EasyCar

Introduction
EasyCar belongs to the easyGroup family of companies, founded by Stelios. Stelios entered the business with a low cost air carrier easyJet, the first flight being between Luton and Scotland in 1995. easyJet put forth a business model that strived to give the lowest cost product to the consumer by cutting down costs through the use of internet only reservation, simple point to point flights and yield management policies. As the airline evolved in to a “brand”, Stelios extended the brand and found easyGroup.
easyGroup evolved over the years and now consists of the following businesses:
• easyJet
• easyInternetCafe
• easyCar
• easyValue
• easyMoney
• easyCinema
• easyBus
• easyHotel
• easyOffice • easy4men
• easyJobs
• easyPizza
• easyMusic
• easyCruise
• easyTelecom
• easyWatch
• easyVan
Brand Values
Strategy
EasyGroup’s builds its brand based on the following values:
• Great values • Taking on the big boys
• For the many not the few • Relentless innovation
• Keep it simple • Entrepreneurial
• Making a difference in people’s lives • Honest, open, caring and fun
Mission
easyGroup’s mission is to, “manage and extend Europe’s leading value brand to more products and services, whilst creating real wealth for all stakeholders” (easyGroup: Brand Values).
Vision
easyGroup’s vision is to be, “Europe’s leading value brand into a global force” (easyGroup: Brand Values).
Business Model used by easyCar:
The company strives to provide value to the consumer whilst maintaining quality. The company defines quality as meeting or exceeding consumer expectations. easyGroup started business with easyJet in 1995. EasyJet used a low cost strategy providing value to the consumers at the lowest cost possible. This was down by cutting down costs by the elimination of middlemen in reservations, no-frills service and aggressive yield management policies. This served as a business model for extending the brand to the dozens of industries it today operates in, including travel, leisure, telecom and personal finance.
easyCar also follows this model with over 95 percent of the bookings made through the company web site. The rest five percent is made through phone reservation system by the company. This eliminates the cost of intermediaries in the reservation system. Easy car strives at utilizing 100 percent of the fleet so as to generate the maximum possible revenue. easyCar expanded into locations that proved successful already with the easyJet consumers. This ensures that they are venturing in to the right markets. EasyCar maintains a policy of offering a single type of vehicle at each location. However the company did diversify suppliers offering several different vehicles. The company allows for consumers to rent cars for a time period of as little as an hour and the reservations could be made as even an hour’s notice. The company chose to use facilities that would not add too much to the costs. They choose to lease parking spaces and keep physical facilities to a minimum. The pickup process was relatively simple; the consumer could pick up the vehicles with a printed copy of the contract and identification. While returning the vehicle, the fuel tank must not be empty and the vehicle had to be clean.
Macroenvironment: External Factors
Demographics
Although easyCar.com mainly performs the business in central Europe, such as Germany, UK, France, and Spain, as EU becoming a large consolidated market, easyCar.com’s business potential also increases. EU contains a highly populated, culturally diverse union of 27 member states with population of 493 million people (europa.com). Motality rate is expected to increase while a birth rate is expected decline. Today, Japan is the only country with the older average age. Divorce rate is increasing like other developed countries; in contrast, married rate is decreasing due to late marriage in women (europa.com). There has not been significant demographical change in European countries except increasing population and diversity because of increasing the number of members in EU. Since two target market segments, a business segment and a tourist/leisure segment, are hardly influenced by the demographic change, it does not affect easyCar.com’s profitability.
Customer Lifestyles
Customer lifestyles have been changing due to “green movement”. There has been an increase concern about clean environment and global warming amongst people. Since green movement is directly related to the car industry, the rental car industry will be affected by it. People, now, have been increasingly conscious about living in healthier environment. Because the emission from the traditional gasoline vehicle is a major pollution element, many countries’ governments have announced a plan of reducing harmful emissions, especially carbon dioxide. We have already started seeing some shifting in consumers vehicle purchases; as both, environmental concern and gas price, increase, customers will be preferring the cars that is cost efficient and easy for the earth.
Economic Features
Economy in Europe is boosting. However, it is important for easyCar.com to follow the economic environment from around the world as many of their customers are vacationers from countries outside of Europe. Though easyCar.com is a low-cost company that has price competency over rivals, when economy is weakened outside of Europe, it is crucial to make immediate respond to the situation, such as offering discount or coupons that customers could use in different industries. Opposite is true. When the economy is strengthened in outside of Europe, easyCar.com could raise the prices to meet customers’ willingness to pay more.
