Q.

Zipcar is a start-up a membership-based car sharing company providing hourly or daily

rentals to its members. Founded in 2000, the company competed in the $30B automobile
rental industry.  The idea has proved itself in the already established European markets and
seems attractive to implement in Boston with potential for nationwide growth. Zipcar is a car-
sharing company whose mission is to make it as easy for city residents to get behind the
wheel of a car as it is to get a coffee or paper. This was not the first car-sharing business
model, but it was a new concept in the U.S., which meant that there was plenty of opportunity
and growth potential serving this new market niche, the urban, car-less residents in the U.S.
Members could get a car without the hassle having to pay for insurance, buy gas, or try to find
parking on city streets. Zipcar was making a strong case for city residents to not own a car
depending of course on how much they actually drove. Zipcar’s goal was to provide reliable
and convenient access to on-demand transportation, complementing other means of mobility

Q.2

 The potential for the Zipcar venture during late 1999 and 2000 has many attributes as well as
a few hurdles that still need to be addressed. The car sharing format has been proven in other
cities – successfully in Europe and still in its infancy primarily in the western United States.
Chase and Danielson have the opportunity to learn from the experiences of these other
established companies. They chose Boston as their pilot city with an intention to expand to
other cities, first in the northeast and then into the Midwest. Boston is the ideal startup
location because it has limited public parking and expensive private parking which discourage
residents from car ownership, as well as an efficient public transportation system which
allows residents to live conveniently without a car. Boston is also home to tens of thousands
of college-educated professionals, which research showed was a significant part of their target
market. Chase and Danielson both have significant connections in the Boston area, which
will allow them to further their own market research. Each founder has different expertise that
they are bringing into the venture and a different set of contacts that can help them launch the
venture. The venture has potential in areas where people do not need to have vehicles to
commute on a daily basis, but may want the occasional access to a car that does not
substantiate the need or the expense of owning one. Being able to reserve availability online
for the same car each time it is needed has significant advantages over having to go through
the administrative hassles of renting a car. Zipcar provides customers with access to cars
located throughout the city without the need to complete administrative paperwork for each
use, without having to worry about parking, and without the stress of car maintenance. The
word-of-mouth combined with the logo placement on the vehicles would generate significant
exposure and help decrease the need for additional marketing expenses. The company has a
specific market segment that they are targeting which would allow them to focus their
marketing efforts.

Q.3
The business model has evolved between December 1999 and May 2000. Prior to December
1999, the business model was focused on gaining revenue from subscription charges from the
client. The reason for such a design of the business model was that Chase had estimated
running costs of rental of cars to the clients at a much lower figure. Prior to December 1999,
the business model was designed in such a way that the automobiles owned by the company
are to be distributed on parking spaces over the city. The parking sites are mostly located
at busy city centers so that they are straightforwardly accessible by the subscribers. 
The business was based on the membership model according to which member was sold to
prospective car users at a fixed mostly subscription. Zipcar owned the automobiles or the
lease on automobiles. According to the business model, the usage of each automobile by a
member is to be determined through a highly complex computerized system. The system
possessed the ability to carry out GPS tracking and mileage recording. According to the
business model, the vehicles are equipped with onboard computers that are automatically
synchronized with the central office. The on-board computer system releases the vehicle
owner for the booked period.  Prior to December 1999, the business model entailed that the
users are liable for the timely return of the vehicles from the place at which they picked it.
Fees are generally charged for the number of kilometers traveled and the length of use. The
pricing model designed by Chase contained within them fuel, consumables, cleaning,
insurance, etc.
Another feature of the business model was that fixed costs like parking space or garage rental,
road tax, and insurance premium payments are not paid separately by the users; rather these
costs were designed to be part of the monthly subscription fees and hourly rate. When not in
use, depending on the provider has only a low or no fees to pay. The business model also
states that a driver is not tied to a specific vehicle or to a particular type of vehicle. Rather
vehicles are allocated depending on the situation and the location of the commuter. Booking
will be done for the vehicles in advance through the company website, telephone, etc... 

Q.4

As Zipcar are not meeting their target in terms of membership, there needs to enhance the
marketing activities. Even though, Zipcar had succeeded to meet the marketing budget as
forecasted, it was necessary to rise the marketing activities for meeting the membership target.
Zipcar had fixed marketing cost of $12,000 which was fixed during the 5 years this was not
consistent in a sense that marketing activities need to innovate according to market
conditions. Car-sharing companies are growing 30% annually with spending very little
amount in marketing head. However, growth rate may not continue because market share can
be attracted by other competitors. In that time, Zipcar needs to spend more on marketing head
in order to maintain the market share and growth rate. Till now, Zipcar Company maintains
their customer through the free media, and word of mouth. However, it is better to make the
marketing platform while company is in growing phase so that more customers can be
attracted when there are few competitors. Most of marketing activities are done through
downsizing the cost as much as they can such as brochure, postcards, web site. In addition,
they need to enhance their management community by hiring people who have deep
knowledge about car manufacturing. Practical or experience information is more important
that theories because there will be different in real scenario. Although, Chased believed that
solid management team is necessary for raising capital, she has not taken into consideration of
expertise and credibility people. Because of lack of expertise in car domain, company might
be high possibility to fail in future because the market may become more competitive
marketplace. Zipcar can be managed better than current situation with the help of hiring
specialized person in each section so that the overall departments are accountable for their
roles and responsibilities to make productive. Revenue is generated with the help of online
reservation service which require technician to operate and supervisor.

Q.5

The strongest argument Chase could make to the potential investor about the attractiveness
are that the market is growing and it had a huge potential.
Also, the technology it had developing is one of the best which will affluence the process of
business. It will also be the competitive advantage for the Zipcar. In addition, the low
marketing cost also attract vast clienteles. Increasing the marketing cost will rise customers.
Finally, the environmentally friendly concept.