Olympic Rent-A-Car Marketing Management

As the 4th largest car rental company in USA, currently, the main marketing strategies of Olympic Rent-A-Car is providing the lowest prices and offering a competitive customer loyalty program. In this competitive and slow-growing industry, the major competitors, such as Enterprise, Hertz, and Avis, take up about 88% of the market, with Olympic earning only 7% in 2012. Obviously, airport business rentals is an attractive segment, which bring in $9.6 (40% of total) billion revenue. In this situation, the largest car rental company, Enterprise is increasing focus on their aggressive dollar-based reward loyalty program to target business travelers market, which creates significant business risks for Olympic, such as potential loss of market share or even acquisition. As a result, to react this move, Olympic company must review of current marketing strategies and make decisions, which would keep it competitive and also retain and increase market share.

Obviously, Olympic is a value player, but not a strong player in this industry. Some factors can help explain the company’s current performance. Firstly, the price of the company is competitive, which is lower than the price maker Hertz. Secondly, this market is very competitive with high negotiation power of both customers and suppliers and high threat of substitutes. Furthermore, market share revenue from business-traveling customers is only 8%, which is the lowest share among other major rental companies. Moreover, revenue grows slowly and the profit margin is thin. In addition, most members are not loyal to the Olympic Medalist Rewards Program. Finally, long term debt is high, but stable because of low interest rate in the past four years. Additionally, some market forces may impede it in the future, such as stiff competition from competitors, increasing overheads and financial risks, third-party consolidators, online price comparisons and bookings, and increasing in teleconference.

Under these factors, it is believed that Olympic can act in three ways: (1) Improving and providing premium services to business-traveling customers; (2) Focusing on simplicity and convenience; (3) Following Enterprise to adopt dollar based reward system.

(1) Improving and providing premium services to business-traveling customers, especially heavy and medium business travelers. This is because it is found that 20 percent of business travelers contribute to 80 percent revenue of airport rentals. In addition, heavy business travelers pay $190 per trip and medium business travelers pay $57 per trip, which are much more than other travelers’ spending because business-traveling customers focus more on service than cost. As a result, Olympic could target more on these travelers by creating a “luxury club”, which should invite all existing and potential business customers to join. This club, as differentiation in the market, would provide elite and various services to club members in order to gain higher profit margin, such as free pick-up and drop off, zero blackouts, and decreasing waiting time and lines. At the same time, adding further incentives to these group members, which should based on dollars spent, to boost business travelers’ spending.

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