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University of Central Florida
Marketing Strategy Spring 2015
A Comprehensive Analysis with Strategic
Recommendations to enter Baldwin Park
by
Kyle Bouffler
Amanda Rodwell
Javier Ros
Sarah Wolfkiel
Professor: Dr. Pradeep Bhardwaj
May 5, 2015
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Executive Summary
Enterprise Rent-A-Car is an all inclusive total transportation solution. Since opening its
doors in 1957, Enterprise quickly became the leader in car rental services. It is currently the
largest car rental company in the world as measured by revenue ($17.8 billion in 2014), fleet (1.5
million vehicles), and employees (83,000). Though Enterprise has already seen success through
it’s high market share and outstanding customer service, there is always room for improvement
and to grow further.
This report is a comprehensive analysis of Enterprise entering a new market in Baldwin
Park. Through extensive primary and secondary research the following was determined: 85% of
the survey takers mentioned enterprise, but 65% did not deal with a car rental company. It was
determined that marketing strategies needed to connect the high brand awareness to more
customer loyalty.
Based on these findings, we have developed several strategies to bridge the gap between
recognition of the brand and consumers call to action. From different loyalty programs based on
customer needs to even branching out into a more modern rent per hour basis, we have come up
with various ways to entice customers to rent from Enterprise. This marketing plan aims to
accomplish the following:
Corporate Goals
o Increasing Corporate Business in the Baldwin Park area by 12% annually.
Marketing Objective
o Increase Loyalty to Enterprise in Baldwin Park through direct and indirect
promotional strategies.
Positioning Strategy
o Create segmentation strategies through loyalty programs and prepaid pay per hour
rentals to increase market share in Baldwin Park.
We strongly believe that Enterprise can greatly benefit by following our marketing
methods and strategies. We are very confident in this work, and this marketing plan will outline
just how Enterprise can become an even stronger leader in the whole Orlando market and
Baldwin Park.
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TABLE OF CONTENTS
EXECUTIVE SUMMARY ........................................................................................................... 3
SITUATIONAL ANALYSIS ……………………………............................................................ 6
Industry Analysis ........................................................................................................................... 6
Industry Factors: Porter’s Five Forces ........................................................................................... 7
Rivalry Among Competitors .......................................................................................................... 7
Potential for new entrants .............................................................................................................. 7
Threat of Substitute Products ......................................................................................................... 7
Bargaining Power of Buyers .......................................................................................................... 7
Bargaining Power of Suppliers ...................................................................................................... 8
Environmental Factors: PESTEL Analysis .................................................................................... 8
Political Factors ............................................................................................................................. 8
Economic Factors .......................................................................................................................... 8
Social Factors ................................................................................................................................ 8
Technological Factors ................................................................................................................... 9
Ecological Factors........................................................................................................................... 9
Legal Factors ................................................................................................................................. 9
Analysis: 5 C’s ............................................................................................................................... 9
Company Analysis ......................................................................................................................... 9
Current objectives .......................................................................................................................... 9
Current Positioning & Marketing strategies .................................................................................. 9
Consumer Analysis ...................................................................................................................... 10
Primary Research on Current Customer Base ............................................................................. 10
Profiles for Possible Target Markets ............................................................................................ 11
Competitive Analysis ................................................................................................................... 12
Competitive Overview ................................................................................................................. 12
Collaborators Analysis ................................................................................................................. 13
Context Analysis .......................................................................................................................... 13
SWOT .......................................................................................................................................... 14
Strengths ...................................................................................................................................... 14
Weaknesses .................................................................................................................................. 14
Opportunities ................................................................................................................................ 15
Threats .......................................................................................................................................... 16
Goals & Objectives-Corporate Objective .................................................................................... 17
CORE STRATEGY Recommended Target Market..................................................................... 17
Recommended Positioning .......................................................................................................... 17
MARKETING STRATEGIES ..................................................................................................... 18
The Four Ps - Product, Price, Promotion, Place .......................................................................... 18
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Strategy I: PRODUCT …………………………......................................................................... 18
Strategy II: PRICE ....................................................................................................................... 19
Strategy III: PROMOTION.......................................................................................................... 20
Strategy IV: PLACE ………….................................................................................................... 20
Strategy Timeline ......................................................................................................................... 22
FINANCIAL DOCUMENTS ...................................................................................................... 22
MONITORS & CONTROLS ...................................................................................................... 23
CONTINGENCY PLAN ............................................................................................................. 23
APPENDICES ............................................................................................................................. 24
Appendix A Financial Analysis for Location/Reliability Segment ............................................. 24
Appendix B Financial Analysis for Customer Service Segment.................................................. 25
Appendix C Calculations for CLTV............................................................................................. 26
Appendix D Example of promotion on car................................................................................... 27
Appendix E Example of online app for reservations and online communications....................... 28
Appendix F Reservation graphic on phone................................................................................... 28
Appendix G Survey to Baldwin Park Businesses......................................................................... 29
Appendix H Survey Results……………………………………………….................................. 30
Appendix I Survey Analysis ……................................................................................................ 31
Appendix J –Picture of Baldwin Park .......................................................................................... 32
Appendix K: Research on Baldwin Park Businesses…………………………………………….33
Appendix L: Achievements and Awards...................................................................................... 34
Appendix M: Competition Matrix comparing Revenue and Customer Service Rankings……...35
Appendix N: Baldwin Park Residential Market Profile………………….……………….……..36
Appendix O: Consumer Decision Making Model with Targeted Marketing Strategy ……….....37
Works Cited ..................................................................................................................................38
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Situational Analysis
Enterprise Rent-A-Car is a car rental service company that originated in St. Louis,
Missouri in 1957. Since then, Enterprise has quickly become the market leader. They have
opened over 7,000 stores internationally, and currently have the largest fleet of vehicles.
