Budget estimation: Saint-Petersburg

Car 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

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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.

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”.

• 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

Streetcar tariffs

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:

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 

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

…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 Hatchback, Ford 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.

         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    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 Management Renting/Purchasing Car Lots Petrol Discounts cooperation with Lukoil (118 gas stations in SPb, 109 in Moscow) Insurance Collaboration with insurance firm Additional insurance for customers while using

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.

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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.

Zipcar: Wheels when you want them

Just imagine the world with a million fewer cars on the road…

Are you young, trendy and green-minded?

Do you live in  densely populated city?

Could you imagine what your neighbourhood might look like if there were up to 20 times fewer cars?!

Then Zipcar is created for you!

“We are obsessed about our customers! So, our work is to make your carsharing experience as easy as possible. Only $6/month or $60/year and You can become Zipster, a member of our exclusive community. We serve more than 810,000 members and offer nearly 10,000 vehicles throughout the United States, Canada, the United Kingdom, Spain and Austria. Imagine, you can actually enjoy all the benefits of driving without complexity of using the car: no servicing, no car-washing, no worries about hijacking and no additional costs!  Just “Join. Reserve. Unlock. Drive.”

We envision a future where car-sharing members outnumber car owners in major cities around the globe

“Save-the-Earth is our philosophy. We believe that we can change the world through urban and environmental transformation. That is why we are fans of electrocars! After joining Zipcar, 90% of our members drove 5,500 miles or less per year. That adds up to more than 32 million gallons of crude oil left in the ground—or 219 gallons saved per Zipster.”

 

Finally, we have packages not only for individual drivers, but also for progressive companies! Less cost, hassle and waste. It’s just plain good for business! We propose: Low weekday driving rates, for business members only. Gas, insurance, and daily mileage included. Conveniently parked around your office (and around the world)

Sounds nice? Zipcar in your city: join the club!