1. How would you characterize the service Zipcar provides?

With which companies or

services does it compete? What role does it play in its competitive landscape?

Zipcar is the provider of one of the oldest car share systems. They lent out cars at an affordable
rate so that the customers needn’t buy a car. The offering is in such a way that cars can be rented
on per hour or per day basis.

As far as Zipcar was concerned, they didn’t have any direct competition in 2005 apart from
traditional car rental companies. But there were a few substitutes operating in the same space
they were- taxis and the prospect of buying a car.

Role in the competitive landscape:

Zipcar changed car rental landscape, providing services and facilities never before seen and
played the role in keeping the competition humble. Following are features found in Zipcar that
sets it apart from its competition.

i. Pay by the hour rate- while other car providers wire charging by the hour Zipcar gave
the option for users to rent cars on a daily rate or per hour rates.

ii. Rent it anytime - with Zipcar the customers were able to book their cars minutes before
they needed the ride.

iii. Prepaid charges- All charges including fuel and insurance were already included in the
package provided.

iv. 3 varieties of subscription plans to attract the different segments of the market.

2. What would you say are the critical success factors for Zipcar?

A brief idea of the success factor can be briefly explained by Figure 1 where Zipcar has
successfully captured the thinking framework. The perfect combination of assessing and
delivering consumer behaviour need leads to the higher level of intention to buy. The design
and execution of the following ideas have also helped Zipcar gain a strong foot in the car rental
industry:

i. Join – Reserve – Unlock – Drive.

 Ease of use, we believe, is the biggest factor that made Zipcar one of the biggest players.
Innovation is one thing, but if no one knows how to use it is worthless. Zipcar stripped
out all the complicated aspects of renting a car and owning a car and simplified the
whole process of car sharing. Easy one-minute booking, no worry about fuel or
insurance, no physical point of sale, these are the features that help Zipcar capture the
entire demography of car users.

ii. Innovation & Uniqueness

Zipcar was one of the first companies to come up with the idea of car sharing and with
this created a new market with a large number of potential customers.

iii. Cost and Value

With competitive advantage, over the substitutes- taxis, car ownership and rental cars-
in terms of value and costs, Zipcar has managed to provide a high-value product to the
customers at a low rate.

iv. Partnership
Partnership with universities will help the company gain market presence and also
promote the idea of brand loyalty. And Zipcar was only one of the few car providers
that do not provide differential treatment based on age, increasing the market
demographic.

Figure 1: Thinking Framework Zipcar

 3. What mechanisms does Zipcar have in place to manage behaviour? What, specifically,
are these mechanisms intended to accomplish? What adjustments, if any, would you
recommend that the company make to these mechanisms?

To manage the behaviours of the customers Zipcar has certain features that limit the customers
from employing a laissez faire approach to ensure that the business runs perfectly. They
allocated specific spots for the customer to park the car, so that they are always available in the
same place, ensuring ease of tracking. They transferred the responsibility of filling gas to the
customers preventing stoppages. Customers are also incentivised to wash their cars, with this
the cars are clean and people at Zipcar can shift their focus to other tasks.

Using these mechanisms Zipcar ensured that the cars were always available, had enough fuel
and were clean saving valuable time for the company. This helps boost the customer perception
towards the company and each step is a value addition for the customer – customers creating
value for themselves and other customers at the same time.

In the end, with this strategy Zipcar is able to reduce maintenance costs while ensuring a very
high-quality service.

Adjustments to the mechanisms.

Zipcar runs a tight ship with respect to behaviour but as seen in the case and based on general
trends we can recommend the following solutions to their problems:

i. Increased fleet size with a ‘plan B car’

High churn rates are caused by customer dissatisfaction, and not having a service when
expected is a major resultant of this. Furthermore, Zipcar needs to increase its fleet size
and have a backup car in place in the event of the customer not returning the car on time.
A bigger fleet size can help the company increase its market share, accommodate new
customer. This does mean high level of complexity in managing the fleet, but this must
be done regardless to fend off competition and build a strong brand image.

ii. Introduce a feedback policy

The best way to find out what’s hurting your company is to get feedback from its regular
users and at the same time taking measures to solve the relevant problems that add value
to the customers. A feedback system and its subsequent implementation will make our
customers feel connected to the company helping improve brand loyalty.
A Introducing a feedback system can help identify and resolve customer pain points,
which in turn improves the quality of the offering. As seen in Figure 2 improved quality
can help close the gap between the customer perception and the products offered. This
as seen in Figure 3 has a positive impact on the overall profits of the firm.

Figure 2: Customer Perception Gap

Figure 3: Impact of Quality on Profits