Technology
Use of advanced computer technology is one of the key success factors easyCar.com uses. EasyCar.com has been able to reduce its costs by having 95% of its reservations booked via the own Web sites and the Internet. This indicates that easyCar.com heavily depends on the most recent technology. Information technology is the element that changes rapidly, and customer requirements and expectations evolve at high pace. EasyCar.com must be sensitive about the movement in the advanced technology market and be flexible to adjust itself and its IT methods. Because the Web sites are the access point between the company and consumers, it is important to ensure that the company meets customer expectations.
Legislation and Regulation
The new regulation that Office of Fair Trading (OFT) has established can be a serious issue to easyCar.com. The new rule allows customers to have 7 days to cancel their reservation and to receive full refund. The law was extended into other industries, such as accommodation, transportation, catering, and so forth. In fact, under the new regulation, easyCar.com was not qualified as a transportation service company because the consumer had to drive themselves, and therefore, they were not receiving the transportation service, just a car. EasyCar.com appealed to the UK High Court and hoped to be waived from the new law and accepted as a transportation service business because, otherwise, its business would be on the edge, and easyCar.com can easily become unprofitable company.
In addition to the negative affects this ruling could have on the company’s profitability, easyCar.com was threatened by possible lawsuits. EasyCar.com implemented a new policy that the company can post pictures of customers who overdue cars 15 or more days on its Web site. However, since there is possibility that eacyCar.com could post pictures of wrong customers, it could be violation of data protection, libel, privacy, confidentiality, and human rights laws. Though Steilos claims that customers are given a choice to or not to sign the company’s terms and conditions, the negativity of the policy could harm the company’s popularity, it can cause costly law suit from “innocent” customer.
Strategic Group Mapping

Microenvironment: Internal Factors
The Five-Forces Model of Competition
Threat of Rivalry
Threat of rivalry is high for easyCar.
We see that the rental car segment has two broad categories of customers. First we have the business travelers who are willing to pay the price for service, quality, convenience and flexibility. Next we have the leisure travelers who are more price-sensitive and comprise of 45 to 65 percent of this market. EasyCar faces competition from the top firms who target to capture both segments of the market by offering a wide range of vehicles. These major firms pose a strong competition to easyCar as they have the resources to compete at a wide range. Competing firms are making fresh moves to improve their product offering, thereby aiming to gain more market share. For example, Avis has made partnerships to enable the firm to extend a 10% discount on weekend stay at Wingate, a partner firm that provides accommodation. The company has made partnerships with airlines, hotels and other companies to improve their product offering making travel arrangements for the consumer as convenient as possible.
We see that the rental car industry has also seen an increase in the number of firms who are approximately of the same size and scope if not bigger. These firms not only offer a wider range of products but also are able to undercut their prices. Although easyCar has 90 percent of its fleet rented out at most times, the competing firms have excess inventory on hand. The competing firms thus can undercut their prices to a great extent to ensure that the inventory is being used.
It is relatively low for the buyers to switch brands. The commodity offered by all the firms is somewhat standardized, the firms provide vehicles for transportation. Then there are smaller rental firms that have fragmented presence in few locations giving them the advantage to target the consumers with more customized product offerings.
Threat of New Entrants
The threat of new entrants can be classified as medium for easyCar.
The industry is experiencing a growth in revenue despite of strong competition so it continues to remain attractive to investors. The common method of entry in to the industry is primarily through franchising and leasing so the barriers to entry are not high. EasyCar has an excellent low cost strategy which can be used as a model for future companies. Since easyCar does 95 percent of its reservations through the company website and handles the rest directly, it is able to provide a lower cost than competitors. Also the company has established other policies that cumulatively contribute to help provide the product at the cheapest possible price to the consumer. The only significant investment using this model would be in the vehicles, as obtaining parking spaces and establishing website would be relatively easy. Since this model is a success for easyCar which has 90 percent of the fleet rented out at a given point, other new companies can look to target this market.
However due to the saturation level in the industry and the fierce competition amongst the current industry participants, new comers are at a disadvantage. Most major players of the industry have been increasing their scope of operation and monitor the environment making entry in to the industry difficult. The present industry participants also have the added advantage of an established brand name amongst the consumers.
Threat of Substitute Products
The threat of substitute products is high for easyCar.
