Olympic Car Rental Case, Case Study Example

Olympic Rent- al- Caris one of the leading automobile rental companies in the United States. The company was conceived by John Uelses. Uleses established a franchising model of automobile rental.  The primary marketing strategy that was applied by Olympic Rental – a- Car was to establish its prices at a more competitive rate than the other actors in the market. In the application of the franchising, promotion and advertising strategy,Olympic Rent – a- Car endeavored to capture more than a 5% market share in 2012.  In establishing its operations at the international airport terminals ion the United States , Olympic  Rent – a -Car strived to gain market share by the acquisition of smaller automobile rental firms.  In the year 2012, the organization possessed more than 460 rental establishments in the United States and administrated a massive fleet of automobiles (Deighton &Kindley, 2013).

In order to increase the market share and attract new clients, Olympic Rent – a – Car applied customer loyalty initiatives. The strategy of applying loyalty initiatives enabled the organization to realizelong term progress and to gain marketing information with regards to the consumer base.  The attractive customer loyalty program is not a novel concept and has been able to evolve over time. The customer loyalty program was initiated in 1990s. The loyalty program was initiated by the S& HGreen Stamp company in the early 1960s (Hatala, 2013). The customer loyalty program has also been applied by American Airlines.  The customer loyalty program has been applied in a number of industries.  The customer loyalty programs enable the marketer to reward the consumers for being loyal clients and facilitate the identification of the clients who provide the highest profit margins (Deighton &Kindley, 2013, Heskett et al., 1994).

The US automobile rental industry is in the mature stage of development.  It is a particular industry that generates annual revenues of $24 billion.  The revenues that are realized by automobile rental organizations are closely associated with business expenditures and leisureexpenses.   The prices of the automobilerental industry have increased since 2009.   The implications of the mature life cycle are that the market actors have the tendency of being larger and there are usually fewer competitors.  The competitors also have the characteristic of having larger market shares due to brand loyalty (Deighton &Kindley, 2013, Heskett et al., 1994).

A specific characteristic of the automobile rental industry is that the numbers of cars that are possessed in an automobile rental organization’s fleet must be able to fulfill the consumer demand.  The automobile rental industry is also characterized by information administration and variations in the prices of the automobile rentals. The most substantial expense is the acquisition of vehicles and this factor represents 50 % of the expenses. The majority of the automobile rentalorganizations have endeavored to add luxuries to the cars(i.e.,GPS devices) in order to realize additional revenues.  The online voucher vendors have been encouraging lower prices for the past several years (Deighton &Kindley, 2013, Heskett et al., 1994).

The benefits of the Olympic Medalist Rewards imitative are that the members were able to optimize on the program free of charge.  In the event that sixteen points were accumulated, the members would qualify for a free automobile rental for one day.  The points that were accumulated through the Olympic MedalistRewards program could also be redeemed for airline tickets.  The automobile renters who participated inOlympic Rent- a – Car’s program accounted for over one fifth of the organization’s revenues.  The membership rentals accounted for over 8% of the automobile rentals for any given year (Deighton &Kindley, 2013, Heskett et al., 1994).

The disadvantage for the franchisees is that the Olympic Medalist Rewards initiative caused the profit margins to be lower.

The information that was listed on Slide 3 states that the majority of the revenues in the industry are derived from heavy commercial travelers.  The second most substantial source of revenueswasderived from moderatecommercial travelers.  The leisure travelers that were the major part of Olympic Rent- a – Car client base only accounted for fifteen percent of the market share (Deighton &Kindley, 2013, Heskett et al., 1994).

Alternatives and Options

In the event that Olympic Rent- a – Car, considering level 1, the customer becomes endeared with the organization by means of lower rates for clients who rent higher volumes of cars. In addition, the bundling and the cross selling of the services could be performed. This is frequently conducted in the passenger airline service industry. There are a number of programs that could be associated with hotels and credit card consumption (Deighton &Kindley, 2013, Heskett et al., 1994).

