Zipcar Analysis

In: Business and Management

Submitted By sslefty1
Words 357
Pages 2
John Grassi In the year 2000, a one hour rental of Zipcar would be worth approximately $9.54. This number was created through a combination data collected by The Federal Highway Administration (FHWA) and the United States Bureau. According to the FHWA, ownership and operating costs of an intermediate size vehicle in the year 2000 averaged $.469/mile. This number is broken down into 8 different costs per mile: 1. Repairs- 0.9 cents 2. Depreciation- 16.4 cents 3. Fuel Tax – 1.9 cents 4. Fuel Cost- 4.2 cents 5. Financing- 7.0 cents 6. Maintenance- 2.3 cents 7. State Fees- 1.4 cents 8. Insurance- 12.7 cents (Our Nations Highways).
After finding this data my next objective was to determine how many miles an average customer drives in an hour. To be specific, my main demographic was the college-educated individual since they were the most receptive to the car sharing idea. With this detail in mind, it was important to find data regarding the amount of miles an hour a college student may drive. I created this number by using the amount of miles a college student drives on a daily basis and multiplied it by the average cost per mile, which was 46.9 cents. To represent the amount of miles by a college student, I discovered data that shows that the average college student drives 20.3 miles a day (Our Nations Highways). I multiplied this number by 46.9 then divided it by 100 to get the exact dollar amount. This number came to approximately $9.54. However, to be more precise, the cost per hour for a Zipcar would be even more depending on the size of the car. For example, for a large party of customers, a mini-van may be needed. According to the FHWA, it costs 50.7 cents per mile (Our Nations Highways). When this is multiplied by $20.3 and divided by 100, the resulting price is $10.29 per hour. Works Cited:
Our Nations Highways." U.S Department of…...

Similar Documents

Zipcar

...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......

Words: 9325 - Pages: 38

Zipcar

...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......

Words: 592 - Pages: 3

Zipcar

...1) How would you assess the overall validity of the Zipcar business idea? Zipcar is an overall strong business idea and Chase has the necessary dedication and base i.e. 250 members, 19 car fleet and approx. 22k revenue, to accomplish the target of additional $1.3million investment to strengthen her business however she needs to work on further exploiting the positive aspects of the idea and control negative points. Pros | Cons | * Strong target market (Boston) and expected demand scalability to populated cities * Potential revenue generation of $23million (0.04%x 66M = 26,400 members) * No existing competitors in North America * The technological concept of admit only the assigned driver to the car to get accurate data * Strong Customer Value Proposition based on extensive market research * Innovative marketing controlled marketing budgets | * Poor execution and team imbalance Lack of experience in the business segment and Danielson’s partial commitment with equal share in profit and ownership * Daily max price of $44 policy costs continue to incur while billable revenue does not hence cars per member is actually less than predicted because of this usage pattern. * Convertible loans are a potential issue need for higher level investors to expand project. | Based on points shared above I believe that the business idea can be a great success if Chase and Danielson are able to hire the right person who is an expert from given industry (car......

Words: 665 - Pages: 3

Zipcar Market Analysis

...------------------------------------------------- Zipcar: Refining the Business Model MARKET ANALYSIS 1. Intuition 2.1. Guess/feel where there is a need ? * Danielson while returning from a trip to Germany where she discovered the car sharing concept, which was already very trendy in Europe * Chase believed there was a strong demand for this service in the US because it provide a new low cost and convenient alternative than to own a car that you would drive occasionally and still pay the insurance * Chase didn’t hesitate when Danielson proposed the venture, believed it was the right moment to launch this idea 1.2 . Where value proposition could be the most interesting? Car sharing was best suited: * Urban locations with a dense population * Cities with expensive and insufficient parking * Locations where the need to drive was limited because allocated with good transportation system * Boston, as most European cities, met all the key criteria 1.3. Where early adaptors could be ? People who need a car just occasionally and don’t want to have the cost of a car * College educated individuals * People who mainly use the transportation system to go to work * Housewives who just need a car for an hourly usage 1. Hard data: confirm intuition 2.1. Evidences confirming the need ? * The concept was already very successful in most European cities * Glenn......