Enterprise is now looking to expand their services to the Baldwin Park area.
Industry Analysis
Baldwin Park is proving to be one of the
fastest growing cities for business in the Greater
Orlando area. The total growth rate of this city has
grown dramatically since it’s humble beginnings of a
Naval Base. Since then, the city is home to over 200
businesses, with about 30% of them being
professional practices (lawyers, consultants,
architects, etc.).
Baldwin Park is attractive to Enterprise
because of the people that live there. The income
level of Baldwin Park is roughly $15,000 more than
that of the rest of Orlando ($55,453 and $40,275
respectively). From our research, a majority of these
high-income residents also have a 30-35 minute drive
to work each morning. Thus making Baldwin Park an ideal place on paper for a rental car
service. Research on the demographics can be found in Appendix N.
Demand for employees, however, is low in these areas. Over 90% of businesses only
have a total of 1-9 employees. This could be due to the fact that most of these businesses operate
in the limited physical area that is Baldwin Park and many businesses are one of kind unique,
where small growing businesses are an influx. This could hinder the use of rental car services
because these companies do not run on a corporate level. This could also be beneficial though,
since at times it could take immense time and effort to get through to the decision makers in
these corporate offices.
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Industry Factors: Porter’s Five Forces
Competitive Rivalry
Car rental companies are extremely competitive. This statement holds true especially in
the small area of Baldwin Park. This area, though small in distance, is a home to over 200
corporate and local businesses alike. In the immediate area, Enterprise is in a highly competitive
market with Hertz, Avis and Zip Car. Whether it is through price, newer fleets, or upgradable
features, companies consistently have to try to differentiate themselves from their competition,
and Enterprise has managed to do this by maintaining a high level of customer service.
Threat of New Entry
With over 35% of the market share,
Enterprise has already established itself as one of
the leaders in the car rental services. Because of
this along with many established brands, it would
prove incredibly difficult for a company to enter
into the car rental market. The high initial costs
(purchasing or renting an attractive fleet of cars
and a location itself) could be intimidating for
new entrants. If price were not an issue, these
new companies would also have to try to steer business from already nationally known market
leaders that already have established reputations and customers. Loyal customers would be less
inclined to trust a new company, and entering the market differentiating by price may even come
off as cheaper quality. Thus making the threats of new entry very low.
Bargaining Power of Buyers
With the increasing amount of competition for car rental services in Baldwin Park, buyers
are the true winners. If a buyer does not like the services that Avis offers, that customer could go
to Enterprise, ZipCar, a taxi service, or even walk! This customer never has to settle and can
continue searching for a service until all of his or her needs are met.
Threat of Substitutions
Differentiation may not be the only factor car companies have to think of in terms of
rental services. Because Baldwin Park is a small area, one might be inclined to simply rent a taxi,
ride their bike, or even walk to their destination. This means that Enterprise is not only
competing against these other car rental companies, they are also competing against more local
alternatives causing indirect competition and making the threat of substitutions extremely high.
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Bargaining Power of Suppliers
Because of the highly competitive market, the suppliers have very little bargaining
power. If one company lowers the price of a vehicle, the others must follow suit or run the risk of
losing business. This also depends on the relationships with the suppliers that cater to Enterprise
and the economic conditions that gauge the fleet pricing. The assumption is that Enterprise,
since it is a well-known and large stable company, has good relationships and therefore the
power of suppliers is low to medium.
Environmental Factors: PESTEL Analysis
Political Factors
Enterprise Rent-A-Car, like most companies, has governmental regulations that it must
abide by. The Telephone Consumer Protection Act of 1991 is a prime example. This Act
prohibits businesses to communicate any advertisements to customers over the phone regarding
services, goods, etc. It is only legal after the consumer accepts written or verbal consent.
Enterprise is subject to federal mandates with advertising, selling, insurance and more and must
stay current with political laws that are ever changing.
Economical Factors
The economy is in a constant flux, and thus has a direct impact on car rental services. If
we see another recession, it is likely that corporate offices and companies will opt for a cheaper
option than to rent a car for meetings. With Baldwin Park, it may become increasingly more
enticing to walk or rent a taxi for the short amount of distance between buildings or use Skype,
email, and other online communications for meetings.
Social Factors
The type of car a person drives can be directly related to social factors. If a car rental
service wants to meet the needs of these consumers, it must have a wide variety in it’s fleet. This
includes: Safe family options, newer and more
reliable options, as well as “green” cars. There has
been a dramatic switch towards a “Green”
conscience movement. This holds true for car rental
services as well. From our survey and research, we
have found that more people are looking for a
“greener” alternative for cars. We have concluded
that it is more rewarding for these consumers because they are getting a sense of accomplishment
and feel they are helping the environment.
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Technological Factors
Technology is always advancing. Companies can now reach customers on the road,
through their phones via apps, and even their social media. It has been reported that over 80% of
businesses that have used social media have seen improvement in their company’s growth. Car
companies are constantly updating and developing new technology in their cars as well. We have
seen this range from power windows to GPS systems in their dashboard.
Ecological Factors
The Florida weather has never been something that could be predicted. With random
bouts of thunderstorms, intense heat, and even hurricanes and other natural disasters, it is
imperative that Enterprise keeps it’s fleet in pristine conditions. With this uncertainly,
precautions such as safe closed locations and insurance are considered.
