MKT100 Assignment #1
Competitive Analysis
Analysing the Toronto Car-Sharing Market
1. How large is the current market for this product category? What is the potential
for growth in the size of the market? If possible find numbers as evidence.
AutoShare: 220 cars, Over 10,000 members (AutoShare saga)
Zipcar: 290 cars (ZC website), growing fast
The potential growth for this market is very large. People are continuously looking
at alternatives to car ownership for various reasons. The market is green,
convenient, and cost saving. TTC and Zipcar’s recent collaboration will further drive
market.
2. What are the strengths and weaknesses of the competition (financial resources,
management experience, brand loyalty, number of locations, proportion of market
covered etc.). You may want to think broadly about direct competitors (companies
in the same business), and indirect competitors (companies in a business in which
their product/service is a reasonable substitute).
Direct Competitors
AutoShare
Strengths
- Positive image in Toronto (local company)
- Environmentally responsible management
- Current contracts with Condo builders
- Apparent strong brand loyalty
- Large number of locations
- Convenient web-booking
- More affordable than Zipcar
- Vehicles with winter tires available
- On average more fuel efficient than Zipcar
- 10% of fleet is hybrid
- Offers Canada’s first shared plug-in hybrid
- Carbon emission offsets available through Zerofootprint program
- Local staff – all problems are assessed individually
Weaknesses
- Small amount of capitol for expansion and marketing
-
Cars up to six years old
Small company
38% of market and falling
Paying off debts
Zipcar
Strengths
- Largest car-sharing company in North America
- 75% of North American market
- Leading innovator in new technology for car-sharing
- Large capital from investment
- 62% of Toronto market and currently growing
- TTC partnership through the TTC’s Hot Dealz program
- Superb management
- High brand recognition
Weaknesses
- More expensive than AutoShare in every category
- Only 1% of fleet is a hybrid vehicle
- Does not offer any plug-in hybrids
- Insurance coverage is provincial minimum
- Does not offer winter tires on any of its vehicles
- No carbon emission offsets available
- On average, Zipcar’s vehicles burn about 9L of fuel for every 100km
compared to AutoShare’s 8L/100km
- American company – problems are assessed through automated systems;
extremely inconvenient for the customer
Indirect Competitors
Hertz
Strengths
- Large pockets
- Many vehicles and offices already spread throughout the city
- Starting car-shares in other cities, notably Manhattan, under the Connect by
Hertz name and experiences huge success and growth
- Household name and many existing partnerships such as with Air Canada
- Discounts on cars through large volume purchasing
- Can lower prices and survive losses to eliminate competition
- Copying Zipcar
Weaknesses
- Not popular amongst the green, hippie crowd
-
Copying Zipcar
Enterprise Rent-A-Car
Strengths
- Very large pockets
- Household name
- Well established marketing
o Could keep the “we’ll pick you up” slogan if cost feasible
- Could also absorb losses to lower prices
Weaknesses
- Seem timid to enter market
Other notable indirect competitors
- U-Haul
- Avis
- Discount
3. What is the competitive situation like? Are there a broad range of competitors or a
fairly narrow range? What does this mean for a new entrant? Use market share
data if available to support your position.
There are currently only two players in the market, Zipcar and AutoShare. They are
battling for market share amongst themselves. Hertz is showing huge potential for
prompt entry considering its car-share testing in the United States and it’s existing
infrastructure in Toronto. Enterprise is a sleeping giant. They have no current plans
to launch a car-share program in Toronto but could be extremely threatening, even
fatal, to competitors if they did. An advantage smaller companies have is the
popularity amongst green individuals. They represent a large portion of the carsharing market and will likely not give their business to the bigger corporations. The
question is whether a lower price will draw them in or not, and if not, will a lower
price bring in as many or more new clients.
For a new entrant this means that they need to have deep pockets, up-to-date
technology, great marketing, a green image, and a strong brand.
4. Is the market dominated by a few large competitors or many small competitors?
What does this mean for a new entrant?
Two large competitors dominate the car-sharing market in Toronto. This means that
new entrants must compete with both to gain their share needed to survive.
5. Do the current product offerings meet the needs of potential customers? Are there
needs that are not being addressed with the current offerings?
-
The entire industry is not marketed well enough
The Toronto suburbs are not being addressed as it is in Montreal
There is no peer-to-peer program set up here
Most rush hour traffic is people coming from the suburbs and driving into the
city
Is there a way of tapping the car-pooling market?
The market of car owners is still huge, there is clients to get
6. Given the range of competitors and the market needs, how would your company
position its product? What would be its competitive advantage, and why would
those features/benefits be an advantage?
Communauto would position itself as truly Canadian, tried and tested, bigger and
better, the most environmentally responsible, and the most reliable. They would
fight for market share from Zipcar and AutoShare, while signing new clients in the
untapped suburbs through peer-to-peer car-sharing. They would want to grow very
fast as fierce competition loomed in the near future. They would use their
knowledge of creating and maintaining positive relationships with government
boards and tribunals to push Zipcar out of TTC partnerships and take them over.
Environmental Scan
Political
- The city of Toronto and the TTC choose who to create partnerships with
o One already created with Zipcar
- The government sets taxes related to rental car companies and car-share
companies
o The car-share industry does not want to be taxed the same way as the
rental industry
Economic
- The recession
o People getting rid of their cars, or their second cars for financial
reasons
- Look up info on Toronto traffic congestion and their future plans
- Every car dedicated to car-sharing takes about 8 cars off the road, sometimes
up to 20 cars off the road
Socio-cultural
- The population of Toronto is becoming increasingly aware of the
environment and are constantly taking more action to protect it
-
Public transit is improving leading people away from car dependency
Our business is directly affected by the way and frequency people use their
vehicles
o Car usage has skyrocketed since the 80’s and now new solutions are
required to handle traffic
o People now dependant on car usage but straying from car ownership
Technological
- Electric cars are becoming increasingly popular and a possible alternative
- Cars now able to be unlocked by iPhones and online bookings are now
standard
- Charging stations needed for electric cars
o Could it be the catalyst needed to put more charge stations
throughout the city
 The pick-up locations could double as ‘gas stations’
SWOT
Strengths
- Position brand recognition
- Largest car-sharing company in Canada
- First car-sharing company in Canada
- Environmentally conscious
- Profitable?
- Doesn’t need to advertise much
- Strong relations with government and tribunals
- Partnerships with transit companies
Weaknesses
- Brand not recognized nation-wide
- Lack advertising experience
Opportunities
- Nissan Leaf
Threat
- Harsh Montreal winters and untested electric vehicles
-