Enterprise Rent-a-Car Essay

jampack With opening night, the customer always comes first. This is a major strength that the confederacy has capitalized on in order to sort out itself from the competition. Their Well pick you up slogan is the immemorial nidus of the orders customer service aspect. After the customers, the tenseness is on employees. Good customer service comes from only the best employees and opening move wants all of their employees to be happy with their jobs. By offering a sensation of stimulateership and incentives to advance inwardly the familiarity, go- beforehand employees ar often very satisfied with their positions. try is the largest motor gondola lease gild with the largest fleet and the close subscribe toal locations. Because of this, they ar easily accessible all over the country. Their important marketplace place focus is the bag/city market piece and they are the industry leader in this incision with the most market share. In order to conciliate on top , initiative has kept up with engineering science and has formed many long-term alliances with insurance agents and railroad car repair shops to train referrals.Shifting to the weaknesses of the company finds initiative falling short in a couple of areas. Enterprise does not hold up the largest market share in the entire car lease industry. The company has established itself in the home/city market and has not entered the largest part of the industry aerodrome rentals. As a result, they have low awareness in the industry. An some another(prenominal)(a) drawback is the leave out of a frequent customer program. Most major car rental companies have these repeat-buyer clubs as they attract repeat course and create much customer awareness. Within the company, Enterprise is also having problems recruiting good employees. Because awareness of the company is low and the image of working for a car rental company isnt that glamorous, college graduates often overlook employment o pportunities with Enterprise.The biggest foresee open probability for the company to take advantage of is the airport market member. This is the largest market segment of the car rental industry and its been left untouched by Enterprise. following(a) would be the under 25 yr. old segment. Rental car companies often leave out possible customers in this segment by both not renting to them or hiting large fees to the normal rental order. Enterprise on the other hand, does rent to the under 25 segment and charges a small fee or no fee at all.The unfilled rental market is another segment that Enterprise chamberpot blow up into. This market is largely made up of people that want to rent more(prenominal)(prenominal) expensive cars (SUVs and convertibles) for the weekend. Another opportunity for the company is to have a fit its system of alliances with businesses and schools/universities. More incentives can be offered to this segment in hopes of opening up more business opp ortunities.Enterprise testament have to visualize out for threats in the industry to animation its competitive position. One of the threats is the opportunity for other car rental companies to enter the home/city segment, which is the speed of Enterprise. In order to be competitive in the future, Enterprise essential keep up with technological advancements such as Internet applications.Alternatives there are three broad alternatives that Enterprise can choose to use if they want to meet their profit and growth expectations for the future. Enterprise could do nothing, nevertheless(prenominal)t joint the vastly untapped 25 and young market, or move into other segments of the general you-drive market. These three alternatives could be used al unrivalled or in combination.One alternative for Enterprise is to do nothing.The next option for Enterprise is to scrape the vastly untapped 25 and younger market. This market is an exceptional opportunity for Enterprise because they are one of the only car rental companies that rents to drivers under the age of 25. To target this group takes commitment and creativity. premier(prenominal) and foremost Enterprise needs to come up with more productive ads targeting this segment. Another angle for Enterprise would be to get its name onto college campuses crosswise the country. They could do this by giving presentations at various Universities or having a creative national contest for college students. Finally to fully reach and keep the under 25 market, Enterprise must keep up with technology. This segment is the most computer savvy of all age groups and to fully target this market Enterprise must be the industry leader in technological innovations.The Final option for Enterprise is to move into other segments of the overall you-drive market. Enterprise dominates the alternate rental segment of overall rent-a-car market. The replacement rental segment only accounts for twenty-seven percent of the impart m arket. Therefore, there is a huge market consisting of the business and leisure/discretional markets that enterprise has currently not entered.Criteria In implementing these alternatives there must be a way to measure the action to see if they are working. The advertisement we propose is more of local nature than national. We believe that the National advertisement grounds should still be done, but a local one should be done also to compliment the National conjure. The local campaigns should be in the form of saucilyspaper ads and radio ads. The local branch should monitor lizard and opt the media. Then the tax generated from the ad should be four time the cost to run the ad. Once this 4to1 ratio is not met, its time to counterchange the ad or find another media. The Enterprise company tillage is such that each individual branch is responsible for its sales and service. To stay in the parameters of this culture each branch should be responsible for its own advertising als o.In measuring the college presentations and the creative contests, Enterprise should monitor the way out of resumes that they receive. If the presentations and/or contests do not generate a sizable heart of resumes, then the programs must be reevaluated. Moving into the other segments of the overall rent-a-car market can be measured by profits. Once an airport branch becomes profitable, then Enterprise should start looking at other airports for expansion. In the leisure/discretionary market, track how many weekend rentals and sumptuosity rentals that are being used by each branch.Evaluation of Alternatives 1. selling to the 25 yr. and younger segment Our first alternative is to develop a marketing campaign to the 25-year and younger market segment. Targeting this segment go forth win Enterprise by developing a significant growth in increased awareness not only locally, but also nationally. increase awareness for the local/city segment pull up stakes greatly dish up thei r all ready prosperous market niche. The recruitment of high theatrical role employees and building superior bulls eye awareness will enable Enterprise to stand above its competitors.Targeting the 25-year and younger segment, Enterprise will develop a younger clientele and will have a wider range of employees to select from. This can be accomplished by setting up presentations at respected universities around the United States and promoting incentive contests with rewards. Other benefits will complicate increased profit potential and being a step ahead of its competitors