Zipcar-- Car-sharing Industry Emerges

It is no surprise that the car sharing industry has emerged due to the rise of automobile and fuel costs. It is no longer viable for one to purchase a car due to the volatile costs and economic state. Zipcar represents the company to first enter such an industry offering consumers car sharing and fleet management. After its founding in 2000, Zipcar soon became recognizable as an environmentally friendly brand that offers car sharing in juxtaposition with sustainability. While Zipcar has acquired more than three-quarters of the US market share in this industry, it still faces a number of problems. The company has yet to post a profit due to the high costs of its fleet. It has been a challenge for the company to find and keep affordable convenient parking for its vehicles. Following Zipcar’s entrance into the industry, many companies followed suit. Zipcar faces increased competition from industry rivals along with a bountiful amount of substitute products available. Some competitors are able to leverage built in infrastructures to enjoy economies of scale, which allows for competition at lower costs. Zipcar does not have such capabilities. It is imperative Zipcar utilizes its other advantages to contain their market share. Perhaps one the larger issues Zipcar faces is the uncertainty with regards to the sustainability of the company’s long-term growth. In addition, Zipcar has recently become public, which has alienated some of Zipcar’s original members who bought into the idea of an alternative lifestyle as opposed to means of transportation.

Zipcar follows an integrated cost leadership/differentiation strategy. Such a strategy has provided the company with a number of competitive advantages. Zipcar has distinguis...

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...arget markets. Zipcar must expand into new campuses. In order to retain college users after graduation, the company should continue fostering the Zipster culture. They should highlight the increasing costs of car ownership. Retaining these consumers would lead to long-term sustainable growth. Zipcar should develop the ability for consumers to return the Zipcar at multiple locations. The Zipcar product would then be more readily available to a wider selection of customers. They should also pursue new parking contracts with cities. Another recommendation is to expand IT investment. Innovation helps a company to stay ahead of the competition. IT has given the company the reputation of great customer service and that must be expanded upon. A final recommendation is to partner with car companies, such as Ford to cut high fixed costs which plague the company.