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[2010]
Marketing Plan: Zipcar in China
Table of Contents
Executive Summary ................................................................................................................................. 4
Situation Analysis .................................................................................................................................... 5
Environmental Analysis........................................................................................................................ 5
Economy.......................................................................................................................................... 5
Politics ............................................................................................................................................. 5
Media .............................................................................................................................................. 5
Transportation Infrastructure .......................................................................................................... 6
Capital City ...................................................................................................................................... 6
Company Analysis................................................................................................................................ 6
Strengths ......................................................................................................................................... 6
Weaknesses ..................................................................................................................................... 8
Customer Analysis ............................................................................................................................... 9
Potential Market Segments.............................................................................................................. 9
Competitor Analysis........................................................................................................................... 12
Car Ownership ............................................................................................................................... 13
Hertz ............................................................................................................................................. 13
eHis FastCar .................................................................................................................................. 14
Public Transportation..................................................................................................................... 14
Channel Analysis................................................................................................................................ 14
Form of Market Entry .................................................................................................................... 14
Zipcars Partner ............................................................................................................................. 15
Marketing Strategy Plan ........................................................................................................................ 16
Statement of Marketing Objectives ................................................................................................... 16
Statement and Justification of Marketing Strategy............................................................................. 17
2
Executive Summary
The enclosed report is an international marketing plan for the entry of Zipcar into Beijing, China. Zipcars concept
of car sharing is simple, inexpensive, and convenient. The company has showed innovation in devising an easyaccess, rental car service for frequent use. The concept brings value to customers by saving them money on car
ownership expenses, allowing them to reduce their carbon footprint, and promoting healthy living. Zipcars success
in the United States, Canada and the United Kingdom suggest that the model works in various cultural settings.
During the 2008 Beijing Olympics, Beijings traffic congestion and pollution problems were presented to the world.
Stories were featured about the challenges caused by the citys poor air quality and appalling traffic. Meanwhile,
the already massive Chinese market is growing and becoming increasingly wealthy. The convergence of these two
trends, among others, signifies a unique business opportunity for Zipcars car sharing model. Admittedly, the
difficulty of entering China as a foreign firm and the prospect of stiff competition will make this a challenging
endeavor.
For this reason, it is essential that Zipcar come prepared with a sound business strategy and marketing plan that
takes some of these threats into account. Zipcar will rely on a joint venture with BYD Auto, benefiting from
synergies, local knowledge, and the relationships of an established Chinese firm. Young professionals will serve as
Zipcars primary target market, followed by university students, and young families. Product offerings will be
tailored slightly to specifically address the needs of the Chinese customer and pricing will be based on survey data
about the customers willingness and ability to pay (See Appendix, Graph 1.1). The company will deliver a
consistent message using trendy, low-cost strategies, focusing on the benefits offered to the consumer through
the use of Zipcars services.
Situation Analysis
Environmental Analysis
Economy
The external environment of Beijing, China is very dynamic. Thus, it is imperative to identify opportunities and
threats facing Zipcar that are unique to the Chinese market. Due to the governments stimulus package and
returns in expenditure on property development, the actual GDP in China was 8.7% which was above the aim of
GDP growth, 8% (The Economist Intelligence Unit Country Forecast). This indicates a strong economic climate
and future growth potential. From 1981 to 2007 the Chinese economy grew an average of 10% a year. This growth
created a significant increase in jobs, wages, and living standards. Coupled with anticipated growth in agricultural
supply, consumer prices will remain steady so that inflation will be limited to a modest 3.5% in 2010 and 3.2% in
2011 (The Economist Intelligence Unit Country Forecast). Even though China is pressured by other countries to
appreciate their currency, it is not likely that the Chinese government will do so. As a result, the value of Chinese
Yuan should stay constant for the foreseeable future (The Economist Intelligence Unit Country Forecast).
Politics
The Chinese government is committed to developing its harmonious society and stimulating economic growth.
The government is dedicated to increase spending on education, health, and social welfare. The Chinese
Communist Party (CCP) will maintain its political dominance. It does not appear that the government will alter its
political party system. However, as the violence in Xinjiang province in 2009 and widespread insurgency in the
Tibetan-dominated region in 2008 showed, the political system in China remains somewhat unstable (The
Economist Intelligence Unit Country Forecast). In the next two years, the government will struggle with possible
problems relating to unemployment (The Economist Intelligence Unit Country Forecast). Recent articles in the
press have highlighted Chinese protectionism with respect to business. Barriers to entry are enacted for foreign
firms and beneficial treatment is given to Chinese companies.
