Beverly Goh ID 23429143 MKC3130 Case Analysis Two

MKC3130: Case Analysis 2-Olympic

Rent-A Car U.S
Industry Description
Olympic Rent a Car
Industry
US Car Rental Industry
Size
$24 Billion
Growth
Mature
Characteristics

Profitable
Consolidating market dominated by 4 major national players and

of Market

small independent regional companies

Has two distinct market with different customer requirements:

Airport rentals and Local Rentals

Industry is sensitive to the macro environment especially the
economy. For example, revenue fell in 2008-2009 due to the
Global Financial Crisis

Trends

National competition was fierce and dominated by four major

companies
Entry barriers to the industry was high as the national players

forced out weaker and smaller companies

Consumers are gaining buyer power by searching online for the

best rental price

Revenue that comes from auxillaries such as GPS navigation has
been cannibalized by the increased prevalence of smartphone
usage by consumers

Beverly Goh ID 23429143 MKC3130 Case Analysis Two

Problems/ Opportunities
SWOT ANALYSIS
Strengths

Weakness

S1 Quality Service

W1 Market follower rather market leader

S2 Strong Brand Perception associated with

W2 Sensitive to aggressive moves by leading

Winning and Quality Service

competitors

Olympic has the smallest market

share out of the 4 national companies

Olympic is still recovering from

S3 Strong airport distribution through

franchisee method

massive revenue loss during GFC

S4 Lower prices compared to leading players
W3 Loyalty Program is now being perceived

in the industry

not as good value compared to competitors

W4 Olympics customers were not brand
loyal

loyalty programs
Threats

Opportunities
O1 Olympic has a window to form a

belongs to several other car rental

T1 Competitors edging them out

distinctive competitive strategy that cannot

be copied unlike the current Loyalty

T2 Increased buyer power through the ease

Programs by their competitors

of travel booking online

ease of access to information through

O2 Additional channels for promotion and

internet price comparison tools allows

pricing through increased internet bookings

consumers to shop for best price

rather than stay brand loyal

O3 Leverage on convenience that online

bookings bring for a new unique pricing
model that is not as reliant on variable
pricing or add to the variable pricing model

Beverly Goh ID 23429143 MKC3130 Case Analysis Two

TOWS Analysis
SO

S1, O1 Leverage on strong brand

ST

S2,T1 They can use their brand

distinguisher of quality service to

attributes to distinguish themselves

advertise
S4,O3 Use of competition pricing

through creative marketing

strategy and position themselves as

campaigns that invoke nostalgia

S4,T2 Capture new consumer through

being better value through online

the internet with their competitive

advertising channels and appeal to the

pricing

discerning value seeking consumer

who researches before they buy
online.
WO

W4,O1 Building brand loyalty will be

WT

W2,T2 Focus on making their niche

increasingly important as they enter

customer segment, The Budget

into online marketing and pricing

Conscious, Olympic brand loyalist by

opportunities so that Olympic Rental

understanding their needs and

will be top of mind and they will also

adjusting operational and marketing

be able to capture a new market share

strategies accordingly.
W1, O2,O3 Use bundle pricing

from brand switchers.

W1,O1,O3 Capitalize on the flaws in

strategies through the internet as a

competitors loyalty program to make

market follower to capture the

theirs better either through

increased number of customers

streamlining their program or offering

booking online

value-adding rewards

Beverly Goh ID 23429143 MKC3130 Case Analysis Two

Core Problem
The Car Rental Industry is maturing and the 4 major national companies are becoming
increasingly aggressive in order to sustain competitive advantage and retain customer loyalty.
As one of the smallest national players with a market share of 8% and still recovering from
the revenue loss during the GFC of 2008-2009, Olympic is vulnerable to aggressive moves its
competitors are making to gain market share. They must keep in mind their narrow operating
margin and their limitations with a smaller fleet of cars than their competitors. Olympic needs
a marketing strategy that will allow it to retain brand loyal customers and grow its market
share in order to create a stable profit stream in order to do future expansion if they wish.

Beverly Goh ID 23429143 MKC3130 Case Analysis Two

Alternative Solutions
Ansoff Matrix
Product Market
Existing Markets

Existing Products
Market Penetration

New Products
Product Development

SOLUTION ONE

SOLUTION TWO

Increase Online Presence

Offer a Car-Sharing Rental

Service

Work with third-party

They may offer a

travel consolidators

membership car-

for bundle pricing

sharing program

strategy
Appeals to

which offers a car at

an affordable hourly

convenience shoppers
who want to book

rate.
Use its fuel efficient

fleet/hybrids
Address the growing

airlines, hotels and

car rentals. They will
be market leaders in

trend of

this approach.

environmentally
conscious customers

New Markets

Market Development

Diversification

SOLUTION THREE

Expand franchisee
airport services and
compete with major
brands.

