Car Rental Industry. Stephanie Jaw Daniel Lyon Hermela Nadew Samantha Tierney

Transcription

1 Car Rental Industry Stephanie Jaw Daniel Lyon Hermela Nadew Samantha Tierney

2 Agenda Introduction Industry Structure: Background Advertising Strategies Investment Recommendations

3 Why Car Rentals? In 2010, $20.55 Billion Market in the US Selling the same product: where is the differentiation? Price Customer Service Convenience Mix between credence and experience good Not a product you keep not an investment

4 Industry: Background

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6 Four Major Players 1. Enterprise Holdings Inc. (38%) 2. Hertz Global Holdings Inc. (18.9%) 3. Avis Budget Group Inc. (18.5%) 4. Dollar Thrifty Automotive Group (5%)

7 Competition 4 Firm Concentration Ratio: 80.4 HHI: 2168 Market Share Enterprise Holdings Inc. 5% 20% 38% Hertz Global Holdings Inc. Avis Budget Group Inc. 18% 19% Dollar Thrifty Automotive Group Other

8 What service does the industry produce? Service of renting and leasing passenger cars for a short period of time (daily, weekly, monthly) Various rental deals to accommodate the consumers needs Millage rates, time rates, etc.

9 Basic Technology Technologies within the automobiles Online reservation systems and self service kiosks Direct link to consumer base Saves cost of acquiring bookings Back office technologies Centralized fleet acquisitions, rental rates and other business logistics

10 How is it distributed? Cars are bought from automobile manufactures (Ford, General Motors, etc.) Ex. Hertz acquired 31% of their US market vehicles from Ford Use pools through independent rental facilities to insure vehicle availability

11 Financing of Production Costs Vehicle acquisition and depreciation are the largest costs Vehicle financing programs Sell older models back to manufacturers to gain back some of the cost Tariffs on imported cars effect the cars in a company s fleet

12 Who uses services? Leisure Business

13 Employees Labor in industry is mainly face-to faceconsumer contact Outsource maintenance and other labor intensive jobs

14 Industry Structure Barrier to entry and exit: Medium Capital Capital intensity: High $1.22 spent on capital for ever $1.00 spent on wages Government regulation: Medium Federal, state, and local laws Large petroleum containers Additional state taxes - Washington

15 Fleet Acquisition Remarket Fleet Manufacturers Buy Lease Supply Chain Distribution Insurance Resale Relationship / Partnership Marketing Online On-Site Location: Airport, hotel, neighborhood Outside Insurance Self-Insured Used car sales Sell back to manufacturer

16 Brand Equity Not in the top 100 brands Small industry Not frequently consumed

17 Advertising Strategies

18 Dollars Spent on Advertising

19 Target Market Age % Male 30% Female Yearly Income: $40,000+ Urban and Suburban Has Children

20 Owns National, Alamo, and Enterprise Largest market share (38%) Spent $78.9 Million on TV advertising in 2011 Not publicly traded

21 Drive Happy 1% of Enterprises Ad Budget ($.82 Million) Muppets Primarily advertise on: Suspense/Mystery Slice of Life Feature Film

22 Go like a pro. 30% of Enterprise advertising budget ($23.8 Million) Primarily advertise on: Professional Football Golf News

23 We ll pick you up 68.8% of Enterprise Ad Budget ($54.3 Million) Customer Service Primarily advertise on: College Basketball Situational Comedy Slice of Life

24 Owns Budget and Avis Has 18% of market share Spent $19.8 Million on TV Advertising 1.81% Ad to Sales Ratio

25 Go budget 26% of Avis-Budget s advertising budget ($5 million) Advertises Price and uses Celebrity (Wendie Malick) Primarily advertise on: Situation Comedy Feature Film

26 We Try Harder Uses 74% of Avis-Budget advertising budget ($14.5 Million) Advertise almost exclusively on Golf (98%)

27 No other brands Have 19% of market share Spend $16.1 Million on TV advertising in % Ad to Sales Ratio Primarily advertise on: Drama/Adventure Slice of Life

28 Commercials: Enterprise Holdings National Commercial Alamo Commercial

29 Number of Ads (Hundreds) Total Ads by Day SUN MON TUE WED THU FRI SAT

30 Number of Ads (Hundreds) Number of Ads Number of Ads by Day of Week Avis SUN MON TUE WED THU FRI SAT Enterprise Rent-A-Car SUN MON TUE WED THU FRI SAT Weekends Weekdays

31 Number of Ads Number of Ads Top Daypart by Number of Ads Avis Enterprise Rent-A-Car Sunday Saturday Afternoon Afternoon Sunday Early Fringe 1 Prime Afternoon Daytime Prime Overnight Afternoon Daytime 2 Early Fringe 2 Late Fringe

32 Expenditure (Millions of Dollars) Top Daypart by Expenditure Enterprise Rent-A-Car Prime Late Fringe Saturday Afternoon Late News Sunday Afternoon

33 Total Ads by Month Number of Ads (Hundreds)45

34 Number of Ads (Hundreds) Ads by Month Enterprise Rent-A-Car National Car Rental Budget Hertz

35 Number of Ads Number of Avis Ads

36 Types of Ads Primarily Persuasive Some informative with Price Few Promotions

37 Case Study: vs. How Avis motto became We Try Harder

38 Analysis and Recommendations

39 Investments Avis Budget Group Hertz Holdings Volatile markets

40 Investment Tied to the success of airline and car industry Financial troubles negatively effect car rentals Recommendation: due to financial instability, we would advise to NOT invest in the car rental industry

41 Advertising Strategy More interactive advertising efforts Commercials, Facebook, Twitter Ex. Enterprise and NCAA campaign Start combatively advertising fleet prices If price is mentioned, consumer assume it s a bargain

42 Questions?