Legal Factors
Enterprise incorporates customer liability to its vehicles. If a consumer rents a vehicle
without getting the extended insurance, it is the responsibility of that consumer to pay the
deductible for the repair of the vehicle. Consideration for safety for the company and employees
is also considered. Note that many liabilities can be chosen to protect employees and customers
and precautions should be taken to protect the Enterprise image.
The 5C Analysis
1) Company
Current Objectives
Enterprise Car Rentals has been around for over fifty years and has enjoyed a lot of
success in the neighborhood car rental industry. To continue growing their company, Enterprise
wants to increase its car rental sales in a very specific and targeted manner. They want to move
into the Baldwin Park area of Central Florida and target the businesses of Baldwin Park to
increase their corporate sales by 12% annually. To accomplish this goal there will have to be a
few changes done to their current marketing in order to attract the attention of such a specific
demographic.
Current Positioning & Marketing Strategies
Enterprise prides itself on its excellent customer service and young fleet of cars. Whereas
many competitors try and win customers on price, Enterprise positions itself as a quality and
reliable rental agency that the community can rely on. This is made most evident through their
slogan “we’ll pick you up.” This slogan and the practice that comes with it embody how much
Enterprise cares about its customers. Another aspect of Enterprise’s reliability is the cleanliness
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of their cars. After every car is returned, the company cleans it to make it like new for the next
consumer.
Enterprise has such a strong brand name and such a strong market share (35.8%) that they
don’t rely too much on advertising to communicate their service. The channels they do use are
television commercials and by having an Internet presence both through their website and their
social media pages. Both of these channels are controlled on the corporate levels and so local
Enterprise offices have little to no control over the content that is presented.
On a local level, Enterprise has a few different channels of communication to attract both
new and old consumers. The first is their sales representatives. To manage the accounts with
businesses, Enterprise has sales representatives that find corporate leads and act as a bridge
between the two companies. They are the main ones who build value to the consumers and
identify why different companies should utilize the car rental service.
When we met with Enterprise, Dwayne told us that his office relies a lot on word of
mouth. Consumers who have good experiences with Enterprise will likely recommend them to
their friends, family, or coworkers. Positive word of mouth helps consumers see that Enterprise
really lives up to the image it is trying to portray. There are times however when customers have
a bad experience and that can cause negative word of mouth, which diminishes the company’s
brand equity.
The last channel Enterprise uses to communicate its value is through different companies
they partner with to receive referrals. These kinds of companies are usually insurance agencies,
auto-shops, or car dealerships. When a person’s car is broken, be it because of an accident or just
a malfunction, the person will usually bring it to be fixed by their car dealership or an auto-shop.
The person may also speak with their car insurance to see how much the insurance will cover. It
is during these conversations that the companies can refer their consumer to Enterprise if they
need to rent a car while their own car is in the shop. Enterprise offers different benefits for
companies who partner with them in this way.
2) Consumers
Enterprise Car Rentals serves people who require a temporary vehicle. It is often thought
that it is more common for people to need car rentals while they travel. While this is true,
Enterprise mainly targets at serving local residents in the community. Residents need car rentals
while their own car is unavailable whether it’s because of maintenance or an accident. Enterprise
also serves corporate clients who use car rentals for business trips. The corporate clients are the
ones Enterprise wishes to target in the Baldwin Park area.
To learn more about the business in Baldwin Park we conducted primary research by
traveling to Baldwin Park to go door-to-door and survey only businesses about their car rental
habits as an entity. We discovered that 85% mentioned Enterprise as a car rental company that is
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within their evoked set, 65% of the respondents are not loyal to any one particular car rental
company, and 75% go for a car rental company that is very well known. We also discovered that
the average price the consumers were willing to pay averaged out to about $31.00 and more than
half of the respondents equated car rentals with the color green. It was also seen in the survey
results that most of the businesses do not offer an expenditure on the amount of miles traveled by
car for business related travel and most companies send out a request for car rentals as opposed
to being solicited by one. When computing a cross tabulation against the questions: “How likely
are you to recommend a car rental company?” and “Do you usually rent from a large popular car
rental company?”, 75% that rent from a large known car company, somewhat to highly
recommend a car rental company. With a significance value taken of .05 and the p-value being
above .5, we can fail to reject the null hypothesis and assume that this data is significant. This
means that we can assume that the businesses that do rent from major car rentals will recommend
to friends and family. This is a huge opportunity and lets us know that word of mouth will work
in this market. Appendix I shows the analysis.
Below are the possible Alternatives created after researching Baldwin Park and the types
of businesses:
1. Segment Based on B2B or B2C Businesses: This would narrow the target market down
but it could target it too far since there are only a limited number of businesses in this
community.
2. Segment Based on Attribute Importance (Customer Service, Location, etc.) This would
segment the market well based on needs, though, it could be difficult to maintain these
segments if the businesses in each segment are extremely diverse.
3. Move into Baldwin Park to target the whole community: This is the best way to gain
immediate attention and market share but at a steep cost that could possibly not
breakeven for a long period of time.
After reviewing the data we decided to segment the businesses using the second option,
into two segments based on attribute importance: the first group is the consumers who emphasize
customer service and the second group is the group who emphasizes location/reliability. It was
clear that customer service, location, reliability and price were the number one attributes when
asked on the survey as seen in Appendix H. Note that price is not strength of Enterprise as they
differentiate based on many factors. Taking into account consumer behavior analysis, most
companies or people do not make decisions based on just one attribute and instead focus on two
or three when making a decision. Conjoint analysis theorizes that buyers view products as
composed of various attributes and levels. Because of this, looking at the participants who listed
price as the most important attribute, it is equally as important to search for this segment’s
second most important attribute listed. The second most important attributes with percentile
weights are listed in Appendix I. All of the second most important attributes for the pricing
segment fit into either the customer service or location/reliability segments created. We include
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this since calculations to figure the absolute potential market share for businesses in Baldwin
Park is essential.
