Strategic Marketing for Hertz Corporation

Introduction

The corresponding study project would be deliberative about the formulation of a research based plan for marketing management of the services offered by a selected organisation. The emphasis would be on performing strategic marketing in tandem with the business decision formulation and marketing operations procedures. Further, the analysis of existing marketing opportunities for the selected organisation would be undertaken to develop effective marketing plans. These processes would culminate in the critical appraisal of the efficacy of such plans through the decision tools through which underscoring marketing models could be elaborated. This exercise would be inclusive of the management of the ethical constraints and other issues to finalise the envisaged marketing plan. In this context, the underlying constituents of the entire marketing plan formulation would be four fold. The first one would be the outlining of selected organisational profile in brief along with the identification of the service offerings, intended market segments, the value propositions associated with such market segments and the delineation of the service propagation concepts which could be focused on. The second one would be the application of strategic marketing approaches which would be inclusive of the strategic situational analysis with particular emphasis on the strategic objectives. The third one would be the most significant since this would entail the development of the most detailed marketing mix strategy to propagate the service offerings of the selected organisation. The fourth one is the extension of the third constituent in the form of development of a 3 year strategic marketing plan for the abridgement of the focused targets and marketing objectives as well as the outlining of the probable variegated budgetary outcomes concerning sales and revenue generation.

Selected company profile

The company selected for the purpose of the marketing project development has been the Hertz Corporation which is a subsidiary organisation of Hertz Global Holdings Inc, which is an American enterprise for car rental operations. Previously, the Hertz Corporation was known as the Rent-a-Car Inc. Currently, the parent company operates from Estero, Florida.

Literature review

The data highlighted by Campbell Ryley and Thring (2018) suggest that a gamut of factors determine the future progression perspectives, such as the number of inbound travelling personnel from the airports, of the UK vehicle rental industry. Akyelken, Banister and Givoni (2018) have observed that the vehicle rental industry at the UK had registered a Compound Annual Growth Rate of 3.65% during the financial years of 2013-2017. The underlying causality of thishas been the gradual recovery ofthe economic sector which has permitted greater domestic leisure travelling as well as the growth in the off-airport vehicular rental operations. Another considerable reason, according to Clark et al (2015), has been the increased awareness regarding the emission reduction imperatives and the necessity to curtail the emanating carbon footprint from the number of automobiles currently operating at the roads. The carpooling and vehicular rentals contribute to the retrenchment of such numbers operating on the streets and this has culminated in the increment of 2.2% in the vehicle rental operations during 2015-16 and 0.6% of increment in this growth rate had been observed by Lazov (2017) during 2018 in comparison to the previous year.

There are five major operators within the vehicle rental industry currently operating within the UK, namely Europcar Group, Avis Budget group Inc, Hertz Corporation, Enterprise Holdings Inc and Sixt. According to ir.hertz.com (2017), Hertz Corporation generally caters to the necessities of the tourists since they prefer to explore the metropolis of London by their own convenience. In this context, the current car rental services are to be identified as customer needs based service requirement responses by the organisations such as the one under consideration. The Hertz Corporation has also benefited from the relaxation of the visa acquisition norms which has facilitated in the increment of tourist visitations in London and has propelled the subsequent growth rate of the vehicle rental businesses. According to Le Vine and Polak (2017), the largest percentage (18.4%) of vehicle leasing and rental undertaking does occur at London in comparison to the average share of the rest of the UK (13.4%).For Hertz Corporation, London being the major tourist attraction has been instrumental for the boosting of demand measures of vehicle rentals and leasing. However, this has also augured in the factor of increasing pressure from market rivals. According Schmidt (2016), this has been exacerbated by the fact of low levels of ownership of vehicles within the London metropolitan area due to the considerably heightened costs of vehicle ownership at London. In this context, according to Shaheen and Chan (2015), the Office for National Statistics has highlighted that the South East London would be accounting for 14% share of the car rental based industrial sector. This has been the premier cause for Hertz Corporation to undertake market consolidation efforts at the previously mentioned region of London through utilisation of customer portfolio identification and targeting of the promising customer segments, product and service differentiation, utilisation of effective service promotional techniques and consumer needs adoption processes. This has to be an integrated and synergistic approach provided the market dynamics which are fundamental to the market operations management responsibilities of the corporate operators. According to Oliveira, Carravilla and Oliveira (2017), approaches oriented towards management of market sizes and forecast based marketing mix applications could be influenced by the information that estimated average numerical threshold of vehicle rental sharing, per round trip within London, is 75 and Jones and Allen (2018) have observed that vehicle rental market potential could equal, in numerical terms, on a per annum basis, that of 800000 commuters within the inner and outer London metropolitan region. The emphasis would be, in future, on the obtaining of perking permits which could be viable throughout the greater metropolitan area of London. The existing policies such as ‘One Way’ vehicle rental services are oriented towards reduction of vehicle dependency and thus, utilisation of such in the marketing mix policy could assist Hertz Corporation to improve on existing service specifications. This would have to entail the fact that four primary drivers are responsible in terms of such changes in the vehicle possession rates at London, such as drive towards reduction of congestion zones, emphasis on low emission zones establishment, restrictions on parking space establishment at housing complexes and on guest parking spaces at offices. Finally, Oliveira et al (2019) have specified that the inner London region is projected to develop the greater potential concerning the vehicle rental market progression and new demographic emplacements in the forms of new housing groups which could exhibit the propensity to adopt vehicle rental services much greater in terms of their daily commute.

