University of Central Florida

Marketing Strategy Spring 2015

A Comprehensive Analysis with Strategic

Recommendations to enter Baldwin Park

by

Kyle Bouffler

Amanda Rodwell

Javier Ros

Sarah Wolfkiel

Professor: Dr. Pradeep Bhardwaj

May 5, 2015

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Executive Summary

Enterprise Rent-A-Car is an all inclusive total transportation solution. Since opening its doors in 1957, Enterprise quickly became the leader in car rental services. It is currently the largest car rental company in the world as measured by revenue ($17.8 billion in 2014), fleet (1.5 million vehicles), and employees (83,000). Though Enterprise has already seen success through it’s high market share and outstanding customer service, there is always room for improvement and to grow further.

This report is a comprehensive analysis of Enterprise entering a new market in Baldwin Park. Through extensive primary and secondary research the following was determined: 85% of the survey takers mentioned enterprise, but 65% did not deal with a car rental company. It was determined that marketing strategies needed to connect the high brand awareness to more customer loyalty.

Based on these findings, we have developed several strategies to bridge the gap between recognition of the brand and consumers call to action. From different loyalty programs based on customer needs to even branching out into a more modern rent per hour basis, we have come up with various ways to entice customers to rent from Enterprise. This marketing plan aims to accomplish the following:

Corporate Goalso Increasing Corporate Business in the Baldwin Park area by 12% annually.

Marketing Objectiveo Increase Loyalty to Enterprise in Baldwin Park through direct and indirect

promotional strategies. Positioning Strategy

o Create segmentation strategies through loyalty programs and prepaid pay per hour rentals to increase market share in Baldwin Park.

We strongly believe that Enterprise can greatly benefit by following our marketing methods and strategies. We are very confident in this work, and this marketing plan will outline just how Enterprise can become an even stronger leader in the whole Orlando market and Baldwin Park.

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TABLE OF CONTENTS

EXECUTIVE SUMMARY ........................................................................................................... 3

SITUATIONAL ANALYSIS ……………………………............................................................ 6

Industry Analysis ........................................................................................................................... 6 Industry Factors: Porter’s Five Forces ........................................................................................... 7 Rivalry Among Competitors .......................................................................................................... 7Potential for new entrants .............................................................................................................. 7Threat of Substitute Products ......................................................................................................... 7 Bargaining Power of Buyers .......................................................................................................... 7 Bargaining Power of Suppliers ...................................................................................................... 8

Environmental Factors: PESTEL Analysis .................................................................................... 8 Political Factors ............................................................................................................................. 8 Economic Factors .......................................................................................................................... 8 Social Factors ................................................................................................................................ 8 Technological Factors ................................................................................................................... 9Ecological Factors........................................................................................................................... 9Legal Factors ................................................................................................................................. 9

Analysis: 5 C’s ............................................................................................................................... 9 Company Analysis ......................................................................................................................... 9 Current objectives .......................................................................................................................... 9 Current Positioning & Marketing strategies .................................................................................. 9 Consumer Analysis ...................................................................................................................... 10 Primary Research on Current Customer Base ............................................................................. 10 Profiles for Possible Target Markets ............................................................................................ 11Competitive Analysis ................................................................................................................... 12 Competitive Overview ................................................................................................................. 12 Collaborators Analysis ................................................................................................................. 13Context Analysis .......................................................................................................................... 13

SWOT .......................................................................................................................................... 14 Strengths ...................................................................................................................................... 14 Weaknesses .................................................................................................................................. 14 Opportunities ................................................................................................................................ 15 Threats .......................................................................................................................................... 16

Goals & Objectives-Corporate Objective .................................................................................... 17 CORE STRATEGY Recommended Target Market..................................................................... 17 Recommended Positioning .......................................................................................................... 17

MARKETING STRATEGIES ..................................................................................................... 18

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The Four Ps - Product, Price, Promotion, Place .......................................................................... 18 Strategy I: PRODUCT …………………………......................................................................... 18 Strategy II: PRICE ....................................................................................................................... 19 Strategy III: PROMOTION.......................................................................................................... 20 Strategy IV: PLACE ………….................................................................................................... 20

Strategy Timeline ......................................................................................................................... 22 FINANCIAL DOCUMENTS ...................................................................................................... 22 MONITORS & CONTROLS ...................................................................................................... 23 CONTINGENCY PLAN ............................................................................................................. 23

APPENDICES ............................................................................................................................. 24 Appendix A Financial Analysis for Location/Reliability Segment ............................................. 24 Appendix B Financial Analysis for Customer Service Segment.................................................. 25 Appendix C Calculations for CLTV............................................................................................. 26 Appendix D Example of promotion on car................................................................................... 27 Appendix E Example of online app for reservations and online communications....................... 28 Appendix F Reservation graphic on phone................................................................................... 28Appendix G Survey to Baldwin Park Businesses......................................................................... 29 Appendix H Survey Results……………………………………………….................................. 30 Appendix I Survey Analysis ……................................................................................................ 31 Appendix J –Picture of Baldwin Park .......................................................................................... 32Appendix K: Research on Baldwin Park Businesses…………………………………………….33 Appendix L: Achievements and Awards...................................................................................... 34 Appendix M: Competition Matrix comparing Revenue and Customer Service Rankings……...35 Appendix N: Baldwin Park Residential Market Profile………………….……………….……..36 Appendix O: Consumer Decision Making Model with Targeted Marketing Strategy ……….....37

Works Cited ..................................................................................................................................38

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Situational Analysis

Enterprise Rent-A-Car is a car rental service company that originated in St. Louis, Missouri in 1957. Since then, Enterprise has quickly become the market leader. They have opened over 7,000 stores internationally, and currently have the largest fleet of vehicles. Enterprise is now looking to expand their services to the Baldwin Park area.