The amount of business travelers has reduced over the past years due to the advancement in technology. Meeting can be conducted among personnel in different branches using tools like video conferencing facilitated through the internet. Technology has reduced the need for business travel which in turn affects the car rental industry.
The public transportation is a good, cost efficient and convenient option to travel. Most big cities have a good transportation system in place consisting of subways, railways and buses. The city and the level of public transportation would affect the car rental industry to a great extent.
These days, we find that tourists are attracted to package deals that provide them with a more cost efficient and convenient option. The group tours come with pre determined options for accommodation and travel. So companies enter in to partnerships stand to benefit from this arrangement and capture this market.
EasyCar’s strategy was to provide car rental at the lowest possible price to ultimately encourage consumers to choose rental over ownership. However we see that car manufacturers are providing attractive options to consumers by reducing the amount of monthly payments required on a car. Also we see that manufacturers and dealers are making the process of ownership much more easy and simple so consumers may choose to own a car than just rent it.
Threat of Suppliers
The threat of suppliers can be described as low for easyCar.
There is no dearth of supply in the car rental industry. Substitute products for automobiles can be easily found due to the vast number of manufacturers in the market. So the suppliers are not in a position to demand premium prices for their products. The car rental companies on the other hand can switch brands at a relatively low cost so it gives the companies an advantage in this aspect. EasyCar initially entered into a contract with Mercedes a deal that offered a buy-back. In order to keep the costs low, easyCar maintained a particular type of vehicle per location but at the same time did not limit itself to being tied down to a single supplier. EasyCar diversified the offerings at locations by renting out Vauxhall Corsa, Ford Focuses, Renault Clios, Toyota Yarises and Smart Cars.
Another factor that reduces the bargaining power of the suppliers is that car rental companies buy products in bulk. This could be mutually beneficial to both the companies, as the manufacturer can increase the number of products sold and the car rental company can take advantage of discounts from bulk sales. Threat from suppliers integrating forward in to rental car industry is low. The manufacturers would find it more beneficial to offer monthly payment options and entering in to deals with rental car industry participants to increase their sales.
Threat of Buyers
The threat of buyers is medium for easyCar.
We see that consumers for car rental company are not frequent purchases of the product. One consumer does not provide consistent revenue to the company. So the consumers are not at a position to bargain.
However this industry is segmented as leisure and business travelers. The leisure travelers are more price-sensitive so the industry participants need to lower their prices to meet the needs of the consumers so that they do not choose a substitute method of transportation due to high costs. The business travelers on the other hand are not so price sensitive and are willing to pay the price for a convenient comfortable product. EasyCar aims at providing a low cost product. They do provide the consumer with the best hardware but may not rank high with business travelers who are not price sensitive. For example, the consumers are required to clean the car before handing it over, and the business travelers who are not price sensitive may not want to take these additional efforts.
SWOT Analysis
Strength
• Lower Price
EasyCar’s low pricing is a major point of distinction from rival car rental company. EasyCar advertises prices as low as five euro a day plus a per rental preparation fee of four euro which provides an more economic way for the leisure travelers and it is also a very good deal for the business people. The company’s prices are less than half that of its major competitors which makes it very competitive in the car rental market.
• Easy Procedures
The unique feature of EasyCar is the flexibility with the rental procedures. Customers can rent a vehicle for as little as one hour. In the meantime, customers also can reserve a vehicle with just providing a one hour notice. Additionally, EasyCar offers large discounts for customers who reserve their bookings early. All of these policies not only provide the conveniences for the leisure travelers but also helps EasyCar to find out the new customers in Europe who do not travel very often and give them the option of not owning a vehicle but instead renting one from EasyCar when they need.
• Effective and Instant Booking Channel
95 percent of the reservations for EasyCar rentals were done via the Internet and the company’s website with the other bookings being done directly through the company phone reservation system. This allowed for the company to save money as they did not have to work in conjunction with any agents who would have added another element to the value chain and thus the prices would have increased.
• Superior Place Selection
EasyCar can establish a new location with very little cost. With 90 percent of their fleet rented at any given time the company does not need to invest in a great deal of space or parking spots. As a result EasyCar has been able to rent a few parking spots in parking garages and set up a small office with a counter and a couple computers to process orders and reservations. This set-up provides the company with an advantage over many of their competitors as they have a small amount of facilities costs which benefits the company as they can pass that savings on to the customers via lower rental prices. EasyCar’s vehicles are rented 90 percent of the time which helps to reduce space needed to house the vehicles.
