there are the clear signs of the maturity of the American and European markets, where Zipcar is currently operating. On the other hand, emerging economies market represents significant business opportunities.

WC_thenandnow

Source: Berkley, 2013

In order to expand its customer base and gain a new market share, Zipcar may put under consideration entering the Russian market as increasingly crowed urban centers in major Russian cities have caused the emergence of concerns among consumers such as personal convenience and the environment. The need to address air pollution, congestion and lack of parking, coupled with the impact of the economic recession has triggered the search for alternative transportation modes. The potential of carsharing is seen in helping to create a more diversified and sustainable transport system, providing cost savings to those who adopt it in favor of vehicle ownership.

The surveyabout the role of car in everyday life  which was initiated by exchange students in fall 2013 and continued by the team in spring 2014 have unveiled some unteresting results (presented below, 100 respondents 2013/2014, Saint-Petersburg).

Рисунок1

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Рисунок3

The results obtained are quire controversal. However the majority have stated that they need a car everyday and probably would like to try carsharing service.