Industry Analysis

Baldwin Park is proving to be one of the fastest growing cities for business in the Greater Orlando area. The total growth rate of this city has grown dramatically since it’s humble beginnings of a Naval Base. Since then, the city is home to over 200 businesses, with about 30% of them being professional practices (lawyers, consultants, architects, etc.).

Baldwin Park is attractive to Enterprise because of the people that live there. The income level of Baldwin Park is roughly $15,000 more than that of the rest of Orlando ($55,453 and $40,275 respectively). From our research, a majority of these high-income residents also have a 30-35 minute drive to work each morning. Thus making Baldwin Park an ideal place on paper for a rental car service. Research on the demographics can be found in Appendix N.

Demand for employees, however, is low in these areas. Over 90% of businesses only have a total of 1-9 employees. This could be due to the fact that most of these businesses operate in the limited physical area that is Baldwin Park and many businesses are one of kind unique, where small growing businesses are an influx. This could hinder the use of rental car services because these companies do not run on a corporate level. This could also be beneficial though, since at times it could take immense time and effort to get through to the decision makers in these corporate offices.

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Industry Factors: Porter’s Five Forces

Competitive Rivalry

Car rental companies are extremely competitive. This statement holds true especially in the small area of Baldwin Park. This area, though small in distance, is a home to over 200 corporate and local businesses alike. In the immediate area, Enterprise is in a highly competitive market with Hertz, Avis and Zip Car. Whether it is through price, newer fleets, or upgradable features, companies consistently have to try to differentiate themselves from their competition, and Enterprise has managed to do this by maintaining a high level of customer service.

Threat of New Entry

With over 35% of the market share, Enterprise has already established itself as one of the leaders in the car rental services. Because of this along with many established brands, it would prove incredibly difficult for a company to enter into the car rental market. The high initial costs (purchasing or renting an attractive fleet of cars and a location itself) could be intimidating for new entrants. If price were not an issue, these new companies would also have to try to steer business from already nationally known market leaders that already have established reputations and customers. Loyal customers would be less inclined to trust a new company, and entering the market differentiating by price may even come off as cheaper quality. Thus making the threats of new entry very low.

Bargaining Power of Buyers

With the increasing amount of competition for car rental services in Baldwin Park, buyers are the true winners. If a buyer does not like the services that Avis offers, that customer could go to Enterprise, ZipCar, a taxi service, or even walk! This customer never has to settle and can continue searching for a service until all of his or her needs are met.

Threat of Substitutions

Differentiation may not be the only factor car companies have to think of in terms of rental services. Because Baldwin Park is a small area, one might be inclined to simply rent a taxi, ride their bike, or even walk to their destination. This means that Enterprise is not only competing against these other car rental companies, they are also competing against more local alternatives causing indirect competition and making the threat of substitutions extremely high.

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Bargaining Power of Suppliers

Because of the highly competitive market, the suppliers have very little bargaining power. If one company lowers the price of a vehicle, the others must follow suit or run the risk of losing business. This also depends on the relationships with the suppliers that cater to Enterprise and the economic conditions that gauge the fleet pricing. The assumption is that Enterprise, since it is a well-known and large stable company, has good relationships and therefore the power of suppliers is low to medium.

Environmental Factors: PESTEL Analysis

Political Factors

Enterprise Rent-A-Car, like most companies, has governmental regulations that it must abide by. The Telephone Consumer Protection Act of 1991 is a prime example. This Act prohibits businesses to communicate any advertisements to customers over the phone regarding services, goods, etc. It is only legal after the consumer accepts written or verbal consent. Enterprise is subject to federal mandates with advertising, selling, insurance and more and must stay current with political laws that are ever changing.

Economical Factors

The economy is in a constant flux, and thus has a direct impact on car rental services. If we see another recession, it is likely that corporate offices and companies will opt for a cheaper option than to rent a car for meetings. With Baldwin Park, it may become increasingly more enticing to walk or rent a taxi for the short amount of distance between buildings or use Skype, email, and other online communications for meetings.

Social Factors

The type of car a person drives can be directly related to social factors. If a car rental service wants to meet the needs of these consumers, it must have a wide variety in it’s fleet. This

includes: Safe family options, newer and more reliable options, as well as “green” cars. There has been a dramatic switch towards a “Green” conscience movement. This holds true for car rental services as well. From our survey and research, we have found that more people are looking for a “greener” alternative for cars. We have concluded

that it is more rewarding for these consumers because they are getting a sense of accomplishment and feel they are helping the environment.

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Technological Factors

Technology is always advancing. Companies can now reach customers on the road, through their phones via apps, and even their social media. It has been reported that over 80% of businesses that have used social media have seen improvement in their company’s growth. Car companies are constantly updating and developing new technology in their cars as well. We have seen this range from power windows to GPS systems in their dashboard.

Ecological Factors

The Florida weather has never been something that could be predicted. With random bouts of thunderstorms, intense heat, and even hurricanes and other natural disasters, it is imperative that Enterprise keeps it’s fleet in pristine conditions. With this uncertainly, precautions such as safe closed locations and insurance are considered.

Legal Factors

Enterprise incorporates customer liability to its vehicles. If a consumer rents a vehicle without getting the extended insurance, it is the responsibility of that consumer to pay the deductible for the repair of the vehicle. Consideration for safety for the company and employees is also considered. Note that many liabilities can be chosen to protect employees and customers and precautions should be taken to protect the Enterprise image.