Customer Service Segment
We determined that in the Baldwin Park area there are between 154 and 240 businesses.
From our survey we gathered that the majority of business people in Baldwin Park care mostly
about Customer Service. This means they care about the quality of cars, the level of service
given to customers, and the efficiency of the rental car company to process the order. This
demographic is the perfect group for Enterprise to target because of the brand image they have
portrayed as being a highly customer service oriented. Even though Enterprise is in the perfect
position to capitalize on this segment, there appears to be something lacking since these
consumers have yet to purchase Enterprise’s rental car service.
Location/Reliability Segment
The second segment we discovered in our primary research is the Location/Reliability
segment. The location of the car rental office and the reliability of their service was the second
most important thing that respondents put on their surveys. This means that they would be more
inclined to choose a particular car rental company based on how close it is to their business. This
also means they want to be able to place a lot of trust in the car rental company and know that
they as business people can rely on them for their travel needs. This segment may be a little more
difficult for Enterprise to target considering Enterprise does not have an actual office located in
the Baldwin Park area. The closest office is on Colonial about 10 minutes away, which does not
sound like a lot but the traffic on Colonial can cause that 10 minute trip to become a 15 or 20
minute trip.
3) Competitors
Competitive Overview
In the Car Rental Industry there are many different companies that consumers can pick
from. The two biggest competitors that Enterprise faces are Hertz and Avis. However our group
also discovered that another source of competition for Enterprise is companies who have begun
pay by the hour programs.
Hertz
Hertz has been around since 1967 which is 10 years younger than Enterprise. They
mainly provide car rentals and leasing, truck and van rentals, heavy equipment rental, and a little
bit of car and heavy equipment sales. Their based out of New Jersey but their “Thrifty” business
segment is based out of Tulsa, Oklahoma. With this segment, Hertz tries to target the price
sensitive consumers with their Dollar Rent A Car and Thrifty Car Rental brands. Another
strategy Hertz has implemented is to allow an hourly car rental program which charges
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consumers a certain price per hour that the car is in use. Hertz has enjoyed financial success
increasing their operating income by about 30% last year at $607 million (Hertz).
Avis
Avis is based out of New Jersey also and has been around since 2006. They operate under
two brands in the United States: Budget Rent A Car and Avis Rent A Car. Budget Rent A Car
targets price sensitive consumers who are looking for an affordable car rental and Avis Rent A
Car targets both business professionals who travel for work and also premium leisure travelers.
Avis also has a acquired Avis Europe in June 2011. The past few years Avis has also enjoyed
some financial success with a 47.5% increase in operating income this past year at $590 million
(Avis).
Zipcar
Zipcar is a car sharing company that was founded 2000 in Massachusetts. In 2013 they
were bought out by Avis and became a subsidiary of Avis. Zipcar offers consumers hourly and
daily rates for car sharing. The cars that consumers rent out are placed in parking spots around a
city for easy access. Consumers pay monthly for a membership and pay an hourly or daily rate
on top of that. To access the cars, consumers schedule a reservation time and are given an access
code that opens the car when they are ready to use it (Zipcar).
4) Collaborators
Enterprise has many acting collaborators. In our meeting with the East Colonial Manager,
the different types of entities that refer customers to the Enterprise office was questioned. These
entities, as mentioned earlier, include insurance agencies, auto-shops, car dealerships, and
sometimes even their own corporate clients. In addition to these collaborators, Enterprise also
collaborates a lot with large airports. For example, in the Orlando International Airport, there is
an Enterprise office located there for incoming travelers to be able to immediately rent out a car.
Enterprise also collaborates with travel agencies such as Expedia and Orbitz. These travel
agencies help consumers plan an affordable trip, which includes bundling their flight, hotel
room, and a car rental.
5) Context
The Enterprise office on Colonial is looking to increase its corporate sales in the Baldwin
Park area. Baldwin Park is home to many businesses but the majority of them are business to
consumer stores (about 70%). Baldwin Park is also a very small community with a high
walkability and it is considered a very high-end environment, demographically when considering
high income and degree levels and home prices that start on average at $1 million (City). As
previously stated in the situational analysis, Baldwin Park, a previous Navel base, was initially
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created as a small nit community that would act as an escape from the city life located less than a
mile away.
SWOT Analysis
Strengths
Since the company has been around for fifty years there are many strengths that the
company has. First and foremost they are the leader in their industry with 35.8% of the market
share. The next closest competitor in the market is Hertz with 17.9% of the market share. Having
this much market share means the company has enjoyed a lot of success and is a very
recognizable brand name to consumers. Being the industry leader will help Enterprise in Baldwin
Park because according to our primary research many business people in that area will choose a
car rental company based on how well known it is and we can see that Enterprise will be in the
evoked set for the consumers they are targeting.
Enterprise is also the number one car rental company when it comes to customer service.
Both Hertz and Avis differentiate themselves based on value and price whereas Enterprise
establishes itself as a premium high quality car rental company which means having the best
customer service as well. People who are willing to pay a little more money to have a pleasant
experience at Enterprise will usually be very satisfied and choose to go back and rent with them
again. This will also result in positive word of mouth for Enterprise which will bring in more
sales because peers are some of the most trustworthy resources for people when they are trying
to make a decision.
When it comes to car rentals there is a sort of stigma about the quality of cars available
for renters. It is thought that car rentals are usually older cars that are not very clean. However
Enterprise prides itself on having the youngest and cleanest fleet of cars in the industry. Their
cars are never more than three years old and after every return, the cars are put through a deep
cleaning. This is done to ensure a pleasant driving experience for the renter which would add to
the good customer service that they should have received while in the office.