Words: 718 - Pages: 3

Zipcar Case Analysis

... Kathmandu University School of Management | Entrepreneurship and Innovation | Zipcar: Redefining the business model | | | 3/29/2015 | Submitted to, Prof. Rupesh Krishna Shrestha | Submitted by, (Group 6) Niraj Ghimire (14313) Amit Pathak (14325) Subigya Regmi (14327) Prajwal Sagar Shrestha (14332) Synopsis: Zipcar is a start-up organized around the idea of "sharing" car usage via a membership organization. This case describes several variations of the Zipcar business model along with their financial plan. These variations include a very early version and a version developed just prior to the launch of the business, as well as data from the first few months of operations. This case is all about the underlying the business model for the venture and to discover how these assumptions are holding up as the business is actually rolled out. Case Facts: * The company was incorporated in January 2000 and raised an amount of $50000 from an angel investor. * Although an MBA from MIT with a good professional background, Robin Chase had minimal experiences regarding start-ups. Similarly, Antje Danielson, despite having held several high position jobs was relatively inexperienced when it came to entrepreneurial venture. * Car sharing was best suited to urban areas where the population density is high. * College-educated individuals were the most receptive to the proposition of car sharing. * Penetration for the car sharing business module was small (0.01%)......

Words: 2654 - Pages: 11

Zipcar

...ZIPCAR ZIPCAR 2011 Sebastian Cruz BUSINESS STRATEGY AND POLICY 2011 Sebastian Cruz BUSINESS STRATEGY AND POLICY TABLE OF CONTENTS EXCECUTIVE SUMMARY……………………………………………………………………………………….3 COMPANY INTRODUCTION……………………………………………………………………………..4-10 PORTER FIVE FORCES ANALYSIS…………………………………………………………………….11- 17 INTERNAL FACTOR EVALUATION (IFE)……………………………………………………………18-24 EXTERNAL FACTOR EVALUATION (EFE)………………………………………………………….25-30 TOWS MATRIX……………………………………………………………………………………………….31-35 REFERENCE……………………………………………………………………………………………………..36-59 EXECUTIVE SUMMARY After analyzing Zip car situation in the industry with a Porter 5 forces analysis, internal factor evaluation, external factor evaluation, and the TOWS analysis, I came out with some strategic ideas that based on the implication of business concepts along with the business idea of Zip car can lead for a better succeed of the company. For the SO strategy, I developed three important opportunities for Zip car. Government got Zip, this consists in working together with the government to reach environmental goal and for Zip car avoid some cost in the long term. Zipster to Wal-Mart, develop a market penetration to focus on a certain group working together with the top wholesaler company in the world would lead for new members to use Zip car. Introduce Zip car to India, this one I think is the most important and very achievable, it is a market that is growing fast with an over populated urban areas. Using a market......

Words: 8022 - Pages: 33

Zipcar

...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......

Words: 361 - Pages: 2

Zipcar Situational Analysis

...a pioneer in the car sharing/rental market in the United States with long-term potential. * The main goal of Zipcar is to satisfy unmet consumer needs regarding a convenient access to transportation by offering car-sharing service that works with advanced wireless platform. 2. Current Target Markets Basically Zipcar wants to attract people who do not have a car, and people who are not interested in dealing with the hassle of owning a car due to traffic jams, maintenance costs, not enough parking lots especially in urban areas. This company wants to facilitate its customer’s life by allowing them to access Zipcar’s parked cars at designated spots. Then we can mention that the companies target markets are: * Males and females who are cost-conscious customers * College-educated and web-connected individuals * People who care about the environment and prefer “green” options * Executives and workaholics who do not have enough time to keep a car due to their busy lives. 3. Current Positioning Strategy Zipcar positions itself as a trendy company and the green solution to the problems of metropolitan cities such as traffic jams, and high cost of car ownership. The company attracts its target markets by offering a low cost and convenience driven model. 4. Current Marketing Mix Price $4.50 and hour and 40 cents a miles. Zipcar also has a $44 per day maximum daily rate. The price represents a low cost for people who drive short......

