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Marketing Management Assignment

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MKT 306 Marketing Strategy First name: Dilara Surname: Bulut Student no. : 119147630 Adress: Hullerstr. 21 44866 Bochum Germany Return date: 1/10/2012 Center: International Business School Lippstadt, Germany | Module leader: Sudipta Das Table of contents 1.

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Executive Summary1 2. Introduction2 3. The Current Situation3 3. 1SWOT-Analysis3 3. 2PESTLE-Analysis6 3. 3Differential Advantage- USP (Unique Selling Proposition)11 4. Recommendations11 4. 1Segmentation, Targeting & Positioning11 4. Marketing Goals and Objectives14 4. 3 The Marketing Mix… 16 4. 3. 1 Product16 4. 3. 2 Price16 4. 3. 3 Place16 4. 3. 4 Promotion17 4. 4Implementation and Control18 5. Conclusion20 6. Appendix21 7. References25 1. Executive Summary This report tends to get an insight into the global marketing strategy of Hertz in the U. S. car rental industry. Though Hertz is the world’s largest car rental company and puts much emphasis on customer satisfaction, some customers are not satisfied. This is a lurking hazard as the competition in the U.

S. is enormously regarding this segment. The idea of their marketing strategy is to differ themselves from the competitors by a high level of customer service, their innovation spirit, technological development and by offering environmentally friendly electric cars. This marketing strategy effects an enhancement of the brand image which will have a positive impact of the company and its stakeholders. 2. Introduction Hertz a U. S. company is the world’s largest car rental company with 8500 locations in 150 countries.

Because of the fact that there is a high amount of competitors within the Car Rental Service industry like Avis Budget or Enterprise Rent-A-Car companies have to distinguish themselves through customer service and prices to win new customers and to retain existing customers. Due to the high intensity in this industry companies have to offer same prices, features, benefits and therefore lose potential profits. Another problem Hertz has to face is the rising fuel costs. A main part of Hertz Car Rental revenues is effected by airport locations.

If the airport Industry raises the price of their ticket, the number of customers willing to spend money in travelling will decrease. This would hurt the profitability. But continuing the marketing strategy by focusing on improving customer satisfaction, employee satisfaction and asset management an economic growth is achievable. (Hertz Annual Report, 2011) 3. The Current Situation 4. 1 SWOT-Analysis Strengths One of Hertz Car Rental’s strength is the global operational structure.

Because of the reason that Hertz has the control over two Car Rental Service companies ‘Dollar’ and ‘Thrifty’ – Hertz is the world’s largest car rental company. This global operational structure sets Hertz apart from its competitors, allows them to create new customer relationships and to increase market share. Moreover the company stands for a high level of customer relationship and their aim is to meet the needs of their customers. “As part of our innovation revolution, we are putting the power of Hertz in the hand of our customers 24/7”. Hertz Annual Report, 2011) The unique services which are provided to customers like the ‘Rent it here/Leave it there’ (to rent a car for one way travel), ‘Connect by Hertz’ (to rent a car for hours), ‘Rent2Buy’ (to rent a car you wish to purchase in the future) programs also help Hertz to differ from the competitors. Furthermore the innovation spirit and new technologies set Hertz apart from the competitors. The company introduced free mobile device widgets which allow users to make reservations, to find Hertz locations and receive promotions over the smart phone. The steady growth is another strength.

After a steady decline from 2007 to 2009 from $ 8,685. 6 million to $ 7,101. 5 million as a result of the economic recession Hertz reported for the second quarter of 2012 worldwide revenues of $ 2. 2 billion, an increase of 7. 4 per cent and achieved several record results. (Hertz Reports Strong Revenue Gains, 2012) Weaknesses Although Hertz puts a lot emphasis on customer satisfaction, my researches on several experience report pages on the internet have shown that customers complain about not agreed fees after giving back the car. Furthermore they complain about that they had to pay money for damages on the car which they did not cause.