Lastly Enterprise has “deep pockets.” They have enjoyed a lot of success over the past
few years and have also enjoyed growth in their sales. Since Enterprise is a private company and
are not obligated to give out a public financial report, IBIS World estimated that Enterprise
earned about $1.4 billion in operating income during the year 2014 which was an 84.2% increase
in operating income from the year before.
Weaknesses
Having those strengths does not mean Enterprise is void of any weaknesses. The biggest
weakness Enterprise has is not having a physical location in Baldwin Park. From our surveys we
discovered that consumers factor the location of the car rental office as an important part of the
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decision making process. As a result, there may be situations where a consumer will choose not
to rent from Enterprise, but rather rent from a competitor, simply because the competitor is
closer in proximity. This proximity leads to easier access which does affect the quality of service
the consumer is experiencing. As stated previously, the closest Enterprise to the Baldwin Park
Area is located on Colonial near Downtown Orlando, which could result in a 10-20 minute drive
depending on traffic.
In addition to not having an office in Baldwin Park, Enterprise Car Rentals has a very
poor website. It looks outdated and it isn’t very user friendly. Companies nowadays have very
modern and aesthetically pleasing websites.
Enterprise also has a weak social media presence. Compared to other companies in the
industry, Enterprise does have the most Facebook likes at just over 300,000. However on
Twitter, Hertz has by far more followers with 40,400,000 compared to Enterprise’s 16,000
followers. Overall these numbers are low compared to most well-known company Facebook
pages. To effectively use social media, Enterprise needs to find a way to grow their amount of
followers and to engage them in it.
Opportunities
Enterprise has numerous opportunities to be successful in the Baldwin Park Area. They
can focus on: Social Media and Internet campaigns, going more “Green,” creating loyalty
programs, or to not go into Baldwin Park at all.
1. Social Media and Internet Campaigns
With the advent of technology on phones, tablets, etc. it has become easier for a company
to always stay on the minds of potential consumers. It’s an easy way to promote services, goods
and specials and creates strong brand awareness. Customers might be more inclined to check
social media platforms if incentivized with deals and
coupons on services. A growing number of people and
business alike are on various social media platforms and by
executing a strong social media presence in Baldwin Park,
Enterprise has the potential of monopolizing the small area.
2. Going more “Green”
A growing number of people are embracing the
“Green” movement. They believe by driving these cars,
they are protecting the environment from harsh chemicals while also saving money on gas. By
having more “Green” options, Enterprise is opening its doors to a completely new
environmentally friendly market. They would also be able to strongly differentiate from their
competitors.
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3. Creating Contracted Loyalty Programs
Creating loyalty programs entice consumers to want to continue using the service. We
have formulated two separate loyalty programs based of segmenting the consumers into two
categories: those who want location and reliability as foremost, and those who mostly seek
customer service in choosing car rentals as stated in the 5C Analysis. Creating loyalty programs
that fit the needs of the consumers will increase share and overall market sovereignty.
4. Going into Baldwin Park
Baldwin Park is a rather small area, dimensionally less than 2 miles by 2 miles. This
company could move in and increase market share and presence by becoming the only car rental
in Baldwin Park. When taking into account the costs though, there would be a large upfront cost
to rent out a storefront, transport their fleet, and hire employees to run an Enterprise in the area.
There is also an Enterprise location roughly ten minutes away, which may cause cannibalization
in the company.
Threats
With the size of Baldwin Park being as small as it is, we have determined that fuel prices
and high competition can be a big threat to Enterprise.
1. Fuel Prices
Companies may opt not to rent vehicles when traveling to Baldwin Park because the price of fuel
is always fluctuating. Because of its size, companies may find it more cost effective to rent a taxi
or even walk building to building.
2. High Competition
As mentioned earlier, car rental companies are extremely competitive. In the immediate area,
Enterprise is in a highly competitive market with Hertz, Avis and ZipCar.
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Enterprise Goals and Objectives
The primary marketing strategy is to increase
the corporate presence of Enterprise in the Baldwin
Park area by 12% annually. We see potential in this
area, with the plethora of businesses and the
opportunity for growth. As of lately, Enterprise does
not have as many corporate partners in the Baldwin
Park area. This does not however mean there is not an
opportunity to increase the numbers. Competitors such
as Hertz and Avis are present around this area, proving
the need for car rental services is there.
In addition to building new partnerships in the Baldwin Park area, increasing brand
awareness in this area is a secondary objective. In order to see how Enterprise stands,
comparisons are a necessity to the local competitors to get a better idea of the present situation in
Baldwin Park. Once a clear path has been shown, we will adjust our strategies to align with our
goals.
Core Strategy:
Recommended Target Market & Target Marketing Profile
Through our survey results and research, we have concluded several things about
Baldwin Park that helped us shape our target market. Based on all of this info, it can be
concluded that the area for growth are mostly small businesses. Thus, the average client in
Baldwin Park is the employees and owners of these small businesses. 13 out of 20 people we
surveyed indicated that the company they worked for did not, in fact, have current contracts with
a car dealer supplier. This creates an opportunity with unforeseen needs and possibilities.
Furthermore, 75% of the respondents said they would be more interested in a well-known
company. Being that Enterprise is one of the ‘Big 3’ car rental companies this is beneficial when
entering this market. Using this primary research as well as additional secondary research the
target market for the Baldwin Park area are businesses that favor customer service and location/
reliability.
