1. Evaluate this potential venture and the progress Chase has made.
Robin Chase, CEO of Zipcar aims to implement a car-sharing service in Boston and then expand to other US cities. The service targets urban dwellers for whom, due to the high burden of car ownership, have forgone it in favor of public transportation, but would still like access to a car on a weekly to monthly basis for shopping or other trips that are difficult with public transportation.
The size of the market is fairly large, Chase estimates about 15,000 Bostonites (or .5% of the population) as the potential market. Looking at the 15 largest US metropolitan areas, predicting .1 to .4% would be interested the potential market is 58-233,000. These will probably be young, tech-savvy …show more content…
A city is unlikely to be able to support more than one such service, and occupying well-located parking spots will be key to attracting customers. Moreover, dense network effects are necessary for the firm’s word-of-mouth advertising strategy. That said, these advantages only work on a city-by-city basis, so it will be important for Zipcar to expand into new markets quickly.
The question of customer acceptance is still up in the air at this point. This model has had some success in Europe, but Americans are much more likely to own their own cars. On the other hand, American cities typically are more car-friendly than European cities, so there could be greater demand for this service. The trend away from car ownership among millennials was not so obvious at the turn of the century, so this was a risky proposition.
There are a number of potential competitors. Two west-coast companies have implemented a similar model, but they do not seem growth oriented. Typical rental car agencies are also potential entrants. They could better finance a rapid growth scheme, though they would have to significantly alter their way of doing business. If Zipcar proves profitable, they may be able to expand to new markets more quickly than the start-up. That said, within city network externalities means that once profitable in a city, new entrants are unlikely and profits …show more content…
There was a major shift in the pricing scheme, as suggested by a potential funder, to a lower annual fee and higher usage fee. This is an effective way to segment the market, charging occasional users less than frequent users, which should allow Zipcar to capture a larger customer base and extract more value from high willingness-to-pay customers. The other major change is the decision to begin operations before completing the smart-card car access system. The development of this will continue to be a drag on the income statement, and it will be interesting to see what affects it has on the operations costs and customer
Robin Chase, CEO of Zipcar aims to implement a car-sharing service in Boston and then expand to other US cities. The service targets urban dwellers for whom, due to the high burden of car ownership, have forgone it in favor of public transportation, but would still like access to a car on a weekly to monthly basis for shopping or other trips that are difficult with public transportation.
The size of the market is fairly large, Chase estimates about 15,000 Bostonites (or .5% of the population) as the potential market. Looking at the 15 largest US metropolitan areas, predicting .1 to .4% would be interested the potential market is 58-233,000. These will probably be young, tech-savvy …show more content…
A city is unlikely to be able to support more than one such service, and occupying well-located parking spots will be key to attracting customers. Moreover, dense network effects are necessary for the firm’s word-of-mouth advertising strategy. That said, these advantages only work on a city-by-city basis, so it will be important for Zipcar to expand into new markets quickly.
The question of customer acceptance is still up in the air at this point. This model has had some success in Europe, but Americans are much more likely to own their own cars. On the other hand, American cities typically are more car-friendly than European cities, so there could be greater demand for this service. The trend away from car ownership among millennials was not so obvious at the turn of the century, so this was a risky proposition.
There are a number of potential competitors. Two west-coast companies have implemented a similar model, but they do not seem growth oriented. Typical rental car agencies are also potential entrants. They could better finance a rapid growth scheme, though they would have to significantly alter their way of doing business. If Zipcar proves profitable, they may be able to expand to new markets more quickly than the start-up. That said, within city network externalities means that once profitable in a city, new entrants are unlikely and profits …show more content…
There was a major shift in the pricing scheme, as suggested by a potential funder, to a lower annual fee and higher usage fee. This is an effective way to segment the market, charging occasional users less than frequent users, which should allow Zipcar to capture a larger customer base and extract more value from high willingness-to-pay customers. The other major change is the decision to begin operations before completing the smart-card car access system. The development of this will continue to be a drag on the income statement, and it will be interesting to see what affects it has on the operations costs and customer