• Advertising Campaign
EasyCar is planning on doubling its advertising campaign, and the company will soon start to advertise on television. With more advertising they can expand their customer base and better inform people about their low prices to boom their revenue. This opportunity can help the company to reach its lofty goals by the end of 2004.
• Vehicle Model Offerings
There is one opportunity for EasyCar is to expand their vehicle model offerings. The company can carry more than one model at each rental location in order to attract more customers who prefer a specific model. And, they can precede with their expansion plan and add more locations and more vehicles available for different customers.
• Strategic Partnership with Car Wash Shop
EasyCar can establish a car wash adjacent to their larger and busier rental locations where customers can conveniently take the car to be washed prior to bringing it back. EasyCar can assure that they have a clean vehicle when it is returned and they can profit off of the policy by owning the car wash.
Weakness
• Gas problem
When customers picked-up their vehicle they may find that they had virtually no gas in the car. This happened often due to the fact that customers were only required to bring the vehicle back to the rental location with enough gas in it so that the fuel light was not on.
• PR Issue
EasyCar had received some bad press as a result of their policy that they required all vehicles needed to be washed and cleaned in both the exterior and interior prior to it being returned to the rental station.
“7-day cooling off period”: EasyCar faces a significant threat from a legal battle that they are waging in the UK. The Office of Fair Trading (a UK governmental agency responsible for protecting UK consumers from unfair and/or anticompetitive business practices) has ruled that easyCar must allow consumers a seven day “cooling-off” period where they can cancel their contracts with the company and still receive a full refund. EasyCar has appealed this ruling, but if the original ruling is not overturned EasyCar could lose a significant competitive advantage, which is their ability to offer low prices, and as a result they could become an unprofitable company.
Bad customer “WANTED” online: EasyCar has a policy in which the picture of the customer whose car is 15 days or more overdue is prominently posted could backfire and be very damaging to the company. The threat is significant if easyCar mistakenly posts a picture of the wrong person they could be sued for liable.
• Lack of Staff
EasyCar had low staffing numbers at all locations; therefore at peak times of the day customers frequently had to wait 30 minutes or more to be processed and subsequently granted permission to take the vehicle.
• Policy Inconvenience:
Customers who book their reservations with a credit card other than EasyCar’s credit card (EasyMoney) are charged 5 additional Euros. Furthermore, the payments have to be made using credit or debit cards as cash is not accepted by EasyCar.
• Distressed by too many business units:
Owner and CEO Stelios has opened many companies throughout Europe including easyJet and easyInternetCafe in addition to easyCar; furthermore he is planning on opening a new company named easyCinema. With all of these other companies demanding his time and attention easyCar could become neglected and as a result not be managed correctly and not maximize its earning potential.
Opportunities
• Opening of Foreign Market
Although the rental car industry is reaching the mature point, international market always presents great business potential for any industries. The company has already entered US, Canada, and other western countries and has been making its success. Though easyCar.com has not planned to enter Indian and Chinese market, entering these markets could boost its sales revenues. Due to considerable difference in annual income amongst people, there are a number of people who are not able to afford a car; yet, recent rapid business growth in both countries began to raise the possibility of needing car. Since easyCar.com’s slogan is “reliable service and product at lower price”, it can offer affordable car to be rented to consumers who need a car occasionally. By offering a car at much cheaper rate than that in Europe, easyCar.com can be still profitable due to high population in each country.
• No Obvious Market Leader
The rental car industry in Europe is semi-fragmented; that is, there is no market leader in the European rental car market as a whole. Different market leader exists in different market, but none of companies own more than 60% of market share. Products and services each company offers are highly commoditized, and customers see difference between companies only through prices. By differentiating itself from competitors through product and service innovations, becoming a low-cost operator, or both, easyCar.com is able to win the significant amount of market and share and could become a market leader.
Threats
• Intense Competitions
The rental car industry is a war-zone due to very saturated market with price-sensitive consumers. In the industry with very narrow profit margin, creating more value or being perceived as a company offering more value to customers is a key to the success. As the first step, each firm broadens its feet sizes to be able to offer customers more selections to choose from. Though it is evident that increasing the fleet size has positive effect on increasing sales revenue, to stay in competitive and to eventually become a market leader, offering the similar products and services is not good enough. As an example, in US, Hertz integrates its Never-Lost GPS system within its cars as an attempt to step ahead of rivals.