Market Analysis

The tendency of the consumers in the vehicle rental market at the UK, as per the observations of Perboli et al (2018), is to purchase extensive mobility without having to possess a vehicle. Thus, the relative significance of the arguments associated with the existing demographic structure within the London metropolitan is indicative of the prioritisation of the customer segment targeting method to be oriented towards outlining the consumer profile in the most accurate manner. It depends on the organisational approach of market analysis tentatively utilised by the Hertz Corporation to particularise the consumer profiles which could be targeted. Data derived from the research of Li and Pang (2017) suggests that the proportion of the young generation within the 25-34 years age group at London (24%) is comparatively higher than those of the UK in general (13%). The age based demography has thus changed the conditions on the ground in terms of inclination towards vehicle possession. This observation has been lent credence by the fact that London has a considerably lesser median age value (34 years) than the national estimate (39.7 years). Radeschütz, Schwarz and Niedermann (2015) have highlighted that in contradiction of decreasing numbers of young motorists throughout the UK, the motorist populace in London are mostly constituted by them.Age group based differentiation is also reflective of the tendency of young adults preferring service usage (taking vehicles on rent or lease) rather that product possession or purchase.

Thus, possible groups of consumers could be the particular categories of millennial segments such as environmentally conscious millennial groups and technology focused groups. According to Wu et al (2019), in the long run, the environmentally conscious millennial groups are inclined towards availing innovative methods in their travel endeavours including renting vehicles and car sharing. Ko, Ki and Lee (2019) have highlighted that the general argument of environmental consciousness barring such personnel from availing automobiles is contradicted by evidence that such millennial groups are substantially wont towards relying on automobile transport. However, this observation is relatively incomplete since the primary rationale of such preference of automobiles despite being environmentally conscious has been the growing trend of electric vehicles and greater approval towards such technological innovation based transport means. Thus, no possibility of conflict exists.However, the preference of taking automobiles on rent in such groups is generally limited (27%). On the other hand, technology centric millennial groups are explicit regarding their preference of advanced vehicles, both the two and four wheeler categories, in terms of their general penchant for private automobiles as Menon et al (2019) have suggested that 42% of such millennial groups prefer to rent automobiles rather than travel in public transportation services.

According to Namazu and Dowlatabadi (2018), though the current vehicle rental market conditions within greater London could be termed favourable for Hertz Corporation in terms of future possibilities, it would be likely for the company to employ effective service differentiation strategies to highlight the competitive benefits of market offerings in comparison to competitors such as Zipcar, Drivy, Sixt, Avis and others. Customer value creation and generation of revenue are the two basic objectivesin this context. According to Mounce and Nelson (2019) the public administration in UK emphasises upon the provisioning of parking arrangements for ‘One Way’ vehicle sharing and rental services and it is imperative to involve individual councils in this context. Data researched by Münzel et al (2019) has suggested that the general trend of vehicle rental businesses conspicuously depend on global intelligent mobility based market which is slated to reach £ 27 billion in 2025 within UK.Hertz Corporation stands to benefit from the user centred experience of door to door mobility through adaptation to the behavioural necessities of consumers in the vehicle rental industry. Further, the current leading car renting organisations within the UK are increasingly capitalising upon the disclosure of information related to availability of services on an integrated platform to the consumers.The market also highlights the integration of various payment technologies to provide greater swiftness of pricing and payment options in the forms of universal online payment applications such as Oyster, Apple Pay and others. According to Namazu et al (2018), the parking aspect in London is primarily undertaken by each of the individual Boroughs with employment of considerable policy variations. This generally slows down the service application for Hertz Corporation since multiple negotiations are to be undertaken. The leading companies, in general, are disposed towards utilisation of vehicles ranging from small to the medium in terms of their millage and cross-country performance so that the cosmopolitan precincts of the London metropolis could be navigated. The companies such as Avis and Zipcar (in collaboration with Sixt) along with the Hertz Corporation are prone to establish consumer to consumer vehicle rental services so that effective utilisation of limited numbers of vehicle available, could be performed. According to Szmelter and Woźniak (2016), this has made the additional expenditure on financing the servicing of such vehicles and their insurance management, imperative.