Criteria Selections
1. Low cost
5

Beverly Goh ID 23429143 MKC3130 Case Analysis Two

a. Olympic is still recovering from loss during GFC and needs to be careful as
their operating margin is thin and competitors are aggressive
b. Cost can be measured by allocation of budget to new strategy
2. Return on Investment
a. Need to increase profit margin in order to grow as a company and ease off
operating costs
b. Profits can be measured by monitoring the growth in revenue from the strategy
chosen
3. Increases Brand Loyalty
a. Olympic needs to increase brand loyalty as their, Leisure consumer segment
are value conscious and brand switchers. They will need to ensure this
segment is sustained instead of switching to competitors because of value
perception.
b. Brand loyalty can be measured by increased number of repeat rentals by
consumers.(Knox & Walker 2010)
4. Differentiates brand
a. Olympic needs to differentiate itself from the market leaders or risk being
constantly compared to them and not being a first choice for the consumer.
(Shankar,2006)
b. Measured by qualitative surveys about the values consumer associated with
Olympic Brand. (Dutta,2012)

Evaluation
Criteria
Low Cost

Increase

50

Profitable

50

Inc Brand

Brand Value

Loyalty

Differentiato

30

r
25

Total

155
6

Beverly Goh ID 23429143 MKC3130 Case Analysis Two

Online
Presence
Airport

10

20

50

25

105

Expansion
Car Share

40

30

20

50

140

Program
Total

100

100

100

100

Pros and Cons

Solutions
Increase Online

Pros

Presence

Will be able to reach and

Cons
Need to invest money

capture higher market share of

in market expertise

leisure travelers
o Leisure Travelers who

for online travel

book online account

for 28% of profit and is

cheap and hurt their

the largest segment

brand perception as

after their business

customers who are on

handle new volume

are shopping around for best

the internet
Have to work with

price
Targets affluent value

of price and convenience

Appeals to convenient

consumers
Successful franchisee

of customers through

third parties which

may be an expensive

process
Business customers

are dropping
Airports dominated

expansion means that they

by major players who

have established presence in

have money to

airports which they can

operate on site
Extremely costly to

capitalize on to expand to new

Car Share

quality
May not be able to

contract (50%)
Capture new customers who

conscious customers in terms

Airport Expansion

booking
May be perceived as

ones
Capture new market by

operate at airports.

New products needs

Beverly Goh ID 23429143 MKC3130 Case Analysis Two

Program

targeting increasingly

investing which may

environment consumers
Market leader in such a

cut into operating

product development that is

costs
Market Leader in

difficult to emulate unless

such a product

competitors are already

development which

investing in green energy cars

New revenue stream as it has a

means there is high

dramatically different pricing

failing

risk in the program

strategy

Recommendation
Solution One

Enhances Olympics long term competitive position

o High consumer power comes from their ease of access to information online
and it is likely that an increasing number of consumers will be brand switchers

Adapting and Responding to market conditions

o Growing customers coming through online booking presence means that most
advertising should come through online
o Consumers value low-prices and convenience. By being easy to find on the
new through targeted advertising and by working with bundle sites, they target
both attributes that consumers value.

Beverly Goh ID 23429143 MKC3130 Case Analysis Two

Sustainable Market Advantage

o A mature market means that there is little differentiation they can do with their
rewards program
o They will be market leaders on the net and this is accountable as a successful
relationship with third party vendors will take time to build for competitors
making it difficult for competitors to copy their strategy quickly

Implementation and Contingency Plan

Implementation
1. Work with digital agency to craft a digital strategy via tools such as Search Engine
Optimization and making their site is user friendly
2. Work with third party booking sites to strike agreements for bundle pricing
Monitors
1. Track click through rate of consumers coming from online bookings
2. Track consumers signing up to become members of Olympic Car members after
online bookings
Threats and Contingency Plan
Improvement of Market Share of 5% by 2017
Trigger: Market share increase is less than 1.5% by 2016
Options:
1. Focus efforts on understanding consumer preferences of booking online

Beverly Goh ID 23429143 MKC3130 Case Analysis Two

Threat from Discount Culture

Trigger: Third party site pushing for higher discount rates
Options
1. Accept reasonable and seasonal discounts for bundle packaging. This may influence
increased value and quality in the minds of consumer during high seasons
Competitors launch aggressive online attack
Trigger: Large competitors launch similar online marketing tactics that push Olympic out as
a preferred partner of third party sites
Options
1. Ensure Olympics site is continually improve for ease of booking through mobile and
through the internet
2. Focus on convenience and look to continually develop digital strategies. For
example, creating an app for easy and convenient pick up of cars.

10

Beverly Goh ID 23429143 MKC3130 Case Analysis Two

Reference
Beverland, M. B., Napoli, J., & Farrelly, F. (2010). Can All Brands Innovate in the Same
Way? A Typology of Brand Position and Innovation Effort. Journal Of Product
Innovation Management, 27(1), 33-48.

Dutta, K. (2012) Brand Management: Principles and Practices. Oxford University Press.

Hooley, G. J., Saunders, J. A., & Piercy, N. F. (2004). Marketing Strategy and Competitive
Positioning (3rd ed.). Essex, England: Pearson Education Limited.

Hoyer, W., & MacInnis, D (2010) Consumer Behaviour. Ohio: South Western

Knox, S., & Walker, D. (2001). Measuring and managing brand loyalty. Journal Of Strategic
Marketing, 9(2), 111-128.

11

Beverly Goh ID 23429143 MKC3130 Case Analysis Two

Magretta, J. (2011) Understanding Micahel Porter: The Essential Guide to Competition and
Strategy. Boston, Massachussets: Harvard Business Review Press.

Shankar, V. (2006). Proactive and Reactive Product Line Strategies: Asymmetries Between
Market Leaders and Followers. Management Science, 52(2), 276-292.

12