Moreover the weaknesses of Hertz are also bound to its infrastructure as the worldwide service generates an unpleasant cost structure. Due to this fact Hertz do not enjoy a good reputation regarding employee payment. Opportunities As we all know the fuel prices are rising steadily. The new fuel price average for 2012 is $128 per barrel. (IATA Economics, 2012) Due to this fact Hertz got the idea to originate an environmentally friendly rental program- the ‘Green-Collection’. Thus Hertz is the only car rental company which offers electric cars on three continents.

With this idea the company sets apart from competitors and it leads to lower costs in total and resultantly to a higher profit margin. Moreover the company should invest in the Airline Industry because a main part of their revenue stream is generated from the airport locations. After the recession there was an increase in consumer spending, especially in travelling. Therefore Hertz could take an advantage of this opportunity. Hertz could also take advantage of the used car market because they sell used vehicles to automotive dealership, when they are no longer eligible for manufacturers.

Hertz was already successful with this idea and was able to sell 88 per cent of those cars through auctions. Threats The threats of Hertz are mostly characterized by the rivalry within the Car Rental Service Industry. The struggle for market share especially in the U. S. between Hertz, Avis Budget and Enterprise Rent-A-Car is enormously. This leads to the fact that companies lower their prices to win and retire customers but this could result in running themselves out of business and lose potential profits. Furthermore Hertz is dependent on fuel prices as it is explained in 1.

Introduction increasing fuel prices could press the profit margin down. Another threat for Hertz is that they operate with vehicles from ‘Toyota’. In the last few years customers complained about manufacturing defaults resulting in safety risks. Also in the media ‘Toyota’ does not enjoy a good reputation regarding safety manufacturing. Hertz rents and sells those cars and if anything happens to the customer Hertz could be held liable. Due to this fact they would damage their image and lose profits. 4. 2 PESTLE-Analysis Political

The United States is one of the biggest and most influential economics in the world. Nevertheless the debts of the U. S. increased dramatically over the last ten years up to 103 per cent of the gross domestic product today. (Trading Economics, 2012) Due to the fact that the U. S. is a democratic country and furnishes security political rebellions or even wars are unlikely. According to the result of the presidential election this year and the future fiscal politics new taxes are possible which could also have an impact on the Car Rental Industry. Economical

The economical situation in the U. S. intensified over the last years as debts have risen steadily. After Japan (220% of GDP), Greece (143%), Italy (119%) the debt to GDP (gross domestic product) in the U. S. with 103% is also extremely high. (Trading Economics, 2012) (See appendix) The GDP growth rate in the U. S. has expanded 2. 2 per cent in the second quarter of 2012 and they expect a growth of 2. 7 per cent in 2013. (Trading Economics, 2012) This lies under the average GDP world growth rate of 3. 6 per cent in both years. The interest rate in the U. S. is 0. 5 in 2012 which is a consequence of the global economic crisis in 2009. (Trading Economics, 2012) As the following figure shows in year 2012 8. 16 per cent of the population is unemployed. This is the lowest value since 2009. According to the Bureau of Labor Statistics despite the recovery in the labor market are still 13. 1 million unemployed Americans. (Bureau of Labor Statistics, 2012) However the situation on the market for permanently unemployed people is still unchanged. 5. 6 million people, i. e. two of five Americans are unemployed. Rate of unemployment in the U.