Media
The censorship of the media should also be considered because it is a necessary channel for Zipcar to increase its
awareness and market share through advertising. Currently, China has a wide array of media: Television, Radio,
Newspaper, Magazines. There were 1,938 newspapers, 9,468 magazines, 287 television stations and 263 radio
stations in circulation in 2007 (The Economist Intelligence Unit Country Profile). However, the government
monitors what is published especially on sensitive issues like policy, economy, and social uprisings. Each media
sector is monopolized by the state with only a few private companies existing. CCP controls the Chinese Central
Television, the most powerful television network (The Economist Intelligence Unit Country Profile).
Transportation Infrastructure
As the government has developed infrastructure over the course of the past two decades, logistics have improved
significantly. Overall, the infrastructure of the major cities in China is improving and will be better as the national
road network is continually being extended and railways expanded. (The Economist Intelligence Unit Country
Profile). In 2007, the highway system had 53,900 km of expressways and the government plans to extend 900,000
km of rural roads (The Economist Intelligence Unit Country Profile). These improvements will make driving
increasingly attractive and public transportation inadequate to meet demand. According to The Economist
Intelligence Unit, there were 32 million passenger vehicles in 2007 compared to 12 million in 2002. The railway
network in China covers 78,000 km, the third most extensive in the world and will be extended to 120,000 km by
2020 (The Economist Intelligence Unit- Country Profile). Due to the large and growing population, the railway
network is congested and crowded most of the time.
Capital City
In Beijing there are an estimated 2.82 million cars on the road with over 1,000 more cars added each day (Xinhua).
Air pollution from car emissions, not enough parking spaces, and traffic congestion are top concerns of residents.
The Beijing municipal government recently decided to raise the vehicle tax by 2.5% and increase parking fees by
20% to ameliorate some of these problems (Jiangwei).
Company Analysis
Strengths
approximately 7,500 new members join each month and an initial public offering is planned for 2010. Zipcar is
currently the global leader in car-sharing. Recent figures cited the company as offering vehicles in 64 American
cities in addition to services in London, England, Toronto and Vancover. The company has identified parties with
mutual interests in car-sharing to develop strong, mutually beneficial business arrangements. It has paired up with
city governments struggling with traffic congestion, colleges and universities with parking issues, in addition to
other like-minded companies. Ikea and Zipcar are a great example of this type of synergistic corporate partnership;
both cater to the trendy and cost-sensitive urban individual. Zipcar facilitates transport to and from store locations
outside the city center, and Ikea brings greater visibility to Zipcar.
Value Proposition
A second strength of the company is the ability to offer a striking value proposition. Zipcar offers a streamlined
rental car service for individuals, businesses, and universities. They can be booked through the web, or via mobile
phones and are picked up and dropped off in local neighborhoods. The process is convenient and saves customers
money. On average, Zipcar clients or Zipsters save $500 a month compared to car owners (Champy). One
analyst, sums up the value proposition succinctly, Zipcar saw the benefits of car-sharing for urban Americans and
provided an economical solution to such problems as the high cost of ownership, aggravation of traffic congestion,
and danger of environmental damage (Champy). Plans are straightforward, flexible, and inexpensive. Customers
can opt for a $55 annual fee or a plan with no commitment. Hourly rates are under $10, and there is also a daily
option. Customers do not have to worry about insurance, maintenance, depreciation, parking fees, etc. Further,
the automobiles are equipped with the newest technology, including Satellite radio and a voice-mail system to
report problems. Customers have the choice of 25 different car models, including Minis, Hybrids and BMWs.
Boston, Zipcars have transponders to deal with the frequent tolls. This ability to be flexible and respond to the
needs of different markets will serve the company well in China.
