...MAY 9, 2005 MYRA HART MICHAEL J. ROBERTS JULIA D. STEVENS Zipcar: Refining the Business Model It was October 14, 2000, and Robin Chase was leaving yet another meeting with potential providers of capital for her fledgling venture, Zipcar. Chase was CEO and cofounder of the company, which she and Antje Danielson had started some 10 months before. The idea behind Zipcar—a sophisticated form of car sharing—was simple, yet potentially revolutionary. Chase and Danielson had conducted some initial research during late 1999, and by the end of that year, the two had developed a business plan. They had incorporated in January 2000 and raised their first $50,000 from one angel investor. By June of 2000, the two entrepreneurs had leased 12 cars and were ready to open for business in Boston. By October, the fledgling company had 19 vehicles, nearly 250 members, and the founders had raised—and spent—an additional $325,000 to fund the early stages of operations. Yet, even with this demonstration of viability, Chase and Danielson had not succeeded in raising the equity capital they needed to really grow Zipcar. Beginning in early 2000, Chase had made a series of presentations to potential investors in which she sought $1 million in capital to prove the business model in Boston and, eventually, to set the stage for expanding the business to other U.S. cities. Potential investors seemed intrigued and enthusiastic about the Zipcar idea. While Chase hoped to close on this first round of financing...
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...Zipcar is an innovative rental car service company –their innovation must exploit hourly car-renter-needs with unique some IT activities such as RFID, GPS, Apps, and Wireless technology. Zipcar’s strategy with its unique IT activities, including Zipstars or Ziptrips that are social networking technologies, must create more customer values and its creation should be sustainable Zipcar's growth. Also, details are following answers of Discussion Questions; 1. Threat of new entrants –are hard to replicate those unique IT activities because they already have been obtained repositories about personal experiences. Bargaining power of buyers –are reduced because of including the cost of gas, insurance, and reserved parking spots. Bargaining power of suppliers –are mainly structured leased cars, fuel, insurance, maintenance, and parking that are reduced their volume customer or wealth of customer’s information. Threat of substitute products –could not easily follow their activities because of, continuously, improving their services level with customer needs such Zipsters. Industrial competitors –Zipcar has clearly difference between their original hourly rental car service and traditional daily rental car service. 2. Their business strategy, hourly rental car service, has been sustained sophisticating IT, for instance, RFID key system probably decrease a waste of time when standing in line or filling out papers to rent a car –hourly renters must emphasize those time naturally...
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...1 Hi guys, I’m gonna take it from here and I’ll talk to you about the market size & dynamics, the revenue model, and the reasons why we choose zip car. So first off, I will talk about the market size. Zip car is very huge, they are in 175 counties all over the world, they are in the united states, Europe, latin America, Canada, and I believe they are looking for expanding in Australia The picture that you see on the right is a picture of a zip car wondering the streets of London 2 Zipcars target market is mainly us Young adults College students Who don’t own a car They offer a wide rage of cars, from bmws to Volvos so you can pick whatever you want whether it was the low end commercial use or the high end leisure use They are also targeting environmentally conscious people as they have added a line of electric cars called plug-ins where they run on electricity, one single charge can take you for 30 – 40 miles 3 This slide shows results for a survey that was conducted by market trends LLC and it shows some of the challenges that zip car face, The first one is that 80% of the people that have heard about zip car never tried or used it Moreover, 64% of the people feel that the price is an important factor and that they currently cannot afford zip car prices Lastly, 77% reported that they would use more of zip car if they added more car drop off locations 4 This is their revenue model and how they make profit They make profit by renting the cars...
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...zi9-605-054 REV: JUNE 30, 2005 FRANCES X. FREI Zipcar: Influencing Customer Behavior Anita Karr frantically gathered everything she needed for her road trip: water, her favorite “mix” CD from Javier (the ex-boyfriend), ear plugs. After years as a struggling musician her sister was making her debut as the new drummer for No Bags to Check, a performance art/hard rock band that was gaining momentum on the East Coast college circuit. The venue for this breakthrough in her sister’s career was Lupo’s in Providence, Rhode Island and Karr had to be there. Living in Cambridge a car hadn’t been necessary; most of the places she needed to visit on a daily basis were within walking distance of Karr’s Valentine Street apartment. To visit her sister across the river, grocery shop, and run errands Karr relied on Zipcar, which she had signed up for a year ago rather than continue to pay for parking, car insurance, and gas. For tonight’s trip she had reserved weeks ago, using Zipcar’s convenient online reservation system, a VW Jetta Jericho. It was 3:30 pm. Karr was scheduled to pick up the Jetta at 4:00 pm, her sister by 4:30 pm, and arrive at Lupo’s by 6:00 pm. Both she and her sister had figured that this was more than enough time to get to Boston from Cambridge, load the drums, and make Providence by the appointed hour. Karr made one final sweep of her belongings—she couldn’t find Javier’s Best of Bob Dylan CD, which she had conveniently forgotten to return—then gathered her bags and...
