Problems Facing Enterprise Rent-A-Car

 

 

1. ERAC overview and requirement:

1. Company background:

Enterprise Rent-a-car or Enterprise Car Club is a car renting company that establish throughout 19 cities of UK. The company’s primary customers are people that can’t afford a car but need to travel or current don’t need one or families that sometimes require a second car (Enterprise Rent-a-car, 2016). The company has a fleet of more than 960 vehicles in UK only which parking at designated bay across the cities. The main benefit which customers receive is that they don’t have to worry about the cost of ownership of a car. All they have to pay for is a subscription fee when joining the club and small fee per ride.

2. Requirement:

The company is wishing to expand their operation to a new city of Vietnam; that being said, there are some requirements which must be satisfied. First is about customers, the company require all drivers to have a validated driving license of 1 year or more. Individual customers that travel less than 4000 km a year is best benefited from the service. Because the renting procedures are done through smartphones app, so people with familiarity with smart devices are preferred. Second is about city’s prospects, ERAC is a company that let people rent and drive cars to travel around so the city of their inhabiting  must be a large city with infrastructure supporting car transportation because Vietnamese have not get used to car transportation, they are familiar with motorbike more than cars. Also, there must be spaces for parking bays of the fleet of vehicles and they must be accessed with ease.

2. City pick and marketing plan:

1. City pick:

In Vietnam, according to the General Statistics Office, there are only 2 cities that have more than 7 million people which are Ha Noi (7.2 million) and Ho Chi Minh City (8.14 million) and are classified as special grade urban area with developing economics. Only these two cities can satisfied the “large cities” demand of ERAC, the rests are not enough. But only one city pick up is allowed, so more details are needed.

The two cities are both qualified as special grade cities designated by the government but the economics and other factors are different. This part of the essay will attempt to differentiate the two cities and will deliver the choice of city according to elements that are most suitable for car renting industry which ERAC is operating in.

To begin with, the growth speed in 2016 using GRDP of Ho Chi Minh city is 476.988 billion VND and Ha Noi is 140.005 billion VND according the GSO. That is, Ho Chi Minh City’s economics is growing much faster than the capital in 2016 which leads to a higher living standard of the population in Ho Chi Minh City.

Next is about urban infrastructure which support inner city transportation, in Ho Chi Minh City, according to an official report, the officials has focused the investment into infrastructure development; particularly, 3.849,1 billion VND of ODA has been allocated for building, upgrading city’s roads, bridges and transportation system. Ha Noi, however, does not share the same view as Ho Chi Minh City. The officials of Ha Noi deployed the national investment mainly for city’s parks, entertainment centers and public accommodations. Again, Ho Chi Minh City is being developed better in term of infrastructure.

Another matter relating to car consumption rate of each city, this means that the number of cars being registered and put into use in terms of day. Amazingly, Ho Chi Minh City in 2016, average daily newly registered 4 wheels vehicle is 250 per day according to Ho Chi Minh City’s Traffic Safety Committee. Ha Noi, similarly, has 230 four wheels vehicles being registered every day which show that the consumption rate of both of the cities is very high.

About the number of tourists in and out of the city, both cities witnessed a good year in tourism industry. In 2016, Ho Chi Minh City welcomed more than 5.2 million foreign travelers to the city. Unlike Ha Noi, there was only 2.04 million foreign travelers visited the city in 2016. The reason why this paper favors foreign travelers is because international tourists have a higher chance of renting a car instead of a bike because they are already familiar to cars.

Last but not least, competitors that can pose a threat to ERAC in both of the city are not many. In both cities, some big and nation-wide companies like Phi Loan Transportation, Kim’s Self-driving car for hire, Thanh Buoi transportation, Uber or Grab can be major competitors but their business model is not like what ERAC is using and they cannot be ERAC’s competitive rivalry. But the threats from substitution like motor bike, bus, taxi … can be serious and there is a new type of public transportation in Ha Noi, the BRT bus, which is a rapid moving bus that operates in a priority lane. This makes Ha Noi an unsafe place for expansion of ERAC business.