Weaknesses
Customer Analysis
The selected segments have a certain commonality in terms of price sensitivity and their acceptance of
innovations, which is why they have been targeted. A survey conducted on the market potential for car sharing in
Beijing identified what locals like and dislike about car ownership. The results revealed that many appreciated the
travel convenience, comfort, and mobility of a car. Meanwhile, reticence to buy a car stemmed from the high cost
of purchase/ownership, environmental disadvantages, and parking problems. This indicates that because Zipcar
provides the advantages of car ownership, while mitigating the disadvantages, it will have powerful persuasion
potential for targeted groups that meet certain conditions. It is worth noting that only 11% of Chinese polled
thought status was an important factor in owning a car. This is promising for Zipcar. University students, young
professionals and young families have been targeted precisely because they are price sensitive and Zipcar offers an
attractive low-cost alternative to car ownership that is more convenient than other options.
University Students
The total number of students in higher education in China as of 2007 was approximated at 100 million. The entire
student population was said to have encountered a 30% increase toward 2010, decreasing again to 100 million by
2015 for little net change. In Beijing alone there are over 70 colleges and universities. Data from the 2000 Census
counts 75,000 regularly enrolled four-year college students and 23,000 graduate students in colleges and
universities in Beijing ("Status of Population and Family Planning Programme by Province"). Therefore a reasonable
estimate for the current Beijing student population is 98,000 (reflecting the minimal net change in the countrywide statistics). If 25% of this population is interested in car sharing, demand or interest in car sharing can be
estimated at 24,500. This educated population has experienced the opening of borders and is aware of foreign
goods and trends. This segment is competitive and cosmopolitan and marketing ought to take this into account.
Young Professionals
This group is an amalgamation of individuals throughout their 20s. This segment for China as a whole was
projected to grow in 2007 by about 10% until the year 2015 and is forecasted to rise from 190 million to 210
million in 2015. By 2015 there should be 5 million more males than females in this group. Information specific to
Beijing for this group could not be found. As a result, estimates have been generated based on the fact that 1.18%
of the Chinese population lives in Beijing. By taking the total number of Chinese in their 20s and multiplying this by
1.18%, one can approximate the population of individuals in their 20s in Beijing. Of this amount 25% are estimated
to be likely car sharing candidates, based on the Beijing Car Sharing Survey (Shaheen and Martin). Additionally, we
assume that education is a good indication of income since in most societies there tends to be a high correlation
between the two. Given that 30% of Beijings population has completed college/university or higher, it will be
assumed that they are wealthy enough to afford Zipcar (Statistical Communiques)( See Appendix, Table 1.2). The
result is a conservative 167,711 estimated demand from young professionals. This figure is said to be
10
conservative because the 25% of Beijing locals expressing a high interest in car sharing is likely to be a skewed
sample, already over-representative of the higher income bracket. In this way, estimates may have been overly
cautious.
Young professionals are excited by high-tech products, which are said to be highly marketable. Small cars, in
particular, are mentioned in market surveys as attractive to them. They are, again, looking for the comfort and
convenience of car ownership but do not have the income to purchase. They have a greater awareness of
environmental issues than their older counterparts. For the young professionals, Zipcar offers a reliable way to get
to work and other engagements at a fraction of the cost. These individuals regularly use consumer technical
devices such as mobile phones, pdas and laptops. They are beginning to settle down with a partner later in their
20s. The young professionals share some characteristics with students, except that they have greater disposable
income and represent the second highest income group.
Young Families
This group tends to be in their late 20s to mid-30s. This segment will decline by 20% between 2007 and 2015.
Figures estimate 238 million in 2007, 226 million in 2010 and 184 million by 2015. Using the same assumptions
outlined in the previous section, demand from this group can be estimated at 210, 080. For detailed figures, see
the table on estimates for each segment.
Those in their 30s are the highest wage earners and the main group for consumption in general. Their buying
habits are more difficult to predict than other groups, however, marriage and children shape their spending habits.
They are also focused on health and well-being. Many are looking to buy cars. Other relevant outlets for spending
include: Entertainment, socializing, vacation and leisure activities (Euromonitor: Segments). They are interested
in products that will support their family life whether it is by saving time, money or making their lives more
comfortable.
Business Community
In the long-term (3-5 years), the Zipcar in China venture will seek to establish ties with the Beijing business
community, and subsequently make deals with large corporations to provide car sharing accounts for employees.