Recommended Positioning
Based on the survey results above and the target market, it is important that the
positioning of Enterprise reflects these efforts. Enterprise has a great foundation and is known
nationwide as being a top leader in car rentals. Reiterating that in the Baldwin Park area will help
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the ease of new customers as they decide whether or not to use the rental services that Enterprise
provides. In order to attract the target market, Enterprise needs to be able to offer what the
consumers want. Showing these companies that Enterprise has a great customer service system
will put Enterprise ahead of its competitors to these businesses, especially pursuing using CRM
or customer relationship management. The goal for Enterprise is to maintain long-term
relationships with these businesses and focusing on the customers that most benefit their core
values. For the customer service segment, a loyalty program will be positioned. In terms of the
location/reliability, it can be communicated to the potential new customers that Enterprise offers
the latest cars in their fleets and are immediately there when needed. To convey this message,
parking spots will be bought all over Baldwin Park with prepaid hours that will be ready to go as
car rentals on a hour base.
Marketing Strategies
The 4 P’s on the different strategy segments are listed below.
Strategy 1: Product
Enterprise offers a vast array of rental cars, including young cars. The product value for
Enterprise is very well known and their brand awareness reflects that. Maintaining product value
as Enterprise tries to expand their corporate business into Baldwin Park is crucial in its success.
Transparency with customers when it comes to certain features with available cars will increase
Enterprise’s likeness in the area.
Customer Service Segment: A loyalty program has been drafted to cater to the customer service
segment of our target market. With an annual fee per business, the business receives 20% off any
car rental. Along with this discount, the businesses will be incentivized through loyalty points.
Below is a detailed description of how the loyalty program works and its benefits. The loyalty
program will be a point-based program with different benchmarks attributing to different levels
of membership.
Bronze- 20-40 points
Silver- 41-60 point
Gold- 61-80 points
Platinum- 80+ points
Each benchmark gives different rewards to members. Points are acquired based on
frequency of rentals and time period of rentals. Rewards include but are not limited to a
percentage off a car rental and an extension of time for a given rental. This promotion will give
customers a reason to talk to their coworkers to hopefully gain more business. 8 points will be
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given to each member who acquires a new customer for Enterprise. Platinum members have
points that don’t expire, however Gold, Silver and Bronze levels only have a certain amount of
time to spend their acquired points. This promotional tactic will ensure success for Enterprise by
giving it new business and will encourage a long-term relationship with these new customers.
We will also be hiring an intern to go around to each of the businesses to accurately
describe the new product and how it can help each business on an individual basis. Stickers will
be placed on cars throughout the downtown Baldwin Park area to reach people that the intern
may not be able to. Both of these efforts will increase the awareness of the promotion, making
businesses more likely to partner with Enterprise.
Location/Reliability Segment: With the competition using hourly car rentals are increasing, this
segments strategy includes ready to go cars located in parking spots distributed over Baldwin
Park. The steps to sign up for the service and secure a car rental is as follows:
1. Pay a sign up fee and receive a SMART card.
2. Buy at least 100 hours of car rental time.
3. Using the online website or application, register for a car, time and date.
4. Details will be confirmed with the customers’ preferences on text, email, phone call or
through application.
5. At specified arranged time, use SMART card to scan over card reader on dashboard to
open car door.
6. Enjoy your car rental and return rental to same spot at the same gas level.
The product and car fleet will be exactly the same as the East Colonial location will be
maintaining this fleet, switching cars out weekly and cleaning them between once and four times
a week depending on demand. Any issues with the cars or card readers, the customer can call
that location during normal business hours or the 800 number during non business hours to
resolve issues, as this is the same with normal car rentals at Enterprise. Appendix E and F give
examples of the online reservation system design.
Strategy 2: Price
The prices will be different based on the segment. Enterprise offers a reasonable and fair
price point for the value created through its brand. Maintaining an image through the right price
point is always an art so additional primary research could be taken to understand the segments
deeper.
Customer Service Segment: This segment’s annual sign up fee will range from $100 to $200
depending on the type and size of business along with demand. Pricing will be straight forward
20. 20
as this is a simple discount taken off of the normal price. Prices range on type of day, time of
day and season with the average price of car rentals, including a diversity of economy and luxury
cars, selling for $75 per day (USA).
Location/Reliability Segment: The annual sign up fee for this segment is $35. With a mandatory
purchase of at least 100 pre-paid hours pricing at $9 per hour each, this pricing is also
straightforward. Depending on demand and likeability of this product and pricing, different
levels could be made later down the road that incentivize to purchase more hours. This could
include a loyalty program or a decrease in the dollar amount per hour for different levels of hours
purchased. For example 100 hours could be purchased at $9 per hour but if you purchase 300,
the cost goes down to $8 per hour. More primary research should be conducted to analyze the
purchase behaviors that incentivize this community.
Strategy 3: Promotion
The promotional efforts are initially the same for these segments and branch off based on
the positioning strategy.
Customer Service Segment: Since these customers are related to the loyalty programs, the new
hire or intern paid to sign up and maintain this relationship is the initial direct line of promotion.
They communicate the brand and create retention through loyalty. LinkedIn will be used as a
online way to inquire businesses in Baldwin Park and also as a form of communication that’s
professional and informative. This segment, along with Enterprise’s traditional promotional
strategies is focused on the effectiveness of word-of-mouth using friendly and knowledgeable
customer service.
Location/Reliability Segment: These customers will most likely have to be acquired in person to
communicate the ready-to-go spots and show how Enterprise maintains a high level of customer
service and reliability without a person of contact there to greet. Promotional stickers will be
placed on cars that are being used throughout the Baldwin Park area as well as outlined parking
spots to brand the designated area of the car rental. Both of these efforts will increase the
awareness of the promotion, making businesses more likely to partner with Enterprise as they see
the name more often and question the parked cars in the area. Examples of these are in Appendix
D. Since this is a small knit community, word-of-mouth will also be beneficial for this segment
as this new car rental system creates excitement around the neighborhoods.
