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Olympic Rent a Car

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by

Ben Sabo

on 8 October 2014

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Transcript of Olympic Rent a Car

Olympic Rent-A-Car
Competitors
Hertz

Enterprise

Own a large market share
Markets
Airport Rentals

Dominated by major brands
Have to pay concession fees as well as fixed fees
Early mornings and late night collections



Local Rentals

Local offices including car dealerships and repair shops
Segments
More likely to rent a compact car than any other vehicle class

Likely to earn points during business trips and spend in leisure locations
Market
In 2002 there were nine national car rental companies

By 2012 there were just four major national car rental companies

High levels of competition

High entry barriers
Car Rentals
A service based industry

In 2009 total market revenue for the rental car business industry fell 6.5% from 2008

Revenue was up by 2.5% in 2010

In 2011-2012 the growth rate went up to 2-3% per year

Customer Loyalty Battles
History
Founded by John Uelses in 1976

Lower prices than Hertz

In 1987 John sold the business

Operations were conducted primarily at major airports and at downtown locations in major cities
Olympic Rent-A-Car
Car rental business

Struggling to compete with competitors

Do not hold a large market share

Customers are not loyal to their business
Problem
The recent implementation of a new customer loyalty program by Enterprise Car Rentals

No blackout days (days where demand may exceed supply such as public holidays)

The Enterprise rewards program works off the basis that dollars equal points, then you add in bonuses and points accelerators
Problem
The slow-growing market for business car rentals

Increase in web-based conferencing

Market has reached maturity with potential for decline

Opportunity
Adapt to the current and future trends of business users

Accommodate leisure customers

Focus on adopting a low-cost position

Reduce overheads and financial risk

Potential loss of loyal Medallist Program customers


Rapid increase in web-based conferencing


Adopting similar strategy to competitors may reduce differentiation

Opportunity Issues
Solution 1: Revise the customer loyalty program to reflect Enterprise's model
Offer free rental days on any car with no blackouts
Reward customers based on dollars spend, as opposed to days rented

Positives
Continued modification based on industry trends
Enticing repeat customers

Negatives
Shifting of value proposition
Financial viability
Pre-established program
Member rewards are based on their overall number of rentals
New rewards are earned as the number of rentals increase

Positives
Differentiation of rewards
Encourage customer loyalty

Negatives
Establishment of strategic partnerships
Cost of rewards
Pre-established program
Solution 2: Offer a tiered reward-based program
Solution 3: Scrap the loyalty program; offer a no gimmick, low price guarantee
Incorporation of price matching to ensure lowest industry prices

Positives
Maintain current value proposition
Reduction of overhead costs
Creation of a niche within the industry
Allocation of advertising funds to promote the new program
Scope for income generations

Negatives
Current lack of market share; no short-term competitive response
Disapproval from current Medallist rewards members
Recommendations
Low price guarantee

Reduce overhead cost

Niche market

High scope for income generation
Discussion Questions
1. Loyalty programs are a mainstay in the car rental industry. Do you believe an organisation could compete based on offering a low price guarantee alone?

2. Which of the three strategies do you believe would best solve Olympic Rent-A-Car's current problem?

a) Revise their loyalty program to be similar to Enterprise
b)Offer a tiered based program
c)Offer a no gimmick, low price guarantee


3.Olympic Rent-A-Car's business market is in its maturity stage. Should they focus on customer retention in this segment, or adopt new strategies to grow their market share?

4. Enterprise holds a much higher market share than Olympic Rent-A-Car. Could they compete by adopting a similar strategy?
References
Deighton, J Kindley, J. (2013). Olympic Rent-A-Car.: Customer Loyalty Battles. Harvard Business School.


Inkling. 2014. Inkling. <https://www.inkling.com/read/contemporary-strategy-analysis-grant-7th/chapter-13/strategies-for-declining> [Accessed 01 October 2014].


Implementation Plan
Full transcript