This can only be achieved once Zipcar has a strong foundation in China. The business segment has very high margin
potential and will be an important source of revenue for Zipcar. Zipcars services will provide clean and cost-
11
effective car pooling options. Company cars can be procured through Zipcar for business use. Corporations will
benefit from the corporate social responsibility aspect (environmental and reduction of traffic congestion benefits)
of a car sharing partnership.
Students
Pop. in Beijing (1.18% 98,000
Young Professionals
Young Families
2, 236,153
2,801,076
559,038
700, 269
167,711
210,080
167,711
210,080
China)
Interest in Car Sharing 24,500
(25%)
Upper
Income/Higher 24,500
Education (30%)
Total Estimated Demand 24,500
Year 1
Year 2*
Year 3*
Students
24,500
29,500
34,500
Young Professionals
167, 711
175,711
183,711
Young Families
210,080
215,080
220,080
Total
402,291
420,291
438,291
* Based on US estimates of 1,500 new members each month. 1,500 members * 12 months= 18,000; Young
Professionals (primary market): 8,000 new members/ year, Students and Young Families: 5,000/ year (secondary
markets)
Competitor Analysis
12
Zipcar is a car sharing program for individuals, businesses, and universities, thus it is different from a traditional car
rental company. In this respect, Zipcar doesnt compete directly with the large number of rental companies, but
rather with car ownership. A few rental car companies, however, have considered entering the car sharing market
or have already entered it elsewhere if not in China. Zipcars Chief Executive expects car sharing competition to
grow, based on his companys success. Also, increasing car ownership and a well-diversified public transportation
system in Beijing may pose a threat to Zipcar.
Car Ownership
According to a consumer expenditure on transport report in China, the percentage of car purchases in 2007 was
44.3% compared to 5.9% in 1995. As world trade between countries has increased in China, vehicles have
decreased in cost. Government subsidies make cars even more accessible. Thus, car ownership in China has
become a more realistic option for middle income classes (Transport). Also, according to CNN, there will be 55
million privately owned cars in China by 2010 compared to 22 million in 2009. This figure is forecasted to increase
further (CNN). The advantages of car ownership are the pride of ownership and increased flexibility. However, to
most young professionals whom Zipcar targets, high down payments, maintenance costs, increasing gas prices,
high parking fees, and insurance costs make car sharing and public transportation attractive options.
Hertz
Traditionally, Hertz has been the largest rental company in the world with 3,500 locations in the US and 7,500
worldwide (Hertz). According to Clean Fleet Report, Hertz has launched its sharing program in London, New York
city, and Paris. Hertz is planning to expand its program into additional cities in 2009 (Addison). Even though Hertz
has not yet come into China, it will threaten Zipcars market share whenever it launches its program there. Hertzs
car sharing program provides the same service as Zipcar, as well as extra services such as roadside assistance,
maintenance, and cleaning. In addition, Hertz equips its clients with hands-free audio kits, which connect clients to
representatives for communication to solve problems while driving (Addison). Once they consider the potential
benefits in Chinese markets, Hertz may be tempted to enter the country. Hertz could be a fierce competitor for
Zipcar. U-Haul International Inc., Avis, and Enterprise Rent-A-Car are additional companies, which are also
considering launching car sharing.
13
eHis FastCar
eHi Car Service Company is Chinas main car service distributor for self drive service and chauffeur drive service
(eHi). The company has received a number of prestigious awards. Unfortunately as of January 2010, eHi entered
the market for car sharing in Beijing. Their initial fleet is small, limited to 100 cars, but they plan to have 1,000 cars
by the end of 2010. The cost of services is 40 Chinese Yuan per hour, about equivalent to a 30-minute taxi ride. For
320 Chinese Yuan customers can get the car for a day. Insurance is included, but fuel is not, and a down payment
of 3,000 Chinese Yuan is required. eHi will likely benefit from established relationships with local government, and
maybe even financial support, as a domestic firm. Zipcar will have to closely observe eHis progress and learn from
its competitors mistakes, using this information to its advantage. Zipcar must make its offerings more attractive to
compete with FastCar. The U.S. firm must also devise an entry strategy that will build and capitalize on its own
relationships with the Chinese and their government in a way that will level the playing field. Zipcar was actually
the model that eHi followed in launching its concept.
Public Transportation
Buses and subways are the basic form of public transportation in Beijing. Due to the citys large population, the
numbers of buses, subways and the public transportation network have increased yearly to meet public demand.