• Substitute Products
There are many substitutes available for the car rental industry. Especially, since public transportation systems, unlike US, are highly developed in any part of European countries, attracting consumers over other alternatives is challenging. For instance, most of people fly in US when they need to move far distance. However, train system is more sophisticated in Europe since it is important to have easy access amongst countries in EU. It can be convenient, safe, and is definitely cost efficient. This gives consumers another competitive alternative to choose from. Airlines are also becoming more threat to the rental car industry. Like the rental car industry, the airline industry is highly commoditized; that is, customers are price-conscious as well. Each airline competes over the cheapest flight with extra deals, such as millage services, to win more customers.
• Strong Currency Exchange Rate in Euro
In last two years, euro has grown 20%, ?1.28 (2006) to ?1.54 (2008), and has become one of the strongest currencies in the world (MSN money). Though it did not have much of negative impact tourism market in Europe in 2007; especially, France attracted the record number of tourists (reuters.com), people have begun to be reluctant toward traveling Europe. Since the major revenue is generated though leisure travelers, easyCar.com faces a serious challenge winning customers.
Threat & Opportunity
• The record Oil Prices
This presents a great opportunity in the immediate future and will become the biggest threat for easyCar.com in far future. According to BBC News, the oil price has risen by 25% in the last four months and by about 400% in the last seven years (2008). Consumers have begun to prefer smaller cars that do utilize less gas or even are switching to zero-emission cars that do not require gas at all. Customers are responsible to fill up the gas while they are renting a car and when returning it, the expensive gas price discourages consumers to rent a larger car. Since easyCar.com only carries compact cars, it can attract customers, its utilization rate can be increased. Low prices would also sets easyCar.com apart from rivals because it is highly likely that competitors will need to raise their prices due to a huge inventory costs they need to spend to maintain their product lines. During competitors suffer from excess inventory, easyCar.com has an opportunity to improve its market position.
However, the high oil price can also be a huge threat to the rental car industry. Customers are responsible to fill up the gas while they are renting a car and when returning it. The gas price is predicted to grow even further, and so that, consumers might simply stop using cars. Customers could choose substitute products, a cab, trains, airplanes, or so forth, or they could switch to vehicles that do not require gasoline, zero-emission vehicles. The major car companies, like TOYOTA, Honda, and GM, have already started manufacturing the zero-emission cars. Even though they have not become a standard household vehicle yet, increasing gas price will encourage consumers to shift their preferences. That would cause easyCar.com to replace its entire inventories or to develop new business strategy that can create more values that customers can overcome the high gas price.
Financial Analysis
EasyCar is the low priced European car rental business founded by easy Jet pioneer Stelios Haji-Ioannou. EasyCar had just reached breakeven in 2002 on sales of £27 million, and had as its goals to reach sales of £100 million and profits of £10 million by the end of fiscal year 2004 in order to position itself for an initial public offering. To do this would require opening new locations at a rate of two per week and expanding its fleet of rental cars from 7000 to 24,000. (Easycar.com: strategic service system design, resources from http://findarticles.com/p/articles/mi_qa5452/is_200501/ai_n21364555)
Some big steps in the EasyCar growth
EasyCar plans unmanned rental pick-up (Mar, 2003)
EasyCar plans to have as many as 12,000 rental vehicles available from unmanned pick-up points by the end of next year as Stelios Haji-Ioannou's latest venture allows its hire cars to be unlocked using mobile phones.
The car operation began a test of its new technology in Edgware Road, London, at the end of last week. If it proves a success, the low-cost hire company plans to expand aggressively into the "car clubs" market. Customers will have to reserve a car through the internet, then call on their mobile phone when they arrive at the vehicle. EasyCar's operators unlock the car remotely using standard mobile technology connected to the central locking system and its immobiliser, and the customer can then remove the car keys from the glove compartment and drive off.
Other car rental agencies, notably Avis, have begun pilot schemes using relatively expensive "telematics" technology originally tested by the Edinburgh City Car Club.
"In the next few days we will ramp it up," said Mr Haji-Ioannou. "My guess is that as many as a third to a half of all our vehicles could be car clubs [by the end of next year]."