Strategy 4: Place
The place of the car rentals differs slightly with each segment but maintains a main point
of contact at the East Colonial location.
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Customer Service Segment: Since the East Colonial location will handle most of the trips in
Orlando, it will also benefit from setting up rentals outside of Orlando and even outside of
Florida for businesses.
Location/Reliability Segment: Since building another location in Baldwin Park is costly and
inefficient the parking spots are a cost effective and innovative way to place the product. First
and foremost, the East Colonial location will be a point of contact and will be the designated
location for all services. To compensate for not having a location closer to Baldwin Park,
Enterprise will own multiple parking spots throughout the downtown Baldwin Park area which
will have a car available for businesses to rent. The cars will be ready to go, simply requiring a
pre-payment of 100 hours. This will increase reliability with customers as they will be in
physical walking distance of the car and can avoid troubling scenarios like heavy traffic to get to
a rental car or getting lost on the way to and from the rental company. The flexibility that comes
with this plan allows for Enterprise to be as involved as the company desires, which is important
as there are over 150 unique businesses in the Baldwin Park area with different needs.
22. 22
Strategy Timeline
The time frame for this strategy is 3 months of set up and 1 year to see results for both
segments. The following are the financial documents along with the set of risk calculations.
Financial Documents
Since Enterprise Rent-A-Car is an established company with strong financial experience,
it is stable fiscally with the greatest market share in car rentals. Researching Baldwin Park
though, there is potential to increase revenue and market share through their already strong
finances and brand awareness. From the primary research conducted there’s two overall market
segments with different financial plans: Customer Service and Location/Reliability. The
financial statements with a projection of 2 years for these segment plans are included in the
appendices as noted. In relation to cost, we assume the segments are equally divided in the total
potential market share based on survey results of important attributes. 12% annually is used as a
goal for each segment to increase since this is the East Colonial’s annual growth goal (Telephone
Interview).
The costs associated with the customer service segment include the 20% discount (this is
not actually a cost but is a loss in revenue and will therefore be included in the cost section) and
the new hire responsible for caring for the Baldwin Park area. The assumption is this will be an
intern, working 25-30 hours per week, earning possible course credit and earning $12 per hour.
These costs are calculated on an annual base as $5400 and $15,600 respectively, assuming 12
businesses, 12% of the market that year. The income is generated from the $150 signup fee and
the actual car rentals, assuming 30 car rentals per year. The revenue from this segment the first
year therefore equals $2400. Appendix B shows these calculations for 2 years. If calculated on
an individual bases, it costs $1,315 to obtain one new customer. The breakeven time is less than
a year with revenues generated within the first year depending on usage.
The costs associated with the location/reliability segment have more variable associated
costs depending on the number of customers and usage. These include the $3600 annual fee per
car spot (note that only about 1/3 to ½ spots will be purchased compared to number of customers
for efficiency), the $33 for each card reader, the 50 cent fee for each actual card given to the
customer, the cleaning and switching of these cars equaling to approximately $10 per week or
$520 annually, along with the promotion on the car, about $36 per car, and a fixed cost of $200
to install the technology and update the website and app to include this service. Since this will
be done corporately, the assumption of a salaried role for this fixed cost is used. The income is
generated through the $35 signup fee and the amount of prepaid hours bought to rent these cars,
averaging 5 hours per week used for 50 weeks (250 hours) at $9 per hour, assuming two weeks
of vacation for holidays and off days. The revenue for the first year is therefore about $8,200,
with steady increase in each year thereafter. Appendix A shows these calculations for 2 years.
23. 23
The cost to obtain one customer for this segment equals about $1600, dividing the cost by the
number of customers expected. The breakeven time is also less than a year, with this segment
more fluctuating with demand because of the variable costs.
Risk and Reward Analysis
Calculating the risk for each segment strategy is found by dividing the potential income
by the associated annual costs. For the first segment, the loyalty program, this equals about 0.5
and the second segment risk to reward equals about 0.43. This risk and reward calculation
increases to 0.7 and 0.5, respectively for the second year. Most financial advisers do not
recommend a risk to be taken if this number is under 2 and preferably 4. With respect to most
financial advisors and this calculation, if only businesses are used as the market share without
regards to the increased brand awareness and potential revenue from Baldwin Park residents,
then this number will generate a relatively small gain. This number again can be recalculated
and most likely increased with a decrease in risk if the community market share is taken into
consideration (Auto).
Monitors and Controls
The metrics used for these two segments will be revenue generated, customer life time
value and market share growth based on the 12% annual goal.
In the Location/Reliability segment, the card reader will allow as a tracker to track usage,
location, and customer data specific to the company and individual. This will act as primary
research as well to see the patterns of businesses and create more in depth profiles of the
companies in Baldwin Park. The new hire focused on the customer service segment will also
help service this segment to create new customers and determine the plan and segment the
customer is in, in relation to their attributes important to car rental companies.
In the Customer Service segment, the new hire will act as the tracker, following up and
communicating with these businesses personally to verify they are receiving the needed attention
and care. From here, this will act as primary research to serve this segment better and change, if
need be. As you can see from Appendix C, customer life time value is a good indicator of
retention and total revenue an individual customer can give and should differs based on the
segment. In these target markets, the customer service segment has a higher value and should be
valued higher.