Nonetheless, the public transportation system continues to be overcrowded (transport). As Beijings traffic
congestion is severe, using public transportation is efficient compared to cars (Xinhua). Public transportation is
more efficient and environmentally friendly. However, public transport is much less flexible when compared to
automotive transport. Interestingly, in the survey conducted by Shaheen and Martin on car sharing in Beijing 74%
of respondents reported using public transportation and still had a high interest in car sharing (See Appendix,
Graph 1.2).
Channel Analysis
14
Chinese firm will be necessary to gain access to this type of local knowledge in the initial stages. For Zipcar to be
successful, good government relations are imperative. The Chinese government has a history of creating obstacles
to firms that it does not favor. Good government relations are even more important for a company like Zipcar,
where arrangements must be made with the Beijing government to obtain city parking for the vehicles. According
to Doing Business in China, the government views favorably ventures that: 1) help the growing Chinese economy 2)
encourage the development of Chinese culture, and 3) represent the needs of the local people. Zipcars ability to
improve air quality, reduce traffic congestion, and streamline parking within the city of Beijing increases the
likelihood that the government will support Zipcar.
Zipcars Partner
BYD Auto is a Chinese battery, mobile phone, and electric car company owned by Wang Chuan-Fu, who is
renowned for entrepreneurship and innovation. BYD Auto became involved in automobile manufacturing in 2003
by buying out a Chinese state-owned enterprise. The companys F3 sedan quickly became Chinas bestselling car in
its class, surpassing foreign cars like the Volkswagen Jetta and the Toyota Corolla. BYD also sells a plug-in electric
car with a backup gasoline engine. This model goes farther on a charge and costs less than similar automobiles
produced by competitors. BYD Auto currently has eight factories in China (Gunther).
BYD Auto has been selected because they will be able to provide environmentally-friendly vehicles that are
popular among Chinese. They have technical expertise as a player in the automotive industry and access to local
facilities. Procuring cars from within China makes more sense for Zipcar because of the high import tax associated
with foreign vehicles. With a manufacturing plant in Beijing, their facilities and location are well-placed to take
advantage of market opportunities. BYD also has established relationships with firms in the supply chain,
customers, and the government, called guanxi, which shape how things get done in China. Lastly, BYD Auto has an
interest in expanding its operations and developing a market in the U.S. A passage in Doing Business in China
illustrates the significance of this to the relationship:
Some of the most successful joint ventures of recent years have been structured along a two-way
network, with a foreign firm allowed to use the domestic partners distribution network to sell
into China, while the domestic firm gains access to foreign networks. These kinds of ventures are
increasingly common in the car industry, as Chinas car-makers grow in sophistication and begin
to seek export markets. (Ambler, Witzel, and Xi 142)
15
Zipcars second objective is to continuously understand the Chinese market. Marketing research is essential to the
success of Zipcar. The initial research gathered has indicated a strong potential for success in China, but research
should not stop there. It is more important to conduct research in the first few months, to gauge the customers
interests, likes, and dislikes so that Zipcar can fully adapt to the markets needs. Furthermore, it is important to
constantly conduct research in the long term to gauge trends and changing needs in the market. All of the
research has a significant impact on the marketing message, advertising and promotion, product mix, and
relationship with the customer.
The next objective is to establish exceptional customer service. Once again, because car sharing is relatively new
to China, it is important that interaction between Zipcar and the customer be impeccable to properly communicate
the Zipcar message. To achieve this objective, any interaction the customer has with Zipcar must be easy, helpful,
and informative. This should be most evident in the company website, where all of the information and
arrangements can be obtained in a quick and user-friendly manner. Also, customer support should just be a phone
call or an instant message away to answer any of the customers questions or problems. Furthermore, Zipcar must
16
establish relationships with the local communities in Beijing to promote the Zipcar message through hyper-local
relationships and to demonstrate the needs being fulfilled. To measure this objective, online surveys will be used
to measure the level of customer satisfaction.
In addition, Zipcar will be able to diversify its business in the future. In two to four years, Zipcar will have
conducted the necessary research to branch into business and university markets. There is a large potential in
these segments and this is seen in the success of the US market. Growth in different segments is essential to
success and necessary to differentiate Zipcar from the competition. Furthermore, we will expand into other cities
in the future. Cities like Shanghai, Guangzhou, and Shenzhen have high potential for expansion because of their
similar market needs.