If Mr Haji-Ioannou reaches his target, this would make EasyCar by far the world's biggest operator of car clubs. Most clubs are small or are pilot projects subsidised by local authorities. Zipcar, the US car club with 4,000 members and 155 cars, is re-garded as one of the most successful. EasyCar will allow only customers who have proved trustworthy through the hire of cars from ordinary depots to use car club vehicles, which have no preparation fee. EasyCar plans to float towards the end of next year, by when it hopes to have 24,000 cars compared with 8,000 now.
EasyCar chief resigns (Mar,2003)
Andrew Fitzmaurice has resigned as chief executive of EasyCar, Stelios Haji-Ioannou's car rental business. Mr Haji-Ioannou said the search for a chief executive was unlikely to affect EasyCar's plans for flotation, pencilled in for the end of 2004.
EasyCar Loss (2003)
A rare advertising setback for Stelios Haji-Ioannou. Scared by the possibility of the congestion charge damaging his business, his EasyCar recently ran an advertisement with the slogan: "Tax dodgers welcome at the Barbican". The rental company is pre-paying Ken Livingstone's £5 daily tax (at its Barbican branch only) and boasted about it.
Unsurprisingly, the Barbican authorities and its patron, the Corporation of London, were not pleased, complaining that it tarnished their reputations. They demanded the advert be pulled - and Haji-Ioannou, uncharacteristically, caved in. James Rothnie, EasyCar spokesman, said: "It's fair enough. It's not like the Barbican is a competitor of ours, like Hertz."
EasyCar to delay flotation as loses continue (Jul 2003)
Stelios Haji-Ioannou has been forced to overhaul his EasyCar car rental business as it continues to lose money. He also confirmed that the company's flotation would be delayed.
Mr Haji-Ioannou said EasyCar should aim to replicate the business model of Ryanair, its rival. "EasyCar should try to be the absolute lowest cost producer in the car rental business, so I think it aspires to be closer to Ryanair than EasyJet."
A flotation of EasyCar has been put on hold until 2005 "at the earliest". Originally Mr Haji- Ioannou had planned to bring the business to market in 2004.
Stephen Jackson, EasyCar's finance director, had resigned. His departures have left Mr Haji-Ioannou running the business. In the meantime, EasyCar has already more than halved its UK workforce from 150 to 60 people. Further savings will come from the use of car clubs, which enable customers to rent cars without visiting an EasyCar office. Mr Haji-Ioannou is also reviewing EasyCar's sites in France, Spain and Switzerland with a view to franchising them.
EasyGroup boss to give £11m more to car arm (Oct 2003)
Stelios Haji-Ioannou has injected a further £11m ($18.3m) into EasyCar, his lossmaking car rental business. The additional funding takes Mr Haji-Ioannou's investment in EasyCar to about £21m, and his total investment in his private Easy-branded businesses to more than £120m. The funds were needed to help EasyCar through a restructuring, intended to reduce its cost base. Mr Haji-Ioannou said a flotation of EasyCar would now be "at the earliest in two to three years".
He described the EasyCar fund-raising as "just a question of needing a bit more money to carry on". He did not rule out EasyCar needing further funds in the future.
The report and accounts of EasyRentacar, for the year to September 30 2002, state that the directors considered the business had "adequate resources available to continue in operational existence for the foreseeable future".
In the year to September 2002, EasyCar, which recently appointed a new chief executive and finance director, made a pre-tax loss of £13m, only a slight improvement on the previous £13.7m deficit. Turnover rose from £20.4m to £28.3m.
Northgate in EasyCar van deal (2007)
Northgate, the van hire company, is aiming to boost its share of the consumer market through a new joint venture with EasyCar.com. Consumers will make online bookings via easyVan.com and Northgate will supply the vehicles from its 88 UK locations. (By Chris Tighe, Financial Times, Published: Jan 19, 2007)
Main Issues
Customer Service
EasyCar had a few areas of customer service that could be modified to increase customer’s satisfaction. EasyCar required customers to clean the cars before returning them. The customers were charged an additional ?16 if they returned the car without cleaning. This poses two problems; first this policy although it reduces the final cost of rental to the customer, is not convenient. Second, charging the customer ?16 for not returning the car clean for any given reason defeats the purpose of providing a low cost product. The company also received bad press due to the institution of this policy.
Rival firm’s offer combination products
Competing firms are aggressively offering products in combination for the convenience of the customer. We see that firms are making strategic alliances with firms in other industries to provide transportation in combination with accommodation, flight and other services. EasyCar does not combine itself with any other service as it strives to reduce costs at all possible levels. EasyCar must consider the opportunity cost of not having these strategic alliances.