The 5C Analysis

1) Company

Current Objectives

Enterprise Car Rentals has been around for over fifty years and has enjoyed a lot of success in the neighborhood car rental industry. To continue growing their company, Enterprise wants to increase its car rental sales in a very specific and targeted manner. They want to move into the Baldwin Park area of Central Florida and target the businesses of Baldwin Park to increase their corporate sales by 12% annually. To accomplish this goal there will have to be a few changes done to their current marketing in order to attract the attention of such a specific demographic.

Current Positioning & Marketing Strategies

Enterprise prides itself on its excellent customer service and young fleet of cars. Whereas many competitors try and win customers on price, Enterprise positions itself as a quality and reliable rental agency that the community can rely on. This is made most evident through their slogan “we’ll pick you up.” This slogan and the practice that comes with it embody how much Enterprise cares about its customers. Another aspect of Enterprise’s reliability is the cleanliness

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of their cars. After every car is returned, the company cleans it to make it like new for the next consumer.

Enterprise has such a strong brand name and such a strong market share (35.8%) that they don’t rely too much on advertising to communicate their service. The channels they do use are television commercials and by having an Internet presence both through their website and their social media pages. Both of these channels are controlled on the corporate levels and so local Enterprise offices have little to no control over the content that is presented.

On a local level, Enterprise has a few different channels of communication to attract both new and old consumers. The first is their sales representatives. To manage the accounts with businesses, Enterprise has sales representatives that find corporate leads and act as a bridge between the two companies. They are the main ones who build value to the consumers and identify why different companies should utilize the car rental service.

When we met with Enterprise, Dwayne told us that his office relies a lot on word of mouth. Consumers who have good experiences with Enterprise will likely recommend them to their friends, family, or coworkers. Positive word of mouth helps consumers see that Enterprise really lives up to the image it is trying to portray. There are times however when customers have a bad experience and that can cause negative word of mouth, which diminishes the company’s brand equity.

The last channel Enterprise uses to communicate its value is through different companies they partner with to receive referrals. These kinds of companies are usually insurance agencies, auto-shops, or car dealerships. When a person’s car is broken, be it because of an accident or just a malfunction, the person will usually bring it to be fixed by their car dealership or an auto-shop. The person may also speak with their car insurance to see how much the insurance will cover. It is during these conversations that the companies can refer their consumer to Enterprise if they need to rent a car while their own car is in the shop. Enterprise offers different benefits for companies who partner with them in this way.

2) Consumers

Enterprise Car Rentals serves people who require a temporary vehicle. It is often thought that it is more common for people to need car rentals while they travel. While this is true, Enterprise mainly targets at serving local residents in the community. Residents need car rentals while their own car is unavailable whether it’s because of maintenance or an accident. Enterprise also serves corporate clients who use car rentals for business trips. The corporate clients are the ones Enterprise wishes to target in the Baldwin Park area.

To learn more about the business in Baldwin Park we conducted primary research by traveling to Baldwin Park to go door-to-door and survey only businesses about their car rental habits as an entity. We discovered that 85% mentioned Enterprise as a car rental company that is

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within their evoked set, 65% of the respondents are not loyal to any one particular car rental company, and 75% go for a car rental company that is very well known. We also discovered that the average price the consumers were willing to pay averaged out to about $31.00 and more than half of the respondents equated car rentals with the color green. It was also seen in the survey results that most of the businesses do not offer an expenditure on the amount of miles traveled by car for business related travel and most companies send out a request for car rentals as opposed to being solicited by one. When computing a cross tabulation against the questions: “How likely are you to recommend a car rental company?” and “Do you usually rent from a large popular car rental company?”, 75% that rent from a large known car company, somewhat to highly recommend a car rental company. With a significance value taken of .05 and the p-value being above .5, we can fail to reject the null hypothesis and assume that this data is significant. This means that we can assume that the businesses that do rent from major car rentals will recommend to friends and family. This is a huge opportunity and lets us know that word of mouth will work in this market. Appendix I shows the analysis.

Below are the possible Alternatives created after researching Baldwin Park and the types of businesses:

1. Segment Based on B2B or B2C Businesses: This would narrow the target market down but it could target it too far since there are only a limited number of businesses in this community.

2. Segment Based on Attribute Importance (Customer Service, Location, etc.) This would segment the market well based on needs, though, it could be difficult to maintain these segments if the businesses in each segment are extremely diverse.

3. Move into Baldwin Park to target the whole community: This is the best way to gain immediate attention and market share but at a steep cost that could possibly not breakeven for a long period of time.

After reviewing the data we decided to segment the businesses using the second option, into two segments based on attribute importance: the first group is the consumers who emphasize customer service and the second group is the group who emphasizes location/reliability. It was clear that customer service, location, reliability and price were the number one attributes when asked on the survey as seen in Appendix H. Note that price is not strength of Enterprise as they differentiate based on many factors. Taking into account consumer behavior analysis, most companies or people do not make decisions based on just one attribute and instead focus on two or three when making a decision. Conjoint analysis theorizes that buyers view products as composed of various attributes and levels. Because of this, looking at the participants who listed price as the most important attribute, it is equally as important to search for this segment’s second most important attribute listed. The second most important attributes with percentile weights are listed in Appendix I. All of the second most important attributes for the pricing segment fit into either the customer service or location/reliability segments created. We include

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this since calculations to figure the absolute potential market share for businesses in Baldwin Park is essential.

Customer Service Segment

We determined that in the Baldwin Park area there are between 154 and 240 businesses. From our survey we gathered that the majority of business people in Baldwin Park care mostly about Customer Service. This means they care about the quality of cars, the level of service given to customers, and the efficiency of the rental car company to process the order. This demographic is the perfect group for Enterprise to target because of the brand image they have portrayed as being a highly customer service oriented. Even though Enterprise is in the perfect position to capitalize on this segment, there appears to be something lacking since these consumers have yet to purchase Enterprise’s rental car service.