There are also several objectives important to Zipcar that must be achieved relating to market share, sales, and
growth. In year one we expect to obtain 5% of the potential demand/total market share (20,114), and it will grow
exponentially to 20% in year two (84,058) and 50% in year three (219,145). The rapid growth is justified by the
targeted advertising and promotional strategies, the historical success in the US market, and expansion into
businesses and universities. Our sales objectives based on the expectation for Zipcars share of the car sharing
market are listed below:
Year 1
Year 2
Year 3
Price
Sales
Price
Sales
Price
Sales
6.00
$506,886.66
8.00
$2,824,355.52
8.00
$ 7,363,288.80
$ 60.00
$362,061.90
$ 80.00
$2,017,396.80
$ 80.00
$ 5,259,492.00
Total Sales
$868,948.56
Total Sales
$4,841,752.32
Total Sales
$12,622,780.80
Zipcar expects that hourly users will drive on average six hours per week. Furthermore, 70% of the consumers will
prefer to use an hourly rate and 30% will prefer to use a daily rate. Sales start off slow in year one but grow rapidly
in years two and three.
17
18
Beijing have learned how to drive and enjoy the benefits of freedom and mobility. The high cost of car ownership,
however, makes cars relatively inaccessible. Students would appreciate access to a car for social activities like
dates or day trips with their friends. Zipcar could also be used for carrying large items or moving in or out of a
family home or student residence. The environmental appeal of Zipcar is another selling point to this younger
generation, who take pride in saving the environment. They also take notice of the trends set by young
professionals.
Product Decisions
Zipcar Description
Zipcar in China will provide the same basic service of car sharing as in other markets (see company analysis), but
will adapt to meet the needs of the Chinese consumers. Its offerings are a streamlined car rental services for
individuals to be located initially in Beijing. Cars will be available to rent by the hour or up to an entire day. Cars
can be booked through the website and mobile phones. The cars are then picked up and dropped off in local
neighborhoods.
Drivers must apply online and are usually approved within 24 hours. Drivers must be at least 21 years of age and
have a drivers license. Next, a Zipcard is issued to the approved driver and it works as a card key through RFID
technology to open and close the rented car. Furthermore, gas and insurance will be included in the original price.
19
There are several necessary adaptations to fully meet the needs of the Chinese consumers. First, the type of cars
available to rent will be different. In China, there will be a green emphasis, hybrids, electric cars and vehicles that
are more suitable for the Chinese environment will make up Zipcars fleet. These vehicles will be made in China by
Zipcars joint venture partner. Thus, hefty import taxes will be avoided and the appeasement of the Chinese
government is ensured because of the benefit to business, society, an people. Through the joint venture, Zipcar
will offer only two cars: a hybrid and a sedan. These cars will have accessories like bike racks, GPS technology,
MP3 players, and sufficient trunk space for the business professional. All of these accessories are meant to fill the
needs of the technologically advanced professional, who is living a busy life. Furthermore, there will be a different
mileage limitation. In the US, users can drive up to 180 miles a day. In China, the majority of drivers travel less
than 50 kilometer per day (roughly 30 miles). Demand to drive long distances is significantly less, so the limitation
will be adjusted accordingly. The limit in China of 75 miles a day will achieve this, while still giving the driver the
flexibility and freedom for longer trips.
Pricing Decisions
Based on our three year growth estimate, we expect to require approximately 3,600 cars over three years to
service the Beijing population. These cars will consist of BYD autos sedan and hybrid models. We will align the
procurement of our fleet with our estimated growth model. Initially in year one, we are charging 41 Chinese Yuan,
based on what Chinese customers are willing to pay (Shaheen 13). This is the equivalent of $6 per hour. The cost of
renting a Zipcar for an entire day will be approximately 409.5 yuan or $60. In year two, we plan on raising these
prices to the equivalent of $8 and $80 respectively in order to help stimulate revenue and meet increased
anticipated demand. These costs include a full tank of gas, and liability insurance of up to $300,000.
Distribution
Zipcar does not need a typical distribution system because of the unique nature of their business. They dont have
a store front or traditional retail establishment; instead they market their service online. This allows for a cost
saving business approach that bypasses many of the traditional business distribution models. The one area in
which Zipcar will use distribution is to locate their vehicles in specific areas.