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...Zipcar: Influencing customer behavior Zipcar provides its members, who it has dubbed “ Zipsters”, the freedom of on demand access to a fleet of cars at any hour of the day or night. The fleet of vehicles is parked conveniently in the Zipsters’ neighborhoods or any Zipcar locations without the costs or hassles of car ownership. There is an estimated 10 million driving age residents, commuters and university community members near these locations so Zipcar provides convenient access to all of them. The freedom associated with owning a car is available to Zipsters as well as they are able to choose where, when and for how long they want to drive. Thanks to car sharing vehicle miles traveled are reduced as well as CO2 emissions. Zipcar is able to provide a low cost by cutting costs on infrastructure and employees. Since the cars are parked in parking lots or otherwise on the street and Zipsters unlock it with their card, no employees are needed to man the lots. The cost saving that comes from comparing the ownership of a car or renting from a traditional rental company is also achieved from the fact that Zipcar takes care of maintenance, insurance, parking and gas for its members. The service is mainly offered online, mobile phones and the Zipcar app (today). Zipcar offers high flexibility and convenience and less people interaction. There is no need to deal with any unhappy employees when filling out paperwork and picking up the car. As a result of this customers ar involved in...
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...Assignment ZipCar Evaluate this potential venture and the progress that Chase has made. For the purpose of evaluating the Zipcar business venture I made use of the format of the Salhman article named “How to write a great business plan.” Hereby, a business framework should systematically assess four independent factors critically to every venture namely; The People, The Opportunity, The Context and an overview of possible risk and the reward for coping with these risks effectively. After shortly explaining the factors I will apply this framework to the Zipcar Case and analyze the quality of its business model. This makes it possible to evaluate the potential of the venture; and its progress from scratch to start, from an investor’s perspective. The people The success of a product or service is dependent on the people developing them. “The people” refers to both the entrepreneurs developing the business as all other actors who have been actively involved in providing key resources or important services. The analysis The easiest way to analyze the people behind the business is by usage of the ‘Fourteen personal questions every business plan should answer’. Hereby, I looked at the completeness in providing the right information and the quality of the information that is provided in the Zipcar case. At first, both developers of the concept; Danielson & Chase were highly experienced and qualified within their field of interest. Danielson; having an educational background...
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...Zipcar Upon receiving first round financing of $1.3 million, Zipcar is, as CEO Robin Chase describes, “poised for action”. The measures that the company intends to take moving forward will likely determine its future viability as the dominant player in the relatively untapped market of car sharing in North America. Currently, Chase is testing the concept in the single market of Boston, and has ambitious goals to break into other markets along the East and Mid-coast by the end of next year. Having received preliminary positive customer responses, Zipcar has potential to establish a secure market foothold and revenue traction; however, the start-up company is not without problems, namely the short lead time on their competitive edge, the lack of a strong, committed and experienced management team, and the absence of a focus on building-up assets. These are significant issues to be addressed before any attempts should be made to raise second round funding for expansion capital. THE MARKET FOR CAR SHARING Before discussing Zipcar’s problematic issues, a brief examination of the market in which the company is operating in is important to put the situation in perspective. The concept of organized car sharing originated in Switzerland in 1987, and has since gained popularity in neighboring regions. Consequently, there is an established and functioning market in Europe, but no such market exists in North America. Whether this is an untapped market potential waiting to be exploited...
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...Zipcar, is an innovative car sharing company, founded by Antje Danielson and Robin Chase. In Cambridge Massachusetts, 2000. The business model consist in an immediate, electronic, car rental reservation, using mobile phones. Users can reserve a car at any time, in over 400 college campuses and over 50 airports. Zipcars are located in different areas of USA, Canada, UK, Spain, Austria, France and Turkey. Users have to join using their credit card and wait for an approval, then reserve the desired vehicle, hybrids, SUVs, pickup trucks, luxury vehicles, minivans, and cargo vans, BMW, or Hybrid; then go to the Zipcar parking spaces, unlock the car with a card (Zipcard), and then drive. The driver has to return the vehicle to the same parking space were the car was initially located ready for the next user. Zipcar has its competitors, RelayRides and GetAround offer a similar service, traditional car rentals are another option for the customer, and Uber is also considered a competitor. The main problem that Zipcar is having, and that is mentioned in the case “Zipcar – Influencing Customer Behavior” is that sometimes drivers are not calculating the time they have to use the car and when cars are reserved for another service after, it causes a lateness problem that affects the Zipcar´s service model. As mentioned above, Zipcar, is located in different cities around the world, with more than 10,000 vehicles, it also offers an innovative mobility service that gives their affiliates...