Location/Reliability Segment

The second segment we discovered in our primary research is the Location/Reliability segment. The location of the car rental office and the reliability of their service was the second most important thing that respondents put on their surveys. This means that they would be more inclined to choose a particular car rental company based on how close it is to their business. This also means they want to be able to place a lot of trust in the car rental company and know that they as business people can rely on them for their travel needs. This segment may be a little more difficult for Enterprise to target considering Enterprise does not have an actual office located in the Baldwin Park area. The closest office is on Colonial about 10 minutes away, which does not sound like a lot but the traffic on Colonial can cause that 10 minute trip to become a 15 or 20 minute trip.

3) Competitors

Competitive Overview

In the Car Rental Industry there are many different companies that consumers can pick from. The two biggest competitors that Enterprise faces are Hertz and Avis. However our group also discovered that another source of competition for Enterprise is companies who have begun pay by the hour programs.

Hertz

Hertz has been around since 1967 which is 10 years younger than Enterprise. They mainly provide car rentals and leasing, truck and van rentals, heavy equipment rental, and a little bit of car and heavy equipment sales. Their based out of New Jersey but their “Thrifty” business segment is based out of Tulsa, Oklahoma. With this segment, Hertz tries to target the price sensitive consumers with their Dollar Rent A Car and Thrifty Car Rental brands. Another strategy Hertz has implemented is to allow an hourly car rental program which charges

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consumers a certain price per hour that the car is in use. Hertz has enjoyed financial success increasing their operating income by about 30% last year at $607 million (Hertz).

Avis

Avis is based out of New Jersey also and has been around since 2006. They operate under two brands in the United States: Budget Rent A Car and Avis Rent A Car. Budget Rent A Car targets price sensitive consumers who are looking for an affordable car rental and Avis Rent A Car targets both business professionals who travel for work and also premium leisure travelers. Avis also has a acquired Avis Europe in June 2011. The past few years Avis has also enjoyed some financial success with a 47.5% increase in operating income this past year at $590 million (Avis).

Zipcar

Zipcar is a car sharing company that was founded 2000 in Massachusetts. In 2013 they were bought out by Avis and became a subsidiary of Avis. Zipcar offers consumers hourly and daily rates for car sharing. The cars that consumers rent out are placed in parking spots around a city for easy access. Consumers pay monthly for a membership and pay an hourly or daily rate on top of that. To access the cars, consumers schedule a reservation time and are given an access code that opens the car when they are ready to use it (Zipcar).

4) Collaborators

Enterprise has many acting collaborators. In our meeting with the East Colonial Manager, the different types of entities that refer customers to the Enterprise office was questioned. These entities, as mentioned earlier, include insurance agencies, auto-shops, car dealerships, and sometimes even their own corporate clients. In addition to these collaborators, Enterprise also collaborates a lot with large airports. For example, in the Orlando International Airport, there is an Enterprise office located there for incoming travelers to be able to immediately rent out a car.

Enterprise also collaborates with travel agencies such as Expedia and Orbitz. These travel agencies help consumers plan an affordable trip, which includes bundling their flight, hotel room, and a car rental.

5) Context

The Enterprise office on Colonial is looking to increase its corporate sales in the Baldwin Park area. Baldwin Park is home to many businesses but the majority of them are business to consumer stores (about 70%). Baldwin Park is also a very small community with a high walkability and it is considered a very high-end environment, demographically when considering high income and degree levels and home prices that start on average at $1 million (City). As previously stated in the situational analysis, Baldwin Park, a previous Navel base, was initially

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created as a small nit community that would act as an escape from the city life located less than a mile away.

SWOT Analysis

Strengths

Since the company has been around for fifty years there are many strengths that the company has. First and foremost they are the leader in their industry with 35.8% of the market share. The next closest competitor in the market is Hertz with 17.9% of the market share. Having this much market share means the company has enjoyed a lot of success and is a very recognizable brand name to consumers. Being the industry leader will help Enterprise in Baldwin Park because according to our primary research many business people in that area will choose a car rental company based on how well known it is and we can see that Enterprise will be in the evoked set for the consumers they are targeting.

Enterprise is also the number one car rental company when it comes to customer service. Both Hertz and Avis differentiate themselves based on value and price whereas Enterprise establishes itself as a premium high quality car rental company which means having the best customer service as well. People who are willing to pay a little more money to have a pleasant experience at Enterprise will usually be very satisfied and choose to go back and rent with them again. This will also result in positive word of mouth for Enterprise which will bring in more sales because peers are some of the most trustworthy resources for people when they are trying to make a decision.

When it comes to car rentals there is a sort of stigma about the quality of cars available for renters. It is thought that car rentals are usually older cars that are not very clean. However Enterprise prides itself on having the youngest and cleanest fleet of cars in the industry. Their cars are never more than three years old and after every return, the cars are put through a deep cleaning. This is done to ensure a pleasant driving experience for the renter which would add to the good customer service that they should have received while in the office.

Lastly Enterprise has “deep pockets.” They have enjoyed a lot of success over the past few years and have also enjoyed growth in their sales. Since Enterprise is a private company and are not obligated to give out a public financial report, IBIS World estimated that Enterprise earned about $1.4 billion in operating income during the year 2014 which was an 84.2% increase in operating income from the year before.

