Zipcar Case Study Solution

Introduction

Zipcar is a new model that started with the aim of sharing car usage over membership organizations. This business model of low membership fee, low service costs and easy access to customers—proven for the first time in Europe—is appropriate mostly in the urban zones. In the initial stages, the entrepreneurs working with the business model had laid down plans for how to lease several cars and open the business in Boston. The proposed target market is to capture an audience logging less than 6,000 miles annually by providing a new, low-cost, convenient alternative to owning an automobile. With the mission to create a new market—that did not exist before in the US—the founders are anxious to pitch their idea at a venture forum to

The core component of their ecosystem is cars and fleet management, provided by the suppliers. The company has made several technological advancements such as the wireless access control, which advances the existing business model and is a critical component of the ecosystem. They have a patented technology platform, which is comprised of mobile applications, back-end technology providers and websites for online car rental. Within North America, the ecosystems comprised of three potential competitors operated similar car-sharing models in large locations and had a large number of members. Other competitors are the traditional car rental companies such as Avis, Hertz, National etc. Collaborating with the parking garages to create parking spaces for the Zipcars is another component of the ecosystem. Vehicle insurance forms a necessary part of the ecosystem. By providing a cost effective car rental, Zipcar is taking a customer-centric view to deliver new sources of value for price sensitive market

Let us examine this business model with a traditional car rental model to answer the question. The Zipcar model targets the “niche” price sensitive customers, which relieves them from the burden of car owning whereas the traditional car rental model targets mass-market consumer market. Therefore, the value proposition for the Zipcar is based on offering the low price compared to traditional car rental model. Patented technology platform, where the cradle-to-grave of car rental happened with less human intervention as opposed to human intervention in the traditional car rentals leading to high overhead costs. In this model, the majority of the cost incurred will come from the fleet leases from the suppliers and marketing, whereas in the traditional models there are loads of inventory due to the car