Porter’s five forces applied to Zipcar
Threat of new entrants:
Potential new entrants include existing car rental firms, companies that currently supply cars to car-sharing businesses (such as Volkswagen), and new start-up car-sharing ventures. As Zipcar is operating in only Boston, there are opportunities for new entrants (with sufficient resources) to establish themselves as dominant car-sharing service providers in other cities. This threat to the profitability of Zipcar’s planned future expansion activities would pressure Zipcar to expand rapidly in order to remain ahead of the competition. A major barrier to entry is Zipcar’s patented technology involving wireless transmission of usage data between the shared cars and a server. New
Larger vehicles could attract bigger travelling groups, while bikes would appeal to those without a driver’s licence or those who enjoy fresh air and exercise while being able to travel faster than on foot.
Zipcar should maintain vehicle supply agreements with manufacturers such as Volkswagen, even if prices are higher than hoped. The dissolution of such agreements could result in vehicle suppliers entering the market directly. They could utilise existing resources to compete against Zipcar. It would be better for Zipcar to work with, rather than compete against, these manufacturers.
More money could be spent on advertising in order to really raise awareness of the company and the services that it provides. The target customer base could be broadened, with advertising aimed at older as well as younger people.
A reward system could reward drivers who have driven a certain number of hours or miles. This would encourage customer loyalty to Zipcar, and increase the frequency at which the company’s services are used by subscribers. The effect on profit would be positive.
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Attractiveness of Zipcar
1. Industry and market
Research indicates that the U.S. market for car-sharing has a revenue capability of $200 million.
2. Consumers
Targeted consumers - well-educated (college), internet savvy, and living in urban areas – have proven to be open and receptive to the concept of car-sharing.
3.