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...Case Analysis: Zipcar Business Model: Application in the US of a car sharing service that provides customers (that can not own a car or do not want to own a car) access to an automobile at defined parking spots by daily or hourly billing. SWOT Analysis: Strengths | Weakness | * Business in a niche market (blue ocean) with a viable concept (sharing that allows save money to customers) * Starting at a very suitable location for the strategy (Boston) * Easy of use and environmentally friendly concept (reduce car usage and pollution) * Well developed technology (protected by patent) | * Higher costs and attrition rates than expected for setting up the strategy * Lack of expertise in this industry and in venture capital of the founders (very anxious) * Very improvised launching (technology platform was not ready) * Poor financial attractive delivered to investors (economic model) | Opportunities | Threats | * Potential growth of the market (low penetration in the US) * Attractive alternative than owning a car (potential customers) * Alliance with car makers or car rental * Potential for revenue diversification (enhancements to the car) | * Vulnerable to increases in costs (parking, fuel, insurance, leasing) * Car rentals offer lower and competitive prices. * Problems to locate good parking spaces in some urban areas. * Potential investors require higher than expect returns (expensive financing) | Recommendation: Zipcar founders need...
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...MAY 9, 2005 MYRA HART MICHAEL J. ROBERTS JULIA D. STEVENS Zipcar: Refining the Business Model It was October 14, 2000, and Robin Chase was leaving yet another meeting with potential providers of capital for her fledgling venture, Zipcar. Chase was CEO and cofounder of the company, which she and Antje Danielson had started some 10 months before. The idea behind Zipcar—a sophisticated form of car sharing—was simple, yet potentially revolutionary. Chase and Danielson had conducted some initial research during late 1999, and by the end of that year, the two had developed a business plan. They had incorporated in January 2000 and raised their first $50,000 from one angel investor. By June of 2000, the two entrepreneurs had leased 12 cars and were ready to open for business in Boston. By October, the fledgling company had 19 vehicles, nearly 250 members, and the founders had raised—and spent—an additional $325,000 to fund the early stages of operations. Yet, even with this demonstration of viability, Chase and Danielson had not succeeded in raising the equity capital they needed to really grow Zipcar. Beginning in early 2000, Chase had made a series of presentations to potential investors in which she sought $1 million in capital to prove the business model in Boston and, eventually, to set the stage for expanding the business to other U.S. cities. Potential investors seemed intrigued and enthusiastic about the Zipcar idea. While Chase hoped to close on this first round of financing...
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...Zipcar 1. Company: Zipcar has great potential to meet needs of urban consumers. An analysis of the company’s strategy, its potential customer market, and its financing needs shows us that while Chase has been great at researching and identifying a potential multi-million dollar business, her ability to raise funds, manage operations, and grow the business at speeds required to keep the competition at bay is in question. Competition: There are no large competitors for Zipcar with only two other car sharing services in US in the west and one in Canada, though large car manufacturers such as Volkswagen could start to compete directly. With a low subscription price and better execution Zipcar should be able to keep ahead of its competition. 2. Zipcar relied on multiple revenue streams. Users paid for annual subscription, processing fees, tiered pricing for usage and interest income on security deposit which created a hybrid revenue model. Between December 1999 and May 2000, Chase realized that her assumption were too optimistic and began to remodel revenues accordingly. Revenues were now skewed towards usage rather than subscription which would call for better ongoing marketing strategy and put them into direct competition with established car rental companies. On the cost front, Chase had to incorporate new charges under parking and increased leasing cost per car, thereby increasing variable cost per car. In addition there were some surprises on fixed costs. The...