The disadvantage with the level one financial incentive programs is that they may be replicated by any of the competitors that possess a larger market share than Olympic Rent – a – Car. The second levels of bonds are social bonds.  Social bonding would be an option in distinct types of settings. These settings include educational institutions and health care providers. The solution may be to combine financial motivations, customization bonds (i.e.,credit cards and free magazine subscriptions in addition to structural bonds where the organization may acquire smaller organizations that have smaller market share (Deighton &Kindley, 2013, Heskett et al., 1994).

In order to address the challenges of customer retention and loyalty, the Olympic Rent – a – Car organization has attempted a number of dist8icnt options. The Olympic organization can modify its customer loyalty program by eradicating the blackout periods and presenting greater rewards to the clients. In addition, Olympic Rent- a- Car needs to consider its positioning in the market.  The organization should consider the manner by which the consumer base viewes its brand and peripheral services.  In attaining this type of recognition from the customer base with regards to the brands and the peripheral services that are associated with the brand, Olympic Rent- a – Car can ensure that the clients would be retained as part of the Olympic market share (Deighton &Kindley, 2013, Heskett et al., 1994).

There are number of distinct options that could be applied in order to address the customer retention challenges. Olympic Rent- a- Car could consider developing stronger consumer ties by the use of telephone apps.  The information that could be gathered from the client by means of ta free telephone app could faceplate a better customer relations segments.  In order to enhance the perceived value of the Olympic Rent – a Car brand (Deighton &Kindley, 2013, Heskett et al., 1994).

An easier, more innovative method should be conceived for the rental of automobiles. These methods may include being able to rent a vehicle by means of using a phone app for their Olympic Medalistrewardclients.  It could also include establishing desks and concessions at airport terminals in order to provide premium service to the Olympic Medalist Rewards clients. The premium service may include access to renting fullsize luxury sedans and sports cars. In addition, the OlympicMedalist program could be extended to hotels, restaurants and resorts. In this manner, the clients realize a benefit of saving time and expense when they decide to rent an automobile with Olympic(Deighton &Kindley, 2013, Heskett et al., 1994).

Another portion that could be exercised is for Olympic Rent – a – Car to produce distinct steps in the loyalty program. The Olympic organization could supply greater benefits to the members that have had the most tenure. The clients who have been with Olympic Rent- a- Car for two years could be offered a credit card that enables them to realize greater benefits. The clients that are retained for longer than two years could be offered another level of credit card. This type of membership may be designated as a platinum membership (Deighton &Kindley, 2013, Heskett et al., 1994).

Conclusion

These types of incentives would enable Olympic Rent- a – Car to retain more clients and to increase its market share. These types of incentives  would enable Olympic Rent- a – Car to retain its clients and to increase its client base. In addition, the clients could gain access to an enhanced level of service by enrolling in a program where a lowmonthly fee is charged.  This type of program mayenable the clients to reserve the best types of rentals (i.e.  full sized luxury vehicles and sport models).  In addition, the Olympic Medalist plan that is included in the Olympic Medalist rewards program could be extended to hotels, restaurants and resort accommodations. The Membership loyalty card or the Olympic Rent –a –Car credit card could be used in order to accrue frequent flyer mileage by means of their purchases.  These are some of the option that could be presented to the client base by o Olympic Rent- a – Car.

References

Deighton, J. and Kindley, J. T. (4 December 2013). Olympic Rent- a- Car U.S. : Customer l loyalty battles. Case Centres Harvard Business Publishing.

Hatala, G. (4 November 2013). Made in Jersy: S& H Green Stamps- in the sixties, Americans were stuck on them. NJ.com.

Heskett,  J. L., Jones,. T. O.  Loverman, G. O., Sasser Jr., W. E., Schlesinger, L. A. (1994). Putting the service-profit chain to work. Harvard Business Review.