Case Analysis: Enterprise's Dominance in Car Rentals PDF

# Marketing Channels: Delivering Customer Value ## Chapter Preview - Firms rarely work alone in creating value for customers and building profitable customer relationships. - Instead, most are only a single link in a larger supply chain and marketing channel. - An individual firm’s success depend...

# Marketing Channels: Delivering Customer Value ## Chapter Preview - Firms rarely work alone in creating value for customers and building profitable customer relationships. - Instead, most are only a single link in a larger supply chain and marketing channel. - An individual firm’s success depends not only on how well it performs but also on how well its entire marketing channel competes with competitors’ channels. - To be good at customer relationship management, a company must also be good at partner relationship management. ## Enterprise: Leaving Car Rental Competitors in the Rearview Mirror - Enterprise Holdings is the number one rental car company in the world. - They own and operate three brands, Enterprise Rent-A-Car, Alamo Rent A Car and National Car Rental. - Enterprise outpaced Hertz in the late 1990s and has never looked back. - Hertz captured 16% of the market share in 2012, while Enterprise captured 53%! - Enterprise is also much more profitable than Hertz. - Enterprise was able to achieve this success due to its industry-changing customer-driven distribution strategy. - While competitors such as Hertz and Avis focused on serving travelers at airports, Enterprise developed a new distribution doorway to a large and untapped segment: - **Off-airport, neighborhood locations that provided short-term car-replacement rentals for people whose cars were wrecked, stolen, or being serviced or for people who simply wanted a different car for a short trip or a special occasion.** - Enterprise's founder, Jack Taylor, discovered an unmet customer need, when his customers often asked him where they could get a replacement car when theirs was in the shop for repairs or body work. - Rather than competing head-on with Hertz and Avis by focusing on airport rentals, Taylor opened his first rental office in a center-city neighborhood. - This gave him a cost advantage and better access to his target customer. - Taylor’s business grew quickly, and he eventually opened multiple locations in other cities. - He renamed the business Enterprise Rent-A-Car after the U.S. Navy aircraft carrier on which Jack Taylor had served as a naval aviator. - Enterprise continued to focus on the "home city" market and provided short-term car replacement rentals for customers who’d been into wrecks or whose cars were being serviced. - Enterprise focused on building relationships with local auto insurance adjusters, dealership sales and service personnel, and body shops and service garages. - Customers in the home city market had special needs. Often, they were at the scene of a wreck or at a repair shop and had no way to get to an Enterprise office to pick up a rental car. - Enterprise came up with another game-changing idea: picking customers up wherever they happen to be and bringing them back to the rental office. - This gave them their popular tagline "Pick Enterprise. We'll Pick You Up". - By the late 1980s, Enterprise had a large nationwide network of company-owned, off-airport locations. - From this strong base, Enterprise began expanding its distribution system by directly challenging Hertz and Avis in the on-airport market. - A decade later, they had set up operations in 240 airports in North America and Europe. - In 2007, Enterprise Holdings acquired Vanguard Car Rental Group, which owned The National and Alamo brands. - National focused on the corporate-negotiated airport market, while Alamo served primarily the leisure traveler airport market. - With the Vanguard acquisition, Enterprise Holdings now captures a more than 31 percent share of the airport market. - This makes them the runaway leader in overall car rentals and puts the company ahead of Avis Budget Group and Hertz. - They operate 7,600 locations in the United States and four other countries. - Enterprise is passionate about creating customer satisfaction. - Enterprise developed a proprietary measurement system called the ESQi (Enterprise Service Quality index). - Enterprise calls about 2 million customers a year asking the simple question: “were you completely satisfied with the service?” - Enterprise managers do not get promoted unless they keep customers completely satisfied. - If customer feedback is bad, the company calls it “going to ESQi jail,” and they don’t get promoted until the numbers improve. - Enterprise has been rated number one in the annual J.D. Power U.S. Car Rental Satisfaction Study for six consecutive years. - Enterprise is always looking for better ways to keep customers happy and get cars where people want them. - Enterprise has now motored into yet another innovative distribution venue: “car sharing” and hourly rentals, called WeCar. - WeCar parks automobiles at convenient locations on college campuses, densely populated urban areas, and at businesses for residents who don’t own cars and business commuters who’d like to have occasional car access. - WeCar members pay $35 for an annual membership fee, depending on the location. - They can then rent conveniently located, fuel-efficient cars (mostly Toyota Prius hybrids) for $10 per hour or $60 to $75 for the day; the rate includes gas and a 200-mile allotment. - Renting a WeCar vehicle is a simple get-in-and-go operation. You just need to pass your member key fob over a sensor to unlock the car, open the glove box, and enter a PIN to release the car key. - Enterprise Holdings continues to move ahead aggressively with its winning distribution strategy. - Andy Taylor, founder Jack’s son and now long-time CEO, said, “We own the high ground in this business and we aren’t going to give it up. As the dynamics of our industry continue to evolve, it’s clear to us that the future belongs to the service providers who offer the broadest array of services for anyone who needs or wants to rent a car.” The company intends to “make cars available wherever, whenever, and however customers want them." ## Conclusion - Firms are rarely alone in creating value for customers. - They must work closely with other firms in a larger value delivery network.