24. 24
Appendix A: Financial Analysis for Location/Reliability Segment, Years 1-2
Year 1- 12 customers Year 2- 24 customers
Sales Amount
Sign up Fee, $35/ each $420
Averaging 250 hours, $9/hr $27,000
Total Sales $27,420
Cost Analysis Amount
$3600/spot (5) $18,000
Card readers, $55 each (5) $275
Cards, $.50 each (12) $6
Promotion on cars,
$36.16/car (5) $180.80
Cleaning, $10/week $520
Fixed Cost- One Time Fee Amount
Technology Fee Cars/Apps $200
Total Costs $19,181.80
Revenue Amount
Sales-Cost $8,238.20
Sales Amount
Sign up Fee, $35/ each $840
Averaging 250 hours, $9/hr $54,000
Total Sales $54,840
Cost Analysis Amount
$3600/spot (10) $36,000
card readers, $55 each (5) $275
Cards, $.50 each (12) $6
Promotion on cars,
$36.16/car (5) $180.80
Cleaning, $10/week $520
Total Costs $36,981.80
Revenue Amount
Sales-Cost $17,858.20
25. 25
Appendix B: Financial Analysis for Customer Service Segment, Years 1-2
Year 1- 12 customers Year 2- 24 customers
Sales Amount
$150 sign up fee $1,800
Averaging 30 rentals per year $21,600
Total $23,400
Cost Analysis Amount
20% discount (12 x $15 x 30) $5,400
New Hire $15,600
Total $21,000
Revenue Amount
Sales-Cost $2,400
Sales Amount
$150 sign up fee $3,600
Averaging 30 rentals per year $43,200
Total $46,800
Cost Analysis Amount
20% discount (24 x $15 x 30) $10,800
Baldwin Park Hire $15,600
Total $26,400
Revenue Amount
Sales-Cost $20,400
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Appendix C: Calculations for CLTV, Using Year 2 Calculations
LTV = (M/ (1-r+i))- AC
M = margin on an annual basis
R= 1-churn rate
I= interest rate
AC= acquisition costs
1. Assumptions: Interest = 5%, r = .97 or churn rate of 3%
Customer Life Time Value for Customer Service Segment
LTV = ($850/.08) - $650 = $9,975.00
Customer Life Time Value for Location/Reliability Segment
LTV = ($744/.08) - $1541 = $7,759.00
28. 28
Appendix E: Example of online app for reservations and online communications
Appendix F: Reservation graphic on phone
29. 29
Appendix G: Survey to Baldwin Park Businesses
1. What companies come to mind when you think of car rentals?
2. Does your company currently deal with one car rental company?
3. If so, which one and why?
If not, why?
4. Does your company have a pay per mile expensed out to you to cover work related travels
with your car? Y/N
5. Does your company send out requests for proposals to car rental companies or do the car
rental companies approach you unsolicited?
6. Rate the following in order of importance for car rentals for company use: (From 1 being least
important to 7 being most important)
Customer service (knowledge and friendliness)
Reliability
Price
Includes pick-up process
Location (closeness and cleanliness)
Car Selection
Custom Plans for your company
7. To your knowledge, do most of your company employees live in Baldwin Park or in other
sections of Orlando?
8. What is the highest price point your company is willing to pay per car rental?
9. Does your company go for a large popular known car rental company?
10. Does the minimum 25 years old age limitation for drivers affect your company to rent cars
11. List 3 attributes that you would want from a car rental company?
12. What would motivate you to switch from your current car rental company?
13. For what occasions does your company rent a car? (travel, conventions, special occasions,
etc.)
14. What is the likelihood that you would recommend a car rental company?
15. Do you enjoy driving to work?
16. What color do you think of when you think of car rental companies?
Yellow, Red, Green, Other
30. 30
Appendix H: Survey Results
What companies come to mind when you think of car rental companies?
Graph of Pricing Segment’s Second Most Important Attribute
Responses to:What is the likelihood that you would recommend a car rental company?
Rank the following in order of importance (1 most
important to 8 least important): Down Below
31. 31
Appendix I: Survey Analysis
The Blue (1) is first most important attribute, Red (2) is second most important attribute
according to the survey results
33. 33
Appendix K: Research on Baldwin Park Businesses
Number of Businesses:
On Baldwin Park community network: 154
In Zip Code 32814: 240
Average amount between those: 197
Type of Business: 70% B2C 30%B2B
Industry of Businesses:80/240 Are in the professional/technical field (lawyers, consultants,
architects)
Size of Businesses: Over 90% have between 1 and 9 employees
Problem: There is a lack of parking
Most important Attributes of a Car Rental Company:
Customer Service (40% answered as most important)-8
Price (30% answered as most important)-6
Reliability (15% answered as most important)-3
Location (15% answered as most important-3
The Survey Participants that answered Price as Most Important Attribute (The Pricing
Segments’ Second Most Important Attribute)
Customer Service-1/6 about 17%
Custom Plans-1/6 about 17%
Reliability-3/6 50%
Location-1/6 about 17%
Where Employees Live
Mostly Baldwin Park (55%)
Mostly other areas of Orlando (20%)
Evenly between Baldwin Park and other areas of Orlando (25%)
34. 34
Appendix L: Achievements and Awards
In 2012 Enterprise won the 2012 FIT Sustainability Award from AkzoNobel Automotive &
Aerospace Coatings Americas
In 2011 Enterprise won the JD Power 2011 Customer Service Champion Award
37. 37
Appendix O: Consumer Decision Making Model with Targeted Marketing Strategy
Marketing Strategy
Create Interest and Brand Awareness in
Baldwin Park
Be present through strong Social Media and
Internet Campaigns
Deliver a strong call to action in Baldwin
Park
Retain customers through Loyalty Programs
38. 38
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