S. (USA International Monetary Fund, 2012) Social The total U. S. population is constantly growing and came up to 314,211,739 million inhabitants in 2012. (United States Census Bureau, 2012) Furthermore the U. S. population is affected by the upward tendency of the Hispanic population and the aging population. In 2009 39. 6 million persons were 65 and older, representing 12. 9 per cent of the U. S. population. (Administration on Aging, 2011) This figure is estimated to grow up to 72. 1 million persons by 2030, representing 19 per cent of the U. S. opulation. (ibid. ) Technological As the activities of Hertz mainly consist in renting cars Hertz is dependent on the car and aircraft manufacturers for better and more efficient vehicles to reduce fuel prices. Hertz is the only car rental company which offers electric vehicles on three continents. Moreover the company introduced free mobile device widgets, which allow customers to make reservations, to find Hertz locations and receive promotions over the smart phone. As a result the bookings from mobile devices grew 300 per cent to $ 32 million in 2011. Hertz Annual Report, 2011) Due to the fact that customer satisfaction is very important, Hertz invest over $20 million in their Customer Relationship Management System. (Hertz Annual Report, 2011) “Hertz has been investing in new technology over the last few years that is purposed to enhance every aspect of rental experience. ” Thus the company launched the ‘Hertz Neverlost GPS System’ which is the perfect travel companion because it does not only bring you to all important European destinations but also shows you the places of interest. Legal * Public Liability and Property Damage

Hertz has to face a numerous amount of legal suits filed against them from customers who lay claim to compensation for personal property due to damages during the operations of their vehicles. (Hertz Annual Report, 2011) * Telephone Consumer Protection Act Due to the fact that in Kansas and throughout the U. S. , there were sent facsimile messages of advertising materials relating to the availability of property, goods or services by HERC and who did not provide express permission for sending such faxes there was a class action and the plaintiffs seek an unspecified amount of compensatory damages, attorney’s fees and costs. Hertz Annual Report, 2011) * Concession Recovery Fee On October 13, 2006 Hertz Car Rental had to face a legal suit by Janet Sobel, Daniel Dugan and Lydia Lee who claimed about the fact that they were misleadingly charged airport recovery fees in addition to their total rental rate charges. The place where the consumers rent their vehicles was in Nevada, a state where it is unlawful to charge airport concession recovery fees. (Hertz Annual Report, 2011) * Patent Infringement On February 19, 2007 Hertz failed a legal suit against Enterprise Holdings, Inc. TSD Rental LLC and The Crawford Group, Inc. because of the fact that these companies were involved in unfair business practice so that a fair competition was impossible. The case was dismissed in June 2009 after Hertz received a non-monetary settlement from these companies. (Hertz Annual Report, 2009) Environmental As I already explained Hertz Car Rental has two very strong competitors- Avis Budget Group and Enterprise Holdings, Inc. . Avis Budget Group is a company which has the control over two subsidiary car rental companies: Avis and Budget.

Whereas Avis is the leading car rental service company which offers luxurious vehicles, Budget offers less expensive products and services. One reason for their success is the high variety which consists of more than 350 000 vehicles. (Avis Budget Group, Inc. , 2012) As the following table shows Avis Budget group was able to reach a revenue of $4,110 million in the U. S. in 2011. Figure 1: U. S. Car Rental Market (N. a. , 2011) Enterprise Rent-A-Car is the largest car rental company in the United States and has the control over three subsidiary car rental service companies: Enterprise Rent-A-Car, National Rent-A-Car and Alamo Rent-A-Car.

This company is focused on the market of consumers in need of a replacement vehicle resulting from theft, mechanical failure or an accident. (Enterprise Holdings, 2012) Enterprise Rent-A-Car was able to reach a revenue of $11,100 million in the U. S. in 2011. 4. 3 Differential Advantage- USP (Unique Selling Proposition) The differential advantage of Hertz lies in its customer service 24 hours 7 days. Its global operational structure set Hertz apart from its competitors. The technological processing, the innovation spirit and the unique services which are provided to customers make the company unique.

That is why in year 1987 the slogan “You don’t just rent a car. You rent a company. ” or the slogan “We’re Hertz. They’re not. ” shows that this company is unique and different than the other Car Rental Services. Moreover Hertz is the number one airport car rental brand in the U. S. and at 119 major airports in Europe. (Hertz Annual Report, 2011) 4. Recommendations 5. 4 Segmentation, Targeting & Positioning The three step STP model is used to strategically direct marketing strategy. (See appendix) The market must be segmented, then groups must be targeted and finally the products must be positioned.