with technology. Technological advancements in the Internet and World Wide Web could add convenience for customers with the creation of an online reservation system.On the other billet of the spectrum, some risks could be associated with the targeting 25 and younger segment. These risks will be associated with large cost in advertising, marketing, and recruitment. Time and energy will also be contributed since a long-term commitment is required. Also, consumers might question the security of on-line reservations.2. Moving into immature market segments Our second alternative is to move into and do a share of new market segments. These new markets are the airport segment and the leisure/discretionary segment. The airport segment is the largest in the rental car market, due to the immense amounts of business corporations renting out cars for their representatives. Enterprise can distinctly take control of this market segment and more profits and revenues can be attained. With sharing or controlling this market segment, awareness will expand among these business travelers and discounts and incentives can be introduced to moderate repeat business. For the leisure/discretionary segment, Enterprise can introduce more luxury vehicles that will appeal to the distinctive traveler. The benefits of despicable into the new markets are considerable.Some negative issues can affect Enterprise by mo ving into new market segments. One is that it is very expensive. There could be legion(predicate) costs resulted by missed judged opportunities or mistakes rendered by managers at these airport locations. Secondly, it is very risky trying to contact an all ready stark(a) market, such as the airport segment. Spending money, time, and energy into a new market segment where Enterprise does not have a steadfastly hold can be fiscally costly and damaging to Enterprises image. pass Our recommendation, as the Base One Consulting firm, to Enterprise self-drive, begins with a slow sixth sense of the business segment (airport rentals) of the car rental market. By entering this segment of the market, Enterprise can penetrate a market in which it formally had no presence in. Also, with the business segment being the largest segment of the car rental industry, there is huge profit potential. We would recommend starting the segment penetration with only the larger airports to limit the cost and risks associated with entering this new segment. Within two eld enterprise should evaluate their progress in this segment.If it proves to be profitable, Enterprise should go along to expand into smaller airports across the country, and have a national presence, in the estimated 150 airports within five years. This will be necessary to maintain the present growth rate of 25% for the company since the home-city market is only growing at about 10 to 15% per year. However, to remain consistent with the companies decentralized operations, we feel that the business segment of the industry should be run and managed as a completely separate region, no matter where it is located. This will prevent the loss of focus on Enterprises primary market segment, the replacement market, with particular wildness on neighborhood locations.The second part of our recommendation for Enterprise Rent-A-Car involves increasing advertising targeted towards the under 25-year-old market. Allowing tim e for budgeting and the creative process, the advertising campaign should be implemented immediately. This can prove to be very worthy because some other firms will not rent a vehicle to anyone under the age of 25. Similarly, a great opportunity to develop brand loyalty lies in this segment. By getting a jump on the other car rental companies in the mind of the consumer, Enterprise can put itself at a strategic advantage. Enterprise has already begun to do this somewhat, with a lower charge than other companies, for the under 25 years old rentals. However, we recommend using a national advertising campaign to not only increase the awareness of renting to younger customers, but also to increase awareness of the company as a whole.This in turn, will help ease the difficulty of penetrating other segments. Furthermore, a localized campaign, managed by each region, should be implemented to increase awareness, give to local trends and needs, once again, keeping consistent with the c ompanies decentralized operations format. include in this local advertisement campaign, an emphasis should be placed on the company itself and its job opportunities, highlighting to the younger audience the promotion from within process and profit-sharing opportunities.Another aspect of the local advertising campaign should focus on employee recruitment. We recommend some type of contest involving a gold reward to generate interest in becoming apply by the company. For example, we suggest implementing a contest rewarding the best creative tape-recorded interview or resume with a $10,000 cash reward and an employed position. This contest will generate interest and provide Enterprise with a database of potential employees. Ultimately it will broaden the pool from which Enterprise is able to choose its employees from. This is very important for the future of the company.Lastly, we recommend that Enterprise continue to keep up with, or ahead of, technology. This continues the emphasis on the younger audience and top-notch employees. Advanced tracking systems, such as the one Enterprise currently utilizes, and convenience are key factors in the future conquest of the company. Advancements in the area of the Internet and computers is crucial to the sustained growth of this company, in particular in the travel segment of the market.Enterprise must consider the financial aspect of the recommendation by Base One Consulting. If approximately 15 airports location were opened and used to judge the profitability of this segment, and an estimated 125 cars at each location (based on Exhibit 1), with the cost averaging about $20,000 per vehicle, Enterprise would be looking at an initial investment of about $37.5 million. However, the companys revenue is estimated at about $2.61 billion per year from the replacement market. The profit potential can only be estimated since airport rates very widely. Since the overall car rental market generates an estimated $14.62 billi on per year, and the business rentals account for about 40 percent of that figure, there is potential to penetrate an over $5.5 billion dollar market (Figures from Exhibit 2).In comparison, the costs to implement an aggressive advertising campaign, both nationally and locally, must be estimated from past advertising figures (Exhibit 2). Since Enterprise spent an estimated $22 million in advertising last year, and a more aggressive campaign will be implemented, we can estimate an advertising budget of about $55 million. This should cover all of the national and local advertisements. Although the advertising budget will more than double, it would only account for about 2.1% of the companys budget. This is less than the industry average of 2.8% of revenue. Overall, by implementing the recommended strategy, Enterprise would be looking at expenditures of about $92 million. Although this is almost 40% of the companys revenue for one year, many of the funds will come from long-term loans a nd other sources. Also, the revenues that will be realized by implementing the recommendation must be considered.