Zipcar Case Study AnalysisPresenters:

Ujjwal Maghaiya 14516Jipin Nakarmi 14520Chandha Parajuli Neupane 14521Roshan Shrestha - 14530

Case SynopsisZipcar was incorporated in January 2000.Robin Chase was the CEO and co-founder of the company and her partner was Antje Danielson.They raised their first $50,000 from one angel investor.Introduced their first business plan for Boston in December 1999Revised the plan in May 2000

Case Synopsis ContinuedInitially split the equity ownership of the business equally.Their 50% ownership stakes would be diluted by subsequent financing.Chase obtained a $50,000 Convertible Loan from a former Sloan Classmate.At the end of October, 2000 the two entrepreneurs were ready to Pitch their idea at Springboard to search for funding.

How Zipcar WorksRegister the one time membership with the membership charge and pay per useLocate a car near you using mobile app or internet services or through telephone callsGet the confirmation about the car and the locationUnlock the car with zipcard and use itReturn after use to the nearest car parking.

Planned Launch BostonInsufficient and expensive off-street parkingLarge number of college-educated and web connected individualBoston lent itself well to a network of cars positioned close to transit stations.

Industry AnalysisOrganized car sharing business originated in Switzerland in 1987. Later in Germany, Austria, and the Netherlands.Porters five forces model:Threat of New Entry LowThreat of Substitutes MediumBargaining power of Suppliers Medium ( Two suppliers one for car and the other insurance companies)Bargaining power of the customers highRivalry among the competitors high

SOWT AnalysisStrengths: New, Low-cost and convenient alternative to own an automobileShort-term, on-demand private car accessEnvironmental friendly vehicles, 24/7 customer service, High TechnologyWeakness:Weak management TeamSignificant investment before profit can be realized

SOWT Analysis continuedOpportunities:Increased customer preference for car sharingIncreasing opportunities of partnership with universitiesNo competitors currently in their regionThreats:Locating affordable parkingFluctuating oil price

Value Addition to CustomersEasy to use: Efficient Technology PlatformEasy membership signup and reservation online Locate nearest Zipcar through mobile app and keyless vehicle access through zipcardsFree parking facilities with no fuel charges.Convenience: Strategic location of ZipcarsShopping malls, airports, entertainment areas and housing estates.

Value Addition to Customers continuedBest alternative solution to:High initial cost of purchase and maintenance of a carInconsistency in the availability and pricing of taxiOvercrowded public transports and expensive per day rental charges of a car.

CompetitorsCommonAuto, launched in Quebec City (1994) and in Montreal (1995)Two West Coast companies: Portland-based Car-sharing inc., (1998) and Seattle-based Flexcar (2000).Traditional car rental agencies: Hertz or Avis might enter the market for this new business opportunity.Car manufacturers who are the suppliers could enter the market directly.

Potential CustomersPoint-to-point users:Mobile professionals, shoppers, University and college studentsDaily fixed time users like the working professionalsCost oriented Vs. Convenience oriented customers.

Marketing StrategiesMarketing plan relied on several low-budget tactics.Word of mouth marketing with customer referral benefitsFree media coverage generated through public relationsGrass roots guerilla marketing efforts.

1st Business Plan$25 - nonrefundable application fee$300 - fully refundable security deposit$300 - annual subscription feeAdditional member - $1.5 per hour, $.40 per mile$20 fine for late returnAssumed annual renewal rate for members 95%Assumed a 5% attrition rate each year Assumed avg. member would take 4 trips per month at an avg. of 4 hours and 22 miles per trip

Revised Business Plan

$25 - nonrefundable application fee$300 - fully refundable security deposit$75 - annual subscription feeAdditional member - $5.5 per hour, $.40 per mile

Real time operation in SeptemberTwo major negative impacts include: Overheads for Boston and Corporate office have increased by 205% &186% respectivelyActual no. of trips per month per member is found to be 1.4 trips per month while the estimates of May plan represent 4 trips per month per member

Real time operation in SeptemberPositive aspects were:For daily trips, 94 miles used, instead of expected 125 miles, and 16 hours used instead of expected 24 hours (it is schemed that billing for daily trips is fixed for 125 miles per day as $44 which saves 31 miles and 8 hours) Hourly use is expected to be 4 hrs. Per trip however actual results show that 6.2 hrs. per trip are used. Since we know that hourly charge is variable, increased in hours means increased earnings, while daily charges are fixed, thus decreased miles reflect savings. Therefore we can say that business is in overall positive direction.

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