Segmentation Firstly the different groups in the market have to be identified and profiled by district characteristics regarding demographic, psychographic and behavioral differences. (Kotler and Keller, 2011) * Demographic People who want to rent a car from Hertz have to be 21 years old or older. They need a valid driver’s license for at least one year and a middle class income level. Furthermore they must have a good credit score. * Psychographic In case of Hertz they are concentrated on three consumer groups. The first group are the ‘Replacement Renters’.

In case of an accident, theft or mechanical failure they need a replacement vehicle. The second group are the ‘Leisure Renters’. These are consumers that rent cars to make their journey more comfortable and independent. This customers rent vehicles for extended amounts of time. The third group are the ‘Business Renters’, who rent vehicles to travel to and from airport locations. For them it is more comfortable than to leave their personal car unattended at the airport. Moreover Hertz divide their offerings into six different categories. Do you want an environmentally friendly car? Choose the ‘Green Collection’.

Do you want a car that is fun to drive? Choose the ‘Fun Collection’. Do you want a comfortable spacious car? Choose the ‘Family Collection’. Thus the offers are clearly arranged and the customers can immediately identify themselves with one of these collections. Targeting The target group of Hertz are customers between 35-50 years. Usually 70% of these customers are male and 30% female. The customers should have an annual income of $40,000 +. The target market should be up-to-date on latest technology and they should want to travel with services that provide comfort and convenience.

Due to the fact that especially in America people prefer luxurious and gigantic cars the ‘Fun Collection’ is the most potential one for the company. Because of the reason that the media massively supports energy conservation, so that these actions will encourage more people in the future to live environmentally conscious, the ‘Green Collection’ is also a very potential one to bind this consumers emotionally to the company through signalising that Hertz is the only car rental company which offers electric cars. Moreover Hertz is the number one airport car rental brand in the U.

S. . Due to the fact the ‘Business Renters’ who rent vehicles to travel to and from airport locations are very important for the company. Positioning The positioning depends on two dimensions: price and quality. As the competition on the car rental market is extremely high, car rental companies offer nearly the same prices. But the price of renting vehicles depends on for how long you will rent the car, whether you want an insurance coverage, the mileage during travel and whether you want special amenities. Of course the quality depends on the car the customer has chosen.

As we all know a Toyota is not the same as a Ford Mustang. Depending on the car brand the quality and the price will change as you can see in the following perceptual map. Figure 2: Hertz Car Rental Perceptual Map (N. a. , 2010) 5. 5 Marketing Goals and Objectives The marketing goal is to increase consumer market share and sales by 20 per cent at the end of year 2012. The objectives to achieve that goal must be SMART (The University of Sunderland, 2008), i. e. S pecific M easurable A spirational R ealistic T ime-based The following objectives will be set: External objectives Increase customer market share and sales by 20 per cent Due to the fact that Hertz entire new line of vehicles like the electric cars which they offer in the ‘Green Collection’ promotional expenditures will need to increase by 15 per cent to reach the target market. Hertz expects a 20 per cent increase in market share and sales for their target group which consists of people between 35 and 50 years. * Increase customer satisfaction For Hertz the customer satisfaction is one of their most important aims. Nevertheless there are some customers who are displeased with Hertz Car Rental.

Due to this fact Hertz want to increase customer satisfaction ratings by convincing their customers with new vehicle collections, special amenities and a unique service. Moreover existing customers must be satisfied because it is more expensive to acquire new customers than retaining existing ones. Therefore the service must be continuously and meet the customer’s needs. This aim can be reached by a better CRM. Internal objectives * Replace existing vehicles by electric cars Due to the fact that fuel costs are rising steadily it is a big chance for Hertz to invest in more efficient electric cars.