Weaknesses

Having those strengths does not mean Enterprise is void of any weaknesses. The biggest weakness Enterprise has is not having a physical location in Baldwin Park. From our surveys we discovered that consumers factor the location of the car rental office as an important part of the

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decision making process. As a result, there may be situations where a consumer will choose not to rent from Enterprise, but rather rent from a competitor, simply because the competitor is closer in proximity. This proximity leads to easier access which does affect the quality of service the consumer is experiencing. As stated previously, the closest Enterprise to the Baldwin Park Area is located on Colonial near Downtown Orlando, which could result in a 10-20 minute drive depending on traffic.

In addition to not having an office in Baldwin Park, Enterprise Car Rentals has a very poor website. It looks outdated and it isn’t very user friendly. Companies nowadays have very modern and aesthetically pleasing websites.

Enterprise also has a weak social media presence. Compared to other companies in the industry, Enterprise does have the most Facebook likes at just over 300,000. However on Twitter, Hertz has by far more followers with 40,400,000 compared to Enterprise’s 16,000 followers. Overall these numbers are low compared to most well-known company Facebook pages. To effectively use social media, Enterprise needs to find a way to grow their amount of followers and to engage them in it.

Opportunities

Enterprise has numerous opportunities to be successful in the Baldwin Park Area. They can focus on: Social Media and Internet campaigns, going more “Green,” creating loyalty programs, or to not go into Baldwin Park at all.

1. Social Media and Internet Campaigns

With the advent of technology on phones, tablets, etc. it has become easier for a company to always stay on the minds of potential consumers. It’s an easy way to promote services, goods and specials and creates strong brand awareness. Customers might be more inclined to check social media platforms if incentivized with deals and coupons on services. A growing number of people and business alike are on various social media platforms and by executing a strong social media presence in Baldwin Park, Enterprise has the potential of monopolizing the small area.

2. Going more “Green”

A growing number of people are embracing the “Green” movement. They believe by driving these cars, they are protecting the environment from harsh chemicals while also saving money on gas. By having more “Green” options, Enterprise is opening its doors to a completely new environmentally friendly market. They would also be able to strongly differentiate from their competitors.

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3. Creating Contracted Loyalty Programs

Creating loyalty programs entice consumers to want to continue using the service. We have formulated two separate loyalty programs based of segmenting the consumers into two categories: those who want location and reliability as foremost, and those who mostly seek customer service in choosing car rentals as stated in the 5C Analysis. Creating loyalty programs that fit the needs of the consumers will increase share and overall market sovereignty.

4. Going into Baldwin Park

Baldwin Park is a rather small area, dimensionally less than 2 miles by 2 miles. This company could move in and increase market share and presence by becoming the only car rental in Baldwin Park. When taking into account the costs though, there would be a large upfront cost to rent out a storefront, transport their fleet, and hire employees to run an Enterprise in the area. There is also an Enterprise location roughly ten minutes away, which may cause cannibalization in the company.

Threats

With the size of Baldwin Park being as small as it is, we have determined that fuel prices and high competition can be a big threat to Enterprise.

1. Fuel Prices

Companies may opt not to rent vehicles when traveling to Baldwin Park because the price of fuel is always fluctuating. Because of its size, companies may find it more cost effective to rent a taxi or even walk building to building.

2. High Competition

As mentioned earlier, car rental companies are extremely competitive. In the immediate area, Enterprise is in a highly competitive market with Hertz, Avis and ZipCar.

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Enterprise Goals and Objectives

The primary marketing strategy is to increase the corporate presence of Enterprise in the Baldwin Park area by 12% annually. We see potential in this area, with the plethora of businesses and the opportunity for growth. As of lately, Enterprise does not have as many corporate partners in the Baldwin Park area. This does not however mean there is not an opportunity to increase the numbers. Competitors such as Hertz and Avis are present around this area, proving the need for car rental services is there.

In addition to building new partnerships in the Baldwin Park area, increasing brand awareness in this area is a secondary objective. In order to see how Enterprise stands, comparisons are a necessity to the local competitors to get a better idea of the present situation in Baldwin Park. Once a clear path has been shown, we will adjust our strategies to align with our goals.

Core Strategy: Recommended Target Market & Target Marketing Profile

Through our survey results and research, we have concluded several things about Baldwin Park that helped us shape our target market. Based on all of this info, it can be concluded that the area for growth are mostly small businesses. Thus, the average client in Baldwin Park is the employees and owners of these small businesses. 13 out of 20 people we surveyed indicated that the company they worked for did not, in fact, have current contracts with a car dealer supplier. This creates an opportunity with unforeseen needs and possibilities. Furthermore, 75% of the respondents said they would be more interested in a well-known company. Being that Enterprise is one of the ‘Big 3’ car rental companies this is beneficial when entering this market. Using this primary research as well as additional secondary research the target market for the Baldwin Park area are businesses that favor customer service and location/ reliability.

Recommended Positioning

Based on the survey results above and the target market, it is important that the positioning of Enterprise reflects these efforts. Enterprise has a great foundation and is known nationwide as being a top leader in car rentals. Reiterating that in the Baldwin Park area will help

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the ease of new customers as they decide whether or not to use the rental services that Enterprise provides. In order to attract the target market, Enterprise needs to be able to offer what the consumers want. Showing these companies that Enterprise has a great customer service system will put Enterprise ahead of its competitors to these businesses, especially pursuing using CRM or customer relationship management. The goal for Enterprise is to maintain long-term relationships with these businesses and focusing on the customers that most benefit their core values. For the customer service segment, a loyalty program will be positioned. In terms of the location/reliability, it can be communicated to the potential new customers that Enterprise offers the latest cars in their fleets and are immediately there when needed. To convey this message, parking spots will be bought all over Baldwin Park with prepaid hours that will be ready to go as car rentals on a hour base.

