MKT5708: International marketing 200

1. Characteristics of car rental industry and its influence on service industry:

Car rental industry faces a completely new dimension when it comes to the degree of integration.
Car rental industry has slow but steady growth along with contracted yield margins. Thus though
the rental industry is semi-integrated it eliminates the possibility of backward integration.
Easycar through its aggressive pricing and forward marketing achieved a fleet utilization rate of
90 percent () and maintained its goal to obtain desired return from its IPO, Initial public offering
().

Car rental industry generally strives in a trend where a handful of the companies seize dominant
positions and others follow suit. Thus car industry was characterized by competition largely.
This fierce competition had a large influence on the services as a whole. Competition brings in
an element of segmentation among the car rental industry. The need is to identify the right
segment and plan your strategy accordingly.

Also car rental industry is characterized by threat of substitutes. With other operations also
getting under the skin to counter the rental service it was necessary to keep them at bay. With the
threat of substitutes there can happen drastic changes in the service industry and the extreme
possibility may be of car rental changing its operations.

2. Operations to support low cost

Easycar was a member of Easy group of families which was set up by Stelios Haji-Ioannu. It was
built on the foundation of single point to point s flights, along with belligerent utilization of yield
management policies and “low cost”.

Easycar supported its low cost policy by maximum utilization of its resources. It cut down its
operational cost and commission to agents by constraining its bookings through Internet and
phone reservation system. With technology at its behest Easycar made it’s sure that its fleet
utilization factor remains 100%. It combined the valuable experience from Easyjet for escalating

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the emplacements of its fleet. Economies of scale were clearly evident through Easycar
operations when it purchased 5000 Mercedes A-class to substantiate low costs. With its 2 P’s
price and promotion Easycar ensured that they get noticed and customers turn to Easycar again
and again for its services.

3. Level of quality provided by Easycar

Easycar like Easyjet was early low-cost no frills rental car service. Customers generally rely on
factors like tangibility, reliability, responsiveness, assurance and empathy for evaluation of any
service quality (). Easycar designed its services covering such factors of service quality. Initially
Easycar offered Mercedes as its fleet for rentals and at the same affordable price. By January
2003, Easycar increased it fleet by buying other high end cars(). Easycar made its service
available for less than an hour adding another element of “flexibility” to service quality. Easycar
made sure that it rents its customers the best of services, thus ensuring that the customers treat
the cars as their own. Easycar showed fellow feeling by offering insurance at low prices and at
no hidden costs. Thus through good hiring, training procedures, services blueprint and
monitoring of customer satisfaction () regularly made sure that its quality always
uncompromised.

4. Design of operations to counter competition

Easycar was started with an endeavor of providing exceptional worth for your money. It simply
meant that whenever you pay you will be satisfied. Easycar took various steps so that it gets
looked upon as not just another service, but as a provider of “quality service”. Easycar had giants
like Sixt, Europcar, Avis and Hertz as competition in Car rental industry (). Apart from them
there were brokers who managed the extra fleet capacity of the car rental industry giants. For its
own convenience Easycar differentiated the market into two segments – business segment and
tourist segment. But whatever the segment it kept the best service quality, expediency and
litheness to keep the giants and small but noticeable companies of this ripped industry at bay.
Easycar was the most viable competition to the taxis, buses and trains through the operational

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design of its fleet. Not every taxi is a Mercedes A-class at available at such an affordable price.
Mercedes A-class reflected quality and status symbol, rented for as low as one hour. Also getting
terms and conditions fully transparent to its customers confirmed its low cost affair. People new
at the locations preferred luxury like own driven cars, cleaned at insured at a minimal cost.
Easycar also introduced a convoy at different locations thus signifying it was ready to take on the
other modes in terms of quality as well as quantity.

5. Operational implications made by Easycar

Easycar believed that “Change is the spice of life” and used this concept for its operations. It
believed that to cope up with the market it needs to be constantly changing its operations and
keep competitors guessing about their next strategy. Easycar had its operations different from the
traditional rental companies and what needed was proper market intelligence and forward
integration to keep its sales graph up.

Easycar was started in April 2000 and eventually it opened locations in Glasgow and Barcelona.
Easycar had a rent of 15 Euros and a minimal car preparation fee of 8 Euros. It had cars
designated according to the locations. Some locations which required more fleet were priced,
promoted and serviced in that way. By 2002 Easycar had 6000 Mercedes A-class across various
locations. In 2003, Easycar introduced Ford, Renault, Toyota and Mercedes smart cars making in
24000 vehicles across 180 rental sites by 2004(). Easycar also made its service available at as
less as one hour. This was a huge and aggressive step different from rental available for one day.
It introduced insurance policies with a bid that it provided security to its users. Though some of
the new policies Easycar introduced seem harsh, they were seen by the company as stepping
stone to success. Easycar promotional strategy was restricted to a minimal advertising budget.
But there was an increase in the advertising expenditure as compared to previous year.

Thus Easycar left no stone unturned so as to achieve its aim of quadrupling sales and introduce
an IPO by 2004.

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6. Significance of legal barriers

Whenever any company is tasting success and that too at such a rapid rate, legal barriers are
bound to show its dirty face. The legal obligations Easycar were facing were significant enough
to hamper its process. Easycar had maintained a non-refundable policy from the start of its
operations. Thus was terminated by OFT-Office of fair trade who considered it to be a descent of
consumer rights. This was going to have an adverse effect on the sales of Easycar and it was
projected that their sales can go down by as much as 10%. Easycar also had a policy of posting
the pictures and information of the customers who fail to return the vehicles in time. This was
considered as violation of RTI- Right to Information act of the UK government. It considered
that such publicity would have a negative effect, and it can jeopardize the life of person whose
name is misprinted taking into consideration the huge database of its customers.

Easycar considered that this legal barriers to be a great threat to its operations. It wanted to start
its IPO by 2004 and with this legal barriers hanging down its neck, Easycar needed to get rid of it
as soon as possible.

7. Assessment of Easycar to realize its goals in 2005

Stelios started Easycar with the only aim of it being the best and better from the rest. With Easy
group tasting success in Easyjet, Stelios decided to keep focus just on other operations of Easy
group. Easycar wanted to start its IPO in 2004 which may become completely functional in
2005. The company had changed hands in 2003 and according to me this will have an adverse
effect on the growth of Easycar. The new appointees did not have the same vision and mission as
of Stelios and this was going to affect Easycar largely.

The need of the hour was to eradicate the legal barriers harrowing over the success of Easycar.
To have a successful future it was absolutely free to eliminate these legal barriers. Easycar had
given rise to many substitutes who used the same marketing policies as of Easycar and it was
necessary to keep improvising so as to keep them at bay.

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Thus in order to realize its goals in 2005 Easycar needed to stick to its pure basics. It should not
divert from its mission and vision. Competitors hoped that Easycar stumbled under pressure. So
the need was to keeping changing its strategy but sticking to the basic ground rules.

REFRENCES:

Easycar appoints head of european marketing . (2003). Marketing Week .

(2002). Easycar set yo shake Up the German Car rental Market. European
Intelligence Wire.

Hodgson, N. (2002, September 24). Stelios Plans easycar Float.

Marketing week. (2003). Finincial Times Information limited .

Nargundkar, R. (2005). Services Marketing . The McGraw-Hill Companies.

Simpkins, E. (2005, December 15). Stelios Isn't Taking it Easy.

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