Negative Publicity
EasyCar battle with Office of Fair Trading (OFT) has lead to a lot of negative publicity for the company. This is due to the policy of the company that the customers must pay in full at the time of reservation and will not be refunded at a later period. As per the regulations, companies that sell at a distance must provide consumers with a seven day cooling-off period, during which customers can cancel their contract and receive a refund. However accommodation, transportation, leisure and catering companies were exempt from this regulation. OFT did not regard easyCar as a transportation company to be exempt from this regulation.
The company also received negative publicity and incurred costs from posting pictures of customers whose cars were 15 days or more overdue. Stelios felt that cost associated with cars not being returned on time could be reduced to a great extent due to this policy. However it is possible, that customers may sometimes be delayed due to genuine reasons and maybe skeptical about renting from a company that would post their picture if this were to occur.
Solutions, Implementation and Financial Implications
To improve customer service
Consumers seek convenience as well value for any product. Having the consumers wash the car before returning may reduce the cost for the product being offered but this is an additional effort that is required on the part of the consumers. We propose that easyCar make a strategic alliance with a car wash company. This way the cost to wash a car is significantly reduced and the product can still be offered at a low price to the consumer. The company can choose a car wash which is located nearby, and strike a contract at a good price. This is an attractive option to the car wash company too as it would assure them a steady stream of revenue.
Alternatively, the company can offer a relatively lower price to the consumer for returning a clean car. The discount would make the consumers feels that they are receiving more value and reduce the amount of dissonance felt by them.
We feel that a strategic alliance with a car wash company offers a better solution to easyCar. The company needs to choose a Car wash Chain based on location and convenience having presence in similar locations as easyCar. EasyCar can then sign a contract with a single Car wash company throughout all the locations and thereby get the best possible deal. We basically feel that by outsourcing this activity which is not core to the company, easyCar can improve service to the consumers. The financial implications of this solution is that the rental charges will increase by a mild margin, as the company will incorporate the car wash charges in to the cost of the final product. However this will prove to be beneficial as this cost will still be substantial less than the cost of the products offered by the rivals.
To compete against rival firm’s offer combination products
More and more companies are offering partnerships with companies in relating industries to offer the consumer better products. EasyCar must also respond to this change and offer car rental in combination with accommodation and flight services. The company can either form alliances within the easyGroup or seek to form alliance outside the easyGroup. We feel that forming an alliance within the easyGroup would be a more profitable option. By offering discounts through package deals, the company will encourage customers to generate revenue within the brand.
The implementation of this solution will require that all accommodation, travel and transportation industries under the easyGroup coordinate in order to provide these services as a package. The websites may have to be modified and the company will have to invest in a reservations system that will allow consumers to make the booking together. This would provide the consumers with a one stop platform where they can book their flight, accommodation and travel through a single website. The business units will benefit from this as this will help them increase their revenues. Also when the consumer looks at a particular business unit’s website, it would form as a means of marketing for the other business units in this partnership. The financial implication would be the cost incurred to combine the reservations systems and obtaining a common platform for the business units that would be combined.
To fight negative publicity
The company needs to improve the marketing efforts for the brand as a whole to promote the brand as well as increase sales. The company can choose from a variety of options to improve brand image. First, the company can improve customer service to increase satisfaction amongst consumers. A satisfied customer us the best form of publicity for a brand. Word of mouth publicity from the customer can go a long way in creating value for the brand. Second, the brand can invest aggressively in advertising the brand to make it well known. This will improve the reach and improve awareness of the brand to a wider consumer group. Third, the company can choose the path that is popular among almost all industries today, which is an environmental friendly business practice. This can be done by choosing vehicles that reduce negative impact on the environment. The company can also show its concern for the environment through goodwill activities like planting trees, recycling waste and holding activities to improve awareness.
Being a low cost provider and having faced financial trouble, easyCar is not in a position to spare resources to aggressively market the brand. The company should concentrate its efforts on increasing consumer satisfaction. Also any future contracts for vehicles with manufacturers should be made for environmental friendly vehicles. The company cannot avoid investing resources on obtaining the vehicles. This choice of environmental friendly vehicle can help build the company’s image among the consumers.http://www.oppapers.com/essays/Easycarcom/148353

EasyCar 6.8 of 10 on the basis of 2632 Review.