So the question is: How can one escape the costs of owning a car and still have the freedom of driving a car for short periods of time while spending as little money as possible?
Zipcar, a Massachusetts-based car sharing company aims to capitalize on this very demographic by offering a “wheels when you want them” service.
This car sharing business model was first seen in Europe almost 50 years ago, but was introduced in the US only a decade ago, gaining momentum with the help of aggressive, eye-catching, and educational marketing campaigns.
A car sharing concept in Berlin was the inspiration for Zipcar founders Robin Chase and Antje Danielson, who launched a similar service in the US in 2000. From an initial fleet of a dozen Volkswagen Beetles, the company now owns 3000 vehicles in 12 US states, the UK, and Canada.
Earlier this week, Zipcar acquired competing brand Flexcar, increasing its fleet size to 5000 vehicles and creating a larger presence in cities like Los Angeles, San Diego, Pittsburg, Philadelphia, and Portland.
As Neil Abrams, an auto-rental consultant at Abrams Consulting Group, says, “Zipcar is an emerging business model in a market which is yet to be totally defined. There is a certain threshold of business required to achieve economies of scale, and the [Zipcar-Flexcar] deal will allow the company to lower operating costs and maybe focus more on marketing initiatives.”
To address the needs of its young target audience (which includes college students and under 35s in the city) Zipcar has adopted a youthful image across all aspects of the brand. From the language on its website, to funky names for its cars (example: Joliet Jetta), to direct promotion activities, Zipcar appeals to an audience that is cool, trendy, and freedom loving.
Joining the Zipcar fraternity, or becoming a “Zipster,” is an easy process for “qualified” customers. The most basic service charges US$ 75 in start up fees, and then a nominal hourly rate of $9-10. This fee covers all the dreaded extra costs like minimum driver’s insurance, fuel costs, and basic maintenance costs such as car washes and window wiper fluid refills.
Traditional rental companies like Hertz and Enterprise have adopted a similar business model, but the rental process is time consuming and entails representatives handing over car keys only at rental locations. Zipcar’s appeal is its flexibility and efficiency; one can pick up a car at any given time, from any available unmanned location, with the keys waiting in the car for the driver to whiz off on a journey—short or long.
After initiation every Zipster receives a “Zipcard” (containing a wireless chip with the customer’s personal details) that allows them to reserve a car of their choice on the company website or via telephone. As Scott Griffith, president and CEO of Zipcar, says in a Boston Globe interview, “getting a car is as easy as getting cash from an ATM.”
The integration of technology to facilitate ease of use is one of the key strengths of the Zipcar brand. As mentioned earlier, the “Zipcard” can lock and unlock any car, eliminating the human element typical at conventional rental outlets. The use of the card warrants the car to wirelessly transmit the time of entry and exit, and any unlawful use is charged to the customer’s account.
“Also the vehicles currently work on a General Packet Radio Service (GPRS) network rather than a Global Positioning System (GPS), [as the former is] more reliable in the cities,” claims Griffith. This system allows the company to track vehicles and send alerts if the car is not where it is supposed to be, which allows for efficient fleet management.
However, some users feel that Zipcar’s distributed network, with three to five cars in each neighborhood, often works as a disadvantage. As one disgruntled customer asserts, “often a car that I want to pick up from a desired location is not available on a particular weekend.”
To mitigate these inconveniences the Zipcar management is working on a strategy to cluster its cars in denser packs, to ensure availability of desired models. “[The recent Flexcar acquisition] created a larger fleet size and [perhaps] the company can now focus on strategically positioning the cars to ensure better accessibility for customers,” says Abram. Customer satisfaction is taken very seriously by the company and contributes to overall brand equity.
When the Zipcar brand was first launched, media campaigns in mass transit systems and guerrilla promotions served as awareness hooks for the brand, and helped educate consumers about this new category. Today, Zipcar competes with many similar companies in the industry like I-go and AutoShare, so word-of-mouth branding serves as a key differentiator. The company places a lot of emphasis on brand touch points like the customer service helpline. A dedicated number is always available to address issues like reservation problems and billing issues. As Rita Healy, a New York-based customer, explains, “[when my car was not running properly, Zipcar] booked another car for me at a location not too far away and even paid for the cab ride to that location.”
As opposed to mainstream rental companies, Zipcar chooses to advertise its service through its existing vehicles. Many of its cars are adorned with the super-sized “Z” logo to grab the attention of prospective drivers. While the company deems this as a cost effective way to promote their service to people, it has not been well received by some customers. As a Zipcar member in Chicago complains, “If you are renting a car to pick up a business client, the obtrusive stickers on the car exhibit my non-car owning status and just send out the wrong message.”
Other direct media activities have also helped in building a sense of community and informing customers about new developments within the company. “Our website and newsletters are the two most important means of communicating with our members,” says Matthew Malloy, vice president-marketing for Zipcar. Zipcar has also partnered with various universities around the US to directly target college students.
Car enthusiasts and large families might not see this as an alternative to car ownership, but if you’re an urbanite looking for the convenience of a car from time to time to zip to places, Zipcar might be one of the smartest ways to go.