Zipcar: Revolutionizing Car Rentals
Case Code: BSTR360
Case Length: 16 Pages
Pub Date: 2010
Teaching Note: Not Available
Organization: Zipcar Inc.
Industry: Car Rentals, Car Sharing
Themes: Services Marketing, Business Models, Promotional Strategy
Abstract Case Intro 1 Case Intro 2 Excerpts
After Griffith became the CEO, Zipcar shelved its expansion plans, and focused on making the operations in Boston, Washington D.C and New York profitable. The company's financial models indicated that each of these cities needed about 150 to 200 cars, with each car being used by about 40 Zipsters, for operations to be profitable...
In the US, insurance companies charged higher premiums from car rental companies if their cars were rented out to people below 25 years of age. For this reason, most car rental companies refused to rent cars to people below 21 year, and charged more for people in the age group of 21-25...
Benefits of Car Sharing
Several reasons were cited for the growth of Zipcar: rising urbanization, increasing use of public transit services, high parking fees (in certain cities), congested roads, mounting maintenance cost of cars, rising gas prices and the onset of the economic recession...
Competition for Zipcar came from traditional car rental companies like Enterprise Rent-A-Car (Enterprise) and Hertz Corp. (Hertz) (See Exhibit IV for more information on the US car rental market)...
Rising Gas Prices
In 2008, Zipcar continued to make losses, even as its revenues increased to US$ 100 million from US$ 60 million in 2007. The company was adversely affected by the sharp rise in gas prices that began in 2007. Zipcar's customer friendly all-in-one price scheme meant that the company had to bear the entire burden of the increased cost...
Though the company did not disclose its marketing budget, it launched several new marketing campaigns in 2008. Speaking about the company's marketing, Victoria Godfrey (Godfrey), CMO of Zipcar said, "We are very much a local brand marketer; in terms of what we do, we are really building relationships with local business, events, viral marketing...
Exhibit I: Zipcar Logo
Exhibit II: Summary of Zipcar's Driving Plans
Exhibit III: Differences between Car Ownership and Car Sharing Services
Exhibit IV: US Car Rental Market in 2008
Exhibit V: Differences between Car Rental and Car Sharing Services
Exhibit VI: US Car Sales Trends, 2001-2007
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