So, with all the advantages that Ho Chi Minh City can provide, Enterprise Rent-a-car should choose this city to be the next destination for expansion.

2. Marketing plan:
   1. Advertising methods:
      1. Digital tactics

• PPC – Pay Per Click advertisement – £3.000

Search engines such as Google or Yahoo Search play a vital role in modern internet surfing activity. Whatever we need to find on the Internet can almost be found by using search engine, that including finding a car renting company. Because the expansion is in Ho Chi Minh City only so the local residents search must be prioritized.

• Social media and social campaigns – £10.000

As suggested by ERAC, social media such as Facebook, Twitter… is a good way to deliver the company’s messages to young, modern customers. A funny, eye-catching, meaningful piece of advertisement can go viral on the internet through social media because people will keep sharing it to their friends. The only thing the company needs to ensure is that the piece of advertisement must be interesting.

• PR promotions – £5.000

To an existing customer, nothing better than a special offer, a discount or an exclusive service. That will fortify their belief in the firm that the company also care about the current customers as much as finding new customers. Even they will introduce the company’s services to their friends or relatives just because of the special offer for current users.

• Youtube videos – £5.000

Videos on Youtube can have a very large cover area and just like social media, people tend to share what they like with the other. Especially with a video that hit the right target customers, they will remember the message delivered in that video and the company will have a better chance to persuade potential customers to become real users. The company also needs to consider about a short ads at the start of other video on Youtube.

Total budget needed: £23.000

2. Physical tactics

• Posters and billboards – £10.000

Posters are usually the avatar, the profile picture of the enterprise. They deliver a brief message of the company’s core values and products/services. A good poster will act like the representative of the company because it contains much important information about the company that potential customers need to know. Moreover, when people keep seeing that poster over and over again for some time, it will be easier for the company to introduce about itself when the customers come to use the services.

• Bay signs – £1.000

Obviously, people need to know where they can get their ride and where the bay is. This is essential since it act like a guideline for customers and show that the company is presented throughout the city. Sometime these sign can share the same function with the poster.

• Vehicle livery – £2.000

Vehicle livery is an obvious and important means of advertisement because when customers driving the branded vehicles on the street, that car will work as a moving logo of the company. Of course, in the bay there must be some cars that aren’t branded for customer’s choices but it will cost more when they want a car like that.

Total budget needed: £13.000

Grand total: £36.000

3. Big idea:

According to a columnist of Marketing Land Peter Minnium, an effective big idea in advertising needs 3 elements:

1. Piercing insights: Owning a car is a pleasant feeling of civic life and is one of the biggest purchases for most people. However, this is not an easy decision for some people since the cost of keeping a car isn’t low. But the need of a car in modern civilization is undeniable; particularly for civic pride.
2.  Brand connection: Enterprise Rent-a-car club is the exact answer to please your demand of a car. With a small subscription fee and a small fee per ride, all you have to do is just take out your phone and click the button in our app to have a ride parking in bays across the city. All costs are on us but the ride is yours.
3. Succinct expression: ERAC. The car in your very own pocket.

With the remaining £14.000, we can communicate this big idea through means of advertisement on television. Creating of a short movie, using real people who are experiencing the services, this will be a solid proof of the quality that ERAC can bring about.

4. Conclusion:

Although this kind of business model of ERAC is quite new to Vietnam, it will be a new experience for the people and maybe the company can use that to their advantage. There is a long way to make the business a success but with the big idea, people will understand and profit will come.

References

Minnium, P. 2015. Marketing Land. [Online]. [7 January 2017]. Available from: http://marketingland.com/whats-big-idea-3-fundamentals-successful-digital-creative-153747

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Hochiminhcity gso. 2016. ThongKeHochiminhcity. [Online]. [7 January 2017]. Available from: http://www.hochiminhcity.gov.vn/thongtinthanhpho/Lists/ThongTinKinhTeXaHoi/Attachments/429/BCTH_T6-FINAL-2016.pdf