Words: 948 - Pages: 4

Zipcar

...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......

Words: 3429 - Pages: 14

Zipcar Case Analysis

...ZIPCAR CASE ANALYSIS The pain that Zipcar is trying to address is the inconvenience and costly car options to the web-connected people. Based on our analysis of the case we think Zipcar’s business is easily imitable and to prevent an entry of new competition, Zipcar must achieve economies of scale at the earliest and strategize to increase their customer base and lower their customer attrition going forward. In the long run, the success of the Zipcar would depend on how many customers they have and the ability of Zipcar to leverage on their economies of scale. We would also recommend on how they can more wisely choose their type of cars, promote their brand and most importantly how they can raise funds at the upcoming Springboard conference. Though the primary emphasis of Zipcar is on convenience and cost savings, the Zipcar concept is planned to be marketed as environmentally friendly. We feel this is an additional pain that Zipcar is trying to address that poses risks because, firstly, there are other two similar companies in US (Portland-based Car Sharing Inc. and Seattle- based Flexcar) that are already more focused towards the environment friendliness. Secondly, if Zipcar really wants to market their product as environmentally-friendly, then they probably should choose their launch car from a list of most environment friendly cars of 2000 such as Toyota Prius, Honda Insight or...

Words: 731 - Pages: 3

Zipcar Analysis

... 1. Zipcar motivates its customers and partners by truly addressing their needs and wants from a company like theirs. For example, customers want something that will save them money. Zipcar’s solution to this is an affordable way to use a car that’s much cheaper than buying your own car. It cuts out the need to buy insurance, maintenance, gas, parking, and the general cost of the car. Cities want to cut down traffic and congestion. By using Zipcar, people tend to drive fewer miles and be more efficient when it comes to driving to and from somewhere. For customer motivation, I would rate them a 3, because most people would prefer to have their own car. Zipcar is not for everyone, but it is extremely useful on vacation, business trips, or simply for convenience. For city motivation, I would rate them a 3 because of how much congestion and traffic will decrease from Zipcar. For businesses, I would rate them a 4 because I believe they would be interested to this as a substitute for rental cars during business trips or as a substitute for issuing work cars for employees. I think it would be not only convenient but cost efficient for the company. For universities, I would rate them a 3, because most students prefer to walk to class or are used to campus buses and other forms of transportation. However, it would be appealing for the students who are unable to afford their own car or live on a campus where little driving is needed. 2. I believe that Zipcar has......

Words: 1114 - Pages: 5

Zipcar Case Analysis

...EZONFADE, ALMA 8010500 ZIPCAR: REFINING THE BUSINESS MODEL • Develop a business model canvas for Zipcar. Key Partners Key activities Value Proposition Customer relationships Customer Segments Automobile companies Operational leasing Convenience Self service Parking lot companies Car Rental Ease of use Phone and website based customer support Mobile & Web interface People who wanted the convenience of a private vehicle to run occasional personal errands apart from getting to work Web & Mobile Technology providers Hassle free ownership Low-cost alternative to owning an automobile Environmentally friendly Cost structures Key Resources For urbanites Channels Revenue streams Customer Acquisition General & Admin cost Web hosting Vehicle leasing costs Parking lots rent Available cars Usage flexibility Shopping malls Residential Estates Parking lots Annual subscription fee Technology infrastructure Parking lots Application fee Mileage fee per hour Late return fee • Discuss the founders’ dilemmas that were experienced at Zipcar. 1. Funding was not as easy to get as the founders anticipated. Chase and Danielson put up initial investment out of their own resources and later turned to loans from friends and family. 2. Chase was faced with the challenge of developing a technology that would admit only the confirmed driver to the car and would also efficiently record the......

Words: 356 - Pages: 2

Zipcar

...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......

Words: 702 - Pages: 3

Zipcar

...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......

Words: 308 - Pages: 2

Zipcar

...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......

Words: 9105 - Pages: 37