Zipcar has traditionally targeted residential neighborhoods with large populations of young working individuals.
However, in China we would like to broaden Zipcars hyper-local distribution and focus on three main areas:
residential neighborhoods, workplace/ schools, and rail transit stations (Shaheen 13).
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In order for Zipcar to work successfully, the company needs to secure parking places in which the customer can
pick up and drop off the vehicle. This is a key element in the Zipcar model. Parking spaces need to be procured in
areas that are convenient to the maximum number of potential customers. The current real estate market has
inflated real estate prices to a premium; it is therefore a more cost effective option to lease parking spots. As of
March 2010, the average price for parking per square meter in Beijing is RMB 4,517.2 (China Country Report).
th
Distribution will begin in several key neighborhoods inside the 5 ring road or the original city. The Cao Yang,
Chong Wen, and Dong Cheng districts are all heavily populated areas that provide great intitial Zipcar launching
points.
Promotion
China is one of the most competitive advertising centers in the world. Every single space available in every public
forum is used for advertising. Thus it is imperative that Zipcar take a unique approach to advertising in China. An
inherent advantage of the Zipcar venture is that the company will be able to benefit from promotion through the
Zip parking spots themselves (See Appendix, Images). Currently, Zipcar has a unique parking marker that allows
zipsters to easily identify the spot. This is one way in which Zipcar can advertise and market its product at a low
cost. Another promotion medium is the Zipcar themselves. The green and black Z emblem placed on all cars is a
great advertising mechanism and an effective way to increase brand strength without additional cost. Zipcars
Wheels when you want them slogan should communicate the message just as effectively if translated into
Mandarin and clearly and concisely expresses the value of the product. It can be expressed in Mandarin as well as
English in promotional. In China the company phone number and website will also be placed on the cars to further
the advertising potential. An additional way to increase company awareness is through the Chinese government.
China is making concerted efforts to reduce its pollution levels and Zipcar is a company directly aligned with this
strategy. Further, several key articles in popular Chinese publications can do wonders for brand and company
recognition. In the U.S. numerous periodicals have featured articles portraying Zipcar as an innovative company,
thus generating positive publicity. This could also be applied in China.
Zipcar is a service company. As a result, the marketing objectives will be reinforced through superior customer
experiences. These will be achieved through great interactions with Zipcar representatives, decreased customers
costs related to vehicles, a positive net impact on the environment, and basic convenience. Zipcar will rely on word
of mouth and unorthodox media advertising outlets to spread company awareness. This is largely an untapped
market in China, so initial competitive advertising should be kept to a minimum.
21
Tactical Plan
We are planning to launch Zipcar in the middle of 2011. The lead up to this launch will include the acquisition of
our vehicle fleet through our joint venture partner. This will take approximately eight months and focus largely on
passenger sedans (Shaheen and Martin). The lead-up will also include the procurement of parking spaces in several
prominent Beijing neighborhoods, and corporate integration with our Chinese business partner, in addition to the
hiring and training of a local sales force. We expect the acquisition of parking places to take approximately twelve
months. Government lobbying will be a part of this process. We hope to generate momentum within the
government for Zipcar by pitching the various advantages of car sharing for Beijing and eventually other cities
within China. This momentum will allow us to procure parking places more quickly and, possibly, at a discounted
rate. The lead-up will also include some preliminary online advertising through popular Chinese websites like
Baidu and company articles in major Chinese publications. We expect this advertising campaign to begin in the
next three months and to continue until launch in mid 2011.
22
Appendix
Graph 1.1
Table 1.1
Shaheen, Susan A., and Elliott Martin. Assessing Early Market Potential for Car Sharing in China: A Case Study of Beijing.
23
Proportion (%)
27311.5
100.0
358.6
1.3
University Graduates
3106.0
11.4
College Graduates
4796.1
17.6
8610.5
31.5
10440.3
38.2
"Communiqu on Major Data of Economic Census (No.1)." Statistical Communiques. National Bureau of the Statistics of China
Graph 1.2
Shaheen, Susan A., and Elliott Martin. Assessing Early Market Potential for Car Sharing in China: A Case Study of Beijing.
24
Images
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