Marketing Strategies

The 4 P’s on the different strategy segments are listed below.

Strategy 1: Product

Enterprise offers a vast array of rental cars, including young cars. The product value for Enterprise is very well known and their brand awareness reflects that. Maintaining product value as Enterprise tries to expand their corporate business into Baldwin Park is crucial in its success. Transparency with customers when it comes to certain features with available cars will increase Enterprise’s likeness in the area.

Customer Service Segment: A loyalty program has been drafted to cater to the customer service segment of our target market. With an annual fee per business, the business receives 20% off any car rental. Along with this discount, the businesses will be incentivized through loyalty points. Below is a detailed description of how the loyalty program works and its benefits. The loyalty program will be a point-based program with different benchmarks attributing to different levels of membership.

Bronze- 20-40 points

Silver- 41-60 point

Gold- 61-80 points

Platinum- 80+ points

Each benchmark gives different rewards to members. Points are acquired based on frequency of rentals and time period of rentals. Rewards include but are not limited to a percentage off a car rental and an extension of time for a given rental. This promotion will give customers a reason to talk to their coworkers to hopefully gain more business. 8 points will be

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given to each member who acquires a new customer for Enterprise. Platinum members have points that don’t expire, however Gold, Silver and Bronze levels only have a certain amount of time to spend their acquired points. This promotional tactic will ensure success for Enterprise by giving it new business and will encourage a long-term relationship with these new customers.

We will also be hiring an intern to go around to each of the businesses to accurately describe the new product and how it can help each business on an individual basis. Stickers will be placed on cars throughout the downtown Baldwin Park area to reach people that the intern may not be able to. Both of these efforts will increase the awareness of the promotion, making businesses more likely to partner with Enterprise.

Location/Reliability Segment: With the competition using hourly car rentals are increasing, this segments strategy includes ready to go cars located in parking spots distributed over Baldwin Park. The steps to sign up for the service and secure a car rental is as follows:

1. Pay a sign up fee and receive a SMART card.

2. Buy at least 100 hours of car rental time.

3. Using the online website or application, register for a car, time and date.

4. Details will be confirmed with the customers’ preferences on text, email, phone call or through application.

5. At specified arranged time, use SMART card to scan over card reader on dashboard to open car door.

6. Enjoy your car rental and return rental to same spot at the same gas level.

The product and car fleet will be exactly the same as the East Colonial location will be maintaining this fleet, switching cars out weekly and cleaning them between once and four times a week depending on demand. Any issues with the cars or card readers, the customer can call that location during normal business hours or the 800 number during non business hours to resolve issues, as this is the same with normal car rentals at Enterprise. Appendix E and F give examples of the online reservation system design.

Strategy 2: Price

The prices will be different based on the segment. Enterprise offers a reasonable and fair price point for the value created through its brand. Maintaining an image through the right price point is always an art so additional primary research could be taken to understand the segments deeper.

Customer Service Segment: This segment’s annual sign up fee will range from $100 to $200 depending on the type and size of business along with demand. Pricing will be straight forward

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as this is a simple discount taken off of the normal price. Prices range on type of day, time of day and season with the average price of car rentals, including a diversity of economy and luxury cars, selling for $75 per day (USA).

Location/Reliability Segment: The annual sign up fee for this segment is $35. With a mandatory purchase of at least 100 pre-paid hours pricing at $9 per hour each, this pricing is also straightforward. Depending on demand and likeability of this product and pricing, different levels could be made later down the road that incentivize to purchase more hours. This could include a loyalty program or a decrease in the dollar amount per hour for different levels of hours purchased. For example 100 hours could be purchased at $9 per hour but if you purchase 300, the cost goes down to $8 per hour. More primary research should be conducted to analyze the purchase behaviors that incentivize this community.

Strategy 3: Promotion

The promotional efforts are initially the same for these segments and branch off based on the positioning strategy.

Customer Service Segment: Since these customers are related to the loyalty programs, the new hire or intern paid to sign up and maintain this relationship is the initial direct line of promotion. They communicate the brand and create retention through loyalty. LinkedIn will be used as a online way to inquire businesses in Baldwin Park and also as a form of communication that’s professional and informative. This segment, along with Enterprise’s traditional promotional strategies is focused on the effectiveness of word-of-mouth using friendly and knowledgeable customer service.

Location/Reliability Segment: These customers will most likely have to be acquired in person to communicate the ready-to-go spots and show how Enterprise maintains a high level of customer service and reliability without a person of contact there to greet. Promotional stickers will be placed on cars that are being used throughout the Baldwin Park area as well as outlined parking spots to brand the designated area of the car rental. Both of these efforts will increase the awareness of the promotion, making businesses more likely to partner with Enterprise as they see the name more often and question the parked cars in the area. Examples of these are in Appendix D. Since this is a small knit community, word-of-mouth will also be beneficial for this segment as this new car rental system creates excitement around the neighborhoods.

Strategy 4: Place

The place of the car rentals differs slightly with each segment but maintains a main point of contact at the East Colonial location.

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Customer Service Segment: Since the East Colonial location will handle most of the trips in Orlando, it will also benefit from setting up rentals outside of Orlando and even outside of Florida for businesses.

Location/Reliability Segment: Since building another location in Baldwin Park is costly and inefficient the parking spots are a cost effective and innovative way to place the product. First and foremost, the East Colonial location will be a point of contact and will be the designated location for all services. To compensate for not having a location closer to Baldwin Park, Enterprise will own multiple parking spots throughout the downtown Baldwin Park area which will have a car available for businesses to rent. The cars will be ready to go, simply requiring a pre-payment of 100 hours. This will increase reliability with customers as they will be in physical walking distance of the car and can avoid troubling scenarios like heavy traffic to get to a rental car or getting lost on the way to and from the rental company. The flexibility that comes with this plan allows for Enterprise to be as involved as the company desires, which is important as there are over 150 unique businesses in the Baldwin Park area with different needs.