But the procurement must negotiate best prices to make the replacement possible. 5. 6 The Marketing Mix 4. 3. 1 Product Hertz offers a large number of products. In addition to the car rental, the company has also specialized on equipment rental as you can see in the list below. Table 1: Hertz Business Profiles (Hertz Annual Report, 2011) 4. 3. 2 Price As mentioned in point 4. 1 (‘Positioning’) the price of renting vehicles depends on the brand the customer has chosen, the renting period, the mileage during travel, whether the customer has special amenities and the insurance coverage. . 3. 3 Place Hertz Car Rental Service is available in 8500 locations in 150 countries and on the internet. 4. 3. 4 Promotion In case of Hertz the campaign must be promoted in mass-market advertising formats like in television, on the homepage, personalized e-mails and advertising in travel-related magazines. But the best way of advertising is through recommendations of customers and opinion leaders. People trust these persons most, as the figure below shows. Figure 3: Whom do consumers trust for information? (Ottman, 2011)

Due to the fact that there is a high competition on the car rental market the most important goal of Hertz is to increase customer satisfaction. Thus the best slogan Hertz has ever had was “We’re Hertz. They’re not. ” because this slogan contains everything what Hertz represents. On the one hand this slogan represents the current situation on the market where one can find a high competition. On the other hand this slogan sets apart Hertz from its competitors by stressing the point that Hertz is better than the others with their high level of customer service, quality, innovation spirit and technological development.

A proper opinion leader could be Sebastian Vettel. He is the youngest world champion in Formula 1. Thus he stands for fast, high-quality vehicles. Furthermore he has many fans and followers and is able to influence many people. Ideally the campaign starts in spring 2013 and ends in autumn 2014 because in summer people are in the mood for nice cars. Especially the ‘Fun Collection’ which offers luxurious, fast cars like a Ford Mustang will find the customers approval at this time. Moreover the summer time is very popular for travelling and people especially families rent car for this.

Therefore this period is the right time to start the campaign. 5. 7 Implementation and Control The basic concept of customer satisfaction is already in progress. Hertz invested over $20 million in their Customer Relationship Management System. Moreover the aim to consider the environment by offering electric cars worked out. However the following tasks have to be completed before starting the advertising campaign: 1. Customer satisfaction survey 2. Sales analysis of the previous fiscal year to calculate the next year 3. Customer tracking software must be developed 4.

The advertising media must be selected. The promotional budget will be calculated as follows: Customer satisfaction surveys| $ 500| Customer tracking software| $ 350,000| Analysing fees | $ 1,250,000| Upgrade costs| $ 20,000| | = $ 1,620,500 (per Hertz Car Rental location)| To observe the process of the marketing campaign control systems will be set up. This system can be divided into output control, which deals with the financial measurements and the non-financial behavioral control. Quarterly the process of the marketing campaign should be assessed and compared with the objectives.

If the development differs from the objectives the management can take corrective actions. 5. Conclusion One problem Hertz has to face is the high amount of competitors but with its high level of customer service and its unique services, its innovation spirit and the technological development Hertz has managed to become the world’s largest car rental company and the number one airport car rental brand in the U. S. . Another problem is the rising fuel price but also for this problem Hertz has a solution because they are already offering electric cars and will expand their product range.

Maybe in ten years we will get electric cars only. Hertz should concentrate on their aim to increase customer satisfaction. Even though Hertz always stresses the fact to put much emphasis on customer satisfaction, some customers are not satisfied. Hertz should concentrate on satisfying existing customers because it is much cheaper than to acquire new ones. To come to a conclusion one can say that although Hertz has to face problems and threats they have always a solution which leads the company to success. With its strong marketing strategy and their self-confidence they can compete with their competitors or even get ahead of them.

