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Olympic Rent-a-Car

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by

Kevin Kwon

on 10 December 2014

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Transcript of Olympic Rent-a-Car

Background
Founded in 1976 by John Uleses
Had an original tagline: "Go with the winners"
Has a fleet of over 108,000 cars
Focuses on fuel-efficient cars
The Olympic Medalist Program
Follow Enterprise
Build A New Program
Eliminate current 3-level system
Focus on simplicity and convenience
Olympic Rent-a-Car
Kevin Kwon
Nicole Hensley
Alexander Larson
Johnson Leonardi
Elle Reed
Sarah Yoon

Options
Recommendation
Retain current program
Follow Enterprise's reward program
Build a new program
Retain Current Program
“Olympic Medalist Awards” – Bronze Level
“Olympic Medalist Awards” – Silver Level
Advantages
Disadvantages
Advantages
Disadvantages

Problem
Industry
- More competitive.
- Ability to offer same value to customers of Enterprise by matching Enterprise's value.
- Second-mover advantage.
- Olympic does not have financial backing
- Higher rental fees
- Unlikely to "steal" customers back
- Positioning themselves as a "knock off" version
Continued support from rewards members
Expanded Membership
Differentiation from Competitors
Greater value, no cost increase
Loyalty programs as competitive advantage
Types of consumers
Heavy business travelers (55%)
Medium business travelers (20%)
Light business travelers (5%)
Leisure travelers (15%)
Other (5%)
Competition in the industry
Fighting for travel booking industries
Pricing and Profitability

Olympic Rent-A-Car is struggling to keep up with their competitors' rewards program. They must choose an option that will keep them competitive and also retain and raise market share.
Build a new program.
Cost of developing new program and training staff
Current rewards members will all be at the same level under new program
Does not immediately increase profit margin
‘Simple: dollars equal points. Then add bonuses and upgrades.’
Goal: Gain long-term business from its best customers
Free to join
“Credits” = rewards like car upgrades, frequent flyer miles, etc.
Renting 1 day = 1 credit
16 credits = 1 free day of a rental
Credits valid for 1 year
Must rent 10x per year or 16 rental days
Earn a 15% bonus on base credits
Receive free upgrades for points
Eligible for 5 free upgrades per year

“Olympic Medalist Awards” –
Gold Level
Must rent 20x per year or 30 rental days
Earn a 25% bonus on base credits
Receive free upgrades for points
Eligible for 10 free upgrades per year
Competitive service and pricing
Lower overall pricing than leading companies
#1 reason for company’s growth & profitability
Members make up 8% of rentals, but account for 21% of revenue
Enterprise’s new program likely to be duplicated by competitors
Pros of Retaining Current Program
Program modified often over past 20 years to respond to competition
Very thin operating profit margin
Profit could easily turn to loss with slight mistake
Teleconferencing as a threat to business trips
Enterprise putting $40M into marketing vs. Olympic’s $28M
Loss of opportunity to take market share from Hertz
Cons of Retaining Current Program
Thank you for your attention
Current Market Share
Full transcript