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...Zipcar: Influencing Customer Behavior Zipcar was a car-sharing service. Started in Boston in 1999, up to 2004, the company had expanded to 21 cities and owned more than 400 cars. Members would have to pay annual fees and monthly fees in order to use this service. The car could be rented hourly or daily and is expected to be returned to the appointed location within the schedule time. The company has recently faced a problem that would influence the reservation schedule. The company needs to figure out a way to influence its customer behavior to return the car on time. In a recent incident, Fishman had picked up the Jetta at 1:00pm for his interview and expected to retune it by 3:30pm, but the interview went beyond the designated time and he could not return the car on time. However, the same Jetta was reserved by Karr weeks ago and she supposed to pick up the car at 3:30pm at that day and drive it to Providence by 6:00pm for an important event. By the time she got to the parking lot where the car should be already waiting, she founded that the car was not there, so she called the company hoping that they could track the car and have it delivered as soon as possible. Meanwhile Fishman excused himself from his interview to call Zipcar to extend his reservation. But he hung up before Zipcar could pick up the phone after someone called him back to the interview. If Fishman did not withdraw himself from the interview and return the car any sooner, Karr would have trouble...
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...• 1. Zipcar : Refining the Business ModelByGroup 4 • 2. ConceptCar sharing business initiated in Switzerland in 1987.Organized car sharing was the coordinated use of vehicles by various subscribers in succession and Independently of one another.Member can reserve any car in the network • 3. Concept Best SuitedUrban LocationsLarge number of potential userExpensive ParkingNeed to drive limited distanceCollege-educated individual were the most receptive to the proposition • 4. BenefitsConvenientEasy to useFreedom to travelHassle free ownershipCost savingEnvironmentally friendly – one car eliminates the need of 7.5 individual owned cars • 5. Course of ActionCompany Web SiteTelephone SupportTechnology development - challenge- admit only confirmed driver, capture usage dataPrice Structure – security fees, initiation fees, annual fees, monthly fees, per mile fees, per mile fee and hourly rates • 6. 1st Business Plan$25 - nonrefundable application fee$300 - fully refundable security deposit$300 - annual subscription feeAdditional member - $1.5 per hour, $.40 per mile$20 fine for late returnAssumed annual renewal rate for members – 95%40% utilization of vehicles. Where as European Companies – 50% utilization of vehicles Assumed – avg. member would take 4 trips per month at an avg. of 4 hours and 22 miles per trip • 7. Users were expected toHandle simple maintenance themselvesRefuel and submit receipt for reimbursementKeep the car cleanTake responsibility of any traffic or parking...
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...The proposed venture in this case study has great potential in highly populated areas with a need for transportation. Since Zipcar provides the cars in areas close to the customer, this service would be easy to use. The drawback would be finding a way to make the benefit of utilizing Zipcar more compelling over other forms of transportation such as owning a car, using other car rental services, taxis, subways, or buses. The nice component of Zipcar is that it offers hourly services which can attract people who need a car only for a doctor’s appointment or grocery run. Zipcar has been able to progress its venture which is notable since funding and parking have been an issue. Most of the funding was used to start building the wireless technology to serve as the operating system. Unfortunately, the shortcoming in Zipcar’s progression could be because the “ Z-card” reader is not finished. With no asset and few angel investors, Zipcar can seem as a risky investment. Instead of rushing to start operating the business perhaps Chase could have gained investors by guaranteeing that she had a system that functioned. Despite the technological setback, Zipcar was able to obtain 3 cars and rely on members to keep a driving log to track usage. The advantage of Chase and Danielson starting Zipcar early is that since both lacked a degree of expertise, Zipcar would be able to grow by observing customer’s usage patterns and understanding the operational and financial parameters of running...
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...Zipcar Case & IT Doesn’t Matter Zipcar Case 1. Analyze the business model of Zipcar using Porter’s five forces model. a. Threat of new entrants: The threat of new entrants is something to be concerned about. The barriers to entry are no different now than when Zipcar first launched with the exception that technology has evolved. The major advantage Zipcar has is it is the first entrant and established in its current markets, but this is not the case in other markets/cities where Zipcar does not currently have a presence. The other advantage Zipcar has is the patent on its wireless technology, but a new competitor might be able to develop technology that could function just as well. In order to keep the threat of new entrants minimal, Zipcar would have expand into other cities and take advantage of its existing infrastructure. b. Supplier power: The biggest equipment costs I can guess for Zipcar would be car purchasing and maintenance and infrastructure cost/maintenance. For cars, there are a few big suppliers that also provide service. The models offered by the various companies that could fill the needs of Zipcar are largely similar. There are a few differences but all of the major car suppliers offer models that have similar fuel effiency, power plant (combustion engine, full electric, or hybrid), etc. While Zipcar might be able to dictate price, the company could shop around for the best price with small cost for switching. c. Threat of substitution:...
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