Not for nothing their slogan was “We’re Hertz. They’re not. ” 6. Appendix Figure 1: Top Debt to GDP (Trading Economics, 2012) Figure 2: GDP Growth Rate (Trading Economics, 2012) Figure 3: United States GDP (Trading Economics, 2012) Figure 4: United States Interest Rate (Trading Economics, 2012) Figure 5: The three step model (Hollensen, 2010) Figure 6: Hertz 2011 Highlights (Hertz Annual Report, 2011) 7. References Literature 1. Hollensen, S. (2003, reprinted 2010). Marketing Management: A Relationship Approach. 2nd ed. Prentice Hall International 2. Kotler, P. & Keller, K. L. 2011) Marketing Management. 14th ed. Global Edition. Prentice Hall International 3. Ottman, J. A. (2011) The New Rules of Green Marketing: Strategies, Tools and inspiration for Sustainable Branding: United States and Canada, Berrett-Koehler Publishers 4. The University of Sunderland (2008) MKT 306: Marketing Strategy. Version 2. 0 Web * Administration on Aging (2011), Aging Statistics Available at: http://www. aoa. gov/aoaroot/aging_statistics/index. aspx (accessed 04. 09. 2012, 00:28) * Avis Budget Group, Inc. (2012), Company Information Available at: http://www. avisbudgetgroup. com/about/ accessed 26. 08. 2012, 16:48) * Bureau of Labor Statistics (2012), Employment & Unemployment Available at: http://www. bls. gov/bls/newsrels. htm#OEUS (accessed 21. 08. 2012, 22:00) * Enterprise Holdings (2012), Enterprise Holdings- Alamo, Enterprise, National. Available at: http://www. enterpriseholdings. com/ (accessed 26. 08. 2012, 16:52) * Hertz Car Rental (2011), Annual Report Available at: http://phx. corporate-ir. net/phoenix. zhtml? c=205461&p=irol-reportsannual (accessed 15. 08. 2012, 01:51) * Hertz Car Rental (2009), Annual Report Available at: http://phx. corporate-ir. et/phoenix. zhtml? c=205461&p=irol-reportsannual (accessed 15. 08. 2012, 01:51) * IATA Economics (2012), Jet Fuel Price Monitor Available at: http://www. iata. org/whatwedo/economics/fuel_monitor/Pages/index. aspx (accessed 15. 08. 2012, 01:00) * No author (2010), Hertz Car Rental Perceptual Map Available at: http://de. slideshare. net/raquelkink/hertz-marketing-plan (accessed 01. 09. 2012, 00:47) * No author (2012), Hertz Reports Strong Revenue Gains Available at: http://www. travelagentcentral. com/car-rental/hertz-reports-strong-revenue-gai ns-36461 (accessed 16. 08. 2012, 17:06) Trading Economics (2012), GDP Growth Rates Available at: http://www. tradingeconomics. com/gdp-growth-rates-list-by-country (accessed 20. 08. 2012, 21:00) * Trading Economics (2012), Government Debt To GDP Available at: http://www. tradingeconomics. com/government-debt-to-gdp-list-by-country (accessed 20. 08. 2012, 21:44) * Trading Economics (2012), Interest Rates Available at: http://www. tradingeconomics. com/interest-rates-list-by-country (accessed 20. 08. 2012, 21:46) * Trading Econimics (2012), United States GDP Available at: http://www. tradingeconomics. com/united-states/gdp (accessed 20. 8. 2012, 20:47) * U. S. Car Rental Market (2011), WE TRY HARDER? PERHAPS NOT IN SOCIAL MEDIA Available at: http://dahlcache. com/2012/03/22/part-2-we-try-harder-perhaps-not-in-social-media/ (accessed 27. 08. 2012, 17:00) * United States Census Bureau (2012), U. S. & World Population Clocks Available at: http://www. census. gov/main/www/popclock. html (accessed 22. 08. 2012, 14:34) * USA International Monetary Fund (2012) Available at: http://de. statista. com/statistik/daten/studie/17332/umfrage/arbeitslosenquote-in-den-usa/ (accessed 20. 08. 2012, 21:04) 8. Word count Total: 3295 words