Zipcar (HBR Case Study)

Intro to Management 1

Tea Tree Systems Michael Chamberlin Drew Kessler Bill Wenrich Daniel Zhao

Bill Wenrich01 April 2010

Intro to Management 2

• Who is Zipcar?• How should we spend the money?• Market segments• Memberships• Brand image• Environment • Public transit• Analysis

Agenda

Intro to Management 3

Who is Zipcar?• Zipcars live in neighborhoods, near

businesses, and at transit locations in Boston• Shared vehicles that members can drive by the

hour or day – from only $4.50/hr• No hassle – The hourly fee covers all expenses:– Fuel– Insurance– Maintenance

• And we are expanding…

Intro to Management 4

How to Spend the Money• Expand into East coast markets• Add targeted advertising to the established

word-of-mouth advertising• Extend Zipcar as a cost-saving resource for

business travel• Focus on promoting the environmental

benefits of car sharing

Intro to Management 5

Our Market Segments• Consumers – Provide personal drivers with a

more cost effective solution for car ownership and rental.

• Businesses – “Z2B” plan and dedicated vehicle program provides cost- effective transportation for businesses

Intro to Management 6

Membership• Open to those

21+ with license, deposit

• Some people with poor driving record excluded

• Annual membership fee + hourly rate

Breakdown of User Cost0%

10%20%30%40%50%60%70%80%90%

100%

Additional milesTotal hourly serviceAnnual feeDeposit

Intro to Management 7

Brand Image & Advertising• Established through word-of-

mouth advertising in urban areas

• Expand advertising to include posters in proximity to mass transit stations in future markets for expansion

• Partner with mass transit– Help customers chose the best

option for them– Based on honesty and trust

Intro to Management 8

Environment• 13% of members have sold a car since joining

• 40% have avoided buying a car

• In San Francisco, car share members drive 47% less– Always aware of miles and

hours– Equate reducing driving &

fuel consumption with saving money

Vehicle tr

avel

Fuel c

onsumption

Emissions

-60

-40

-20

0

20

40

60

80

100

120

140

MembersControl

Intro to Management 9

Partner with public transportation• Supplement, not replace

existing transit networks• Locate Zipcar pods near mass

transit stations• Begin a journey on public

transportation, complete the last leg with Zipcar

• Putting cars here is also an investment in advertising because they are located in a heavily-trafficked area

Intro to Management 10

Analysis of Expansion• Strengths:– Co-founders have experience in business,

environmental issues– Established relationships with insurance, car

manufacturers, parking authorities• Weaknesses:– The management team is weak - Danielson is

distracted by research and is not committed to Zipcar– There is a significant investment into a city before any

profit can be realized

Intro to Management 11

(continued) Analysis• Opportunities:– There are no competing car sharing companies

currently operating on the East coast– Urban areas with over 25 households/acre

frequently have less than 1 car per household• Threats:– Existing car rental companies are established in

many markets and could enter the car sharing market

– Zipcar’s profits are heavily reliant on steady prices in fuel, maintenance, and parking

Intro to Management 12

Questions

Tea Tree Systems Michael Chamberlin Drew Kessler Bill Wenrich Daniel Zhao

Intro to Management 13

References

• http://upload.wikimedia.org/wikipedia/en/9/92/Zipcar_sign_-_Washington,_D.C..jpg

• http://www.zipcar.com/business/• http://blastmagazine.com/wp-content/uploads/

2009/10/zipcar_boston.jpg• http://www.travelyucatan.com/cancun/cancun_

bus_station.jpg• City Car Share. (2007). Bringing car-sharing to

your community. Retrieved from http://www.citycarshare.org/download/CCS_BCCtYC_Short.pdf

• http://images.fanpop.com/images/image_uploads/Boston-MBTA-Map-2001-metro-maps-46863_1024_1022.gif

• http://www.themidnightcoders.com/blog/uploaded_images/question-mark-787608.jpg