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Strategy TimelineThe time frame for this strategy is 3 months of set up and 1 year to see results for both

segments. The following are the financial documents along with the set of risk calculations.

Financial Documents

Since Enterprise Rent-A-Car is an established company with strong financial experience, it is stable fiscally with the greatest market share in car rentals. Researching Baldwin Park though, there is potential to increase revenue and market share through their already strong finances and brand awareness. From the primary research conducted there’s two overall market segments with different financial plans: Customer Service and Location/Reliability. The financial statements with a projection of 2 years for these segment plans are included in the appendices as noted. In relation to cost, we assume the segments are equally divided in the total potential market share based on survey results of important attributes. 12% annually is used as a goal for each segment to increase since this is the East Colonial’s annual growth goal (Telephone Interview).

The costs associated with the customer service segment include the 20% discount (this is not actually a cost but is a loss in revenue and will therefore be included in the cost section) and the new hire responsible for caring for the Baldwin Park area. The assumption is this will be an intern, working 25-30 hours per week, earning possible course credit and earning $12 per hour. These costs are calculated on an annual base as $5400 and $15,600 respectively, assuming 12 businesses, 12% of the market that year. The income is generated from the $150 signup fee and the actual car rentals, assuming 30 car rentals per year. The revenue from this segment the first year therefore equals $2400. Appendix B shows these calculations for 2 years. If calculated on an individual bases, it costs $1,315 to obtain one new customer. The breakeven time is less than a year with revenues generated within the first year depending on usage.

The costs associated with the location/reliability segment have more variable associated costs depending on the number of customers and usage. These include the $3600 annual fee per car spot (note that only about 1/3 to ½ spots will be purchased compared to number of customers for efficiency), the $33 for each card reader, the 50 cent fee for each actual card given to the customer, the cleaning and switching of these cars equaling to approximately $10 per week or $520 annually, along with the promotion on the car, about $36 per car, and a fixed cost of $200 to install the technology and update the website and app to include this service. Since this will be done corporately, the assumption of a salaried role for this fixed cost is used. The income is generated through the $35 signup fee and the amount of prepaid hours bought to rent these cars, averaging 5 hours per week used for 50 weeks (250 hours) at $9 per hour, assuming two weeks of vacation for holidays and off days. The revenue for the first year is therefore about $8,200, with steady increase in each year thereafter. Appendix A shows these calculations for 2 years.

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The cost to obtain one customer for this segment equals about $1600, dividing the cost by the number of customers expected. The breakeven time is also less than a year, with this segment more fluctuating with demand because of the variable costs.

Risk and Reward Analysis

Calculating the risk for each segment strategy is found by dividing the potential income by the associated annual costs. For the first segment, the loyalty program, this equals about 0.5 and the second segment risk to reward equals about 0.43. This risk and reward calculation increases to 0.7 and 0.5, respectively for the second year. Most financial advisers do not recommend a risk to be taken if this number is under 2 and preferably 4. With respect to most financial advisors and this calculation, if only businesses are used as the market share without regards to the increased brand awareness and potential revenue from Baldwin Park residents, then this number will generate a relatively small gain. This number again can be recalculated and most likely increased with a decrease in risk if the community market share is taken into consideration (Auto).

Monitors and Controls

The metrics used for these two segments will be revenue generated, customer life time value and market share growth based on the 12% annual goal.

In the Location/Reliability segment, the card reader will allow as a tracker to track usage, location, and customer data specific to the company and individual. This will act as primary research as well to see the patterns of businesses and create more in depth profiles of the companies in Baldwin Park. The new hire focused on the customer service segment will also help service this segment to create new customers and determine the plan and segment the customer is in, in relation to their attributes important to car rental companies.

In the Customer Service segment, the new hire will act as the tracker, following up and communicating with these businesses personally to verify they are receiving the needed attention and care. From here, this will act as primary research to serve this segment better and change, if need be. As you can see from Appendix C, customer life time value is a good indicator of retention and total revenue an individual customer can give and should differs based on the segment. In these target markets, the customer service segment has a higher value and should be valued higher.

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Appendix A: Financial Analysis for Location/Reliability Segment, Years 1-2

Year 1- 12 customers Year 2- 24 customers

Sales AmountSign up Fee, $35/ each $420Averaging 250 hours, $9/hr $27,000Total Sales $27,420

Cost Analysis Amount$3600/spot (5) $18,000Card readers, $55 each (5) $275Cards, $.50 each (12) $6Promotion on cars, $36.16/car (5) $180.80Cleaning, $10/week $520Fixed Cost- One Time Fee AmountTechnology Fee Cars/Apps $200Total Costs $19,181.80

Revenue AmountSales-Cost $8,238.20

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Sales AmountSign up Fee, $35/ each $840Averaging 250 hours, $9/hr $54,000Total Sales $54,840

Cost Analysis Amount$3600/spot (10) $36,000card readers, $55 each (5) $275Cards, $.50 each (12) $6Promotion on cars, $36.16/car (5) $180.80Cleaning, $10/week $520Total Costs $36,981.80

Revenue AmountSales-Cost $17,858.20

Appendix B: Financial Analysis for Customer Service Segment, Years 1-2

Year 1- 12 customers Year 2- 24 customers

Sales Amount$150 sign up fee $1,800Averaging 30 rentals per year $21,600Total $23,400

Cost Analysis Amount20% discount (12 x $15 x 30) $5,400New Hire $15,600Total $21,000

Revenue AmountSales-Cost $2,400

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Sales Amount$150 sign up fee $3,600Averaging 30 rentals per year $43,200Total $46,800

Cost Analysis Amount20% discount (24 x $15 x 30) $10,800Baldwin Park Hire $15,600Total $26,400

Revenue AmountSales-Cost $20,400

Appendix C: Calculations for CLTV, Using Year 2 Calculations

LTV = (M/ (1-r+i))- AC

M = margin on an annual basis

R= 1-churn rate

I= interest rate

AC= acquisition costs

1. Assumptions: Interest = 5%, r = .97 or churn rate of 3%

Customer Life Time Value for Customer Service Segment

LTV = ($850/.08) - $650 = $9,975.00

Customer Life Time Value for Location/Reliability Segment

LTV = ($744/.08) - $1541 = $7,759.00

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Appendix D: Example of promotion on car

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Appendix E: Example of online app for reservations and online communications

Appendix F: Reservation graphic on phone

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Appendix G: Survey to Baldwin Park Businesses

1. What companies come to mind when you think of car rentals?

2. Does your company currently deal with one car rental company?

3. If so, which one and why?

If not, why?

4. Does your company have a pay per mile expensed out to you to cover work related travels with your car? Y/N

5. Does your company send out requests for proposals to car rental companies or do the car rental companies approach you unsolicited?

6. Rate the following in order of importance for car rentals for company use: (From 1 being least important to 7 being most important)

Customer service (knowledge and friendliness)ReliabilityPriceIncludes pick-up process Location (closeness and cleanliness)Car SelectionCustom Plans for your company

7. To your knowledge, do most of your company employees live in Baldwin Park or in other sections of Orlando?

8. What is the highest price point your company is willing to pay per car rental?

9. Does your company go for a large popular known car rental company?

10. Does the minimum 25 years old age limitation for drivers affect your company to rent cars

11. List 3 attributes that you would want from a car rental company?

12. What would motivate you to switch from your current car rental company?

13. For what occasions does your company rent a car? (travel, conventions, special occasions, etc.)

14. What is the likelihood that you would recommend a car rental company?

15. Do you enjoy driving to work?

16. What color do you think of when you think of car rental companies?

Yellow, Red, Green, Other

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Appendix H: Survey Results

What companies come to mind when you think of car rental companies?

Graph of Pricing Segment’s Second Most Important Attribute

Responses to: What is the likelihood that you would recommend a car rental company?

Rank the following in order of importance (1 most important to 8 least important): Down Below

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Appendix I: Survey Analysis

The Blue (1) is first most important attribute, Red (2) is second most important attribute according to the survey results

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Appendix J: Picture of Baldwin Park

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Appendix K: Research on Baldwin Park Businesses

Number of Businesses:On Baldwin Park community network: 154In Zip Code 32814: 240Average amount between those: 197

Type of Business: 70% B2C 30%B2B

Industry of Businesses: 80/240 Are in the professional/technical field (lawyers, consultants, architects)

Size of Businesses: Over 90% have between 1 and 9 employees

Problem: There is a lack of parking

Most important Attributes of a Car Rental Company:Customer Service (40% answered as most important)-8Price (30% answered as most important)-6Reliability (15% answered as most important)-3Location (15% answered as most important-3

The Survey Participants that answered Price as Most Important Attribute (The Pricing Segments’ Second Most Important Attribute)Customer Service-1/6 about 17%Custom Plans-1/6 about 17%Reliability-3/6 50%Location-1/6 about 17%

Where Employees LiveMostly Baldwin Park (55%)Mostly other areas of Orlando (20%)Evenly between Baldwin Park and other areas of Orlando (25%)

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Appendix L: Achievements and Awards

In 2012 Enterprise won the 2012 FIT Sustainability Award from AkzoNobel Automotive & Aerospace Coatings Americas

In 2011 Enterprise won the JD Power 2011 Customer Service Champion Award

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Appendix M: Competition Matrix comparing Revenue and Customer Service Rankings

5 6 7 8 9 10 11 12 13 14750

760

770

780

790

800

810

Car Rental Companies

2014 Revenue (in Billions)

Cust

omer

Ser

vice

Ran

king

s (JD

Pow

er)

Enterprise

Hertz

Avis

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Appendix N: Baldwin Park Residential Market Profile

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Appendix O: Consumer Decision Making Model with Targeted Marketing Strategy

Marketing Strategy

Create Interest and Brand Awareness in Baldwin Park

Be

present through strong Social Media and Internet Campaigns

Deliver a strong call to action in Baldwin Park

Retain customers through Loyalty Programs

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J.D. Power. "2014 North America Rental Car Satisfaction Study." J.D. Power. N.p., 2014. Web. 13 Apr. 2015. <http://www.jdpower.com/press-releases/2014-north-america-rental-car-satisfaction-study>.

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Signazon, ed. "Car Door Signs, Car Door Decals." Signazon. N.p., 2015. Web. 1 May 2015.

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<http://www.signazon.com/car-door-signs/>.

Telephone Interview by Kyle Bouffler. 30 Mar. 2015. Zipcar

United States Census Bureau. "2012 ZIP Code Business Patterns (NAICS)." United States Census Bureau. N.p., 2012. Web. 1 May 2015. <http://censtats.census.gov/cgi-bin/zbpnaic/zbpsect.pl>.

USA Today. "The Average Cost of a Rental Car." USA Today. N.p., 2015. Web. 1 May 2015. <http://traveltips.usatoday.com/average-cost-rental-car-100390.html>.

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