According to Webb, Wilson and Kularatne (2019), the potential opportunities of Hertz could be realised through strategic asset accumulation such as acquisition of Advantage Rent a Car during 2009 and Dollar Thrifty during 2012.The brand value of Hertz has permitted the company to target mostly the upscaleand business travellers. However, this observation has been contradicted by the evidence that the company also targets the leisure travellers who are predominantly cost sensitive through the Dollar Thrifty services. Furthermore, in the long run, the company has acquired Navigation Solutions (NS) completely through the acquisition of the 35% remaining stakes. This has permitted the company to add GPS systems to every company rental vehicle since the NS has become the operational segment of the customised NeverLost application of Hertz. According to WU (2016), this has culminated in the purchasing of various vehicle rental and independent vehicle sharing organisations by market competitors such as the Avis and Enterprise group as competitive responsesto the strategic acquisitions performed by Hertz. Czerny, Shi and Zhang (2016) have outlined the potential threats of Hertz such as decreasing value of programmable and non-programmable vehicles and increasing competitive pressure along with hikes in fuel prices. The primary points of weaknesses of the company under consideration are inadequacy of vehicles, service innovation shortcomings, customer service management and strategic pricing related problems.

Product/Service

Vehicle rental services constitute the business model of the Hertz Corporation and the business model currently employed by the competing companies as well as the market conditions are demonstrative of the highest potential of unidirectional vehicle rental services regarding maximisation of profit and earning of customer attention. The previously demonstrated consumer profiles and location of concentration of the competing organisations outline the most promising location of business to be the South West London region, particularly Westminster, Hammersmith and Kensington. Furthermore, Hertz Corporation should also plan to formulate compatibility between the Eileo Technology, which is a vehicle sharing and hourly rental service support mechanism and, the entire inventory of vehicles at the disposal of the company under consideration. This could prove to be a serious competitive leverage obtainment initiative over the other four market rivals of Hertz Corporation.

Price

The market analysis is demonstrative of the necessity to utilise multiplicity of pricing strategic approaches to highlight the implications of points of differentiations of the services of the Hertz Corporation. The emphasis, thus, are concentrated on annual membership based charges which could be comparable to ZipCar subscribers in the form of annual fee of membership subscription for the purpose of enhancement of subscriber commitment to the car rental services of Hertz Corporation. Furthermore, Hertz Corporation would require the utilisation of fee per minute of the rental journey approach. This has been a strategy utilised by DriveNow which had charged the users on a per minute basis during their trips. Hertz wouldhave to apply marginally higher charges since inclusion of the expenditure from Congestion Charge and Ultra Low Emission zones would have to be undertaken. According to Terama et al (2018), Hertz would have to utilise the brand values through which the competitive advantage could be maintained by focussing on different consumer segments. The Dollar Thrifty could be utilised with lower price offerings to consumers regarding vehicle rental services. The company could as well add hourly vehicle rental services for the business traveller segments. This could contribute to the operational savings and could offset the obligation of having to pay daily prices.Furthermore, as has been observed by Perboli et al (2018), Hertz would have to apply the customer loyalty management programs such as the Hertz #1 Club to highlight the various technological innovations which the company could provide through service offerings at the rental kiosks. This could ensure retention of an advantageous competitive advantage.

Place

Hertz Corporation, in partnership with Daimler, could extend the vehicle rental and sharing services to the initiatives of ‘Hertz On Demand’ and ‘Car2Go’ within all of the vehicle terminus locations under Hertz. This could be effective in terms of offering the One Way rentals and in case of avoidance of membership fees of the services.Other than this, the strategic partnership between both the companies could enhance mutual competitive capabilities in terms of the competitive price offerings in comparison to other market rivals on a per location basis. According to WU (2016) Hertz Corporation has gained access to the most lucrative parking locations throughout the UK and the size of the vehicle fleet has expanded to include 200 vehicles which has been less than Zipcar by a margin of 50 vehicles. Currently, there are 20 different locations operated by the company under consideration for provisioning of vehicle rental services.

Promotion

According to Webb, Wilson and Kularatne (2019) utilisation of consumer event and experience management could be the most effective mode of promotion for Hertz Corporation. Maximisation of marketing communication is central in this context. The emphasis would have to be on the marketing through increasing numbers of Social Media based channels. Since the targeted segment of consumers generally involve the young personnel, therefore, the preferred Social Media would have to be LinkedIn, Twitter, Reddit, Instagram, YouTube and Facebook. Furthermore, the utilisation of a customised application developed for the company under consideration would be effective for Hertz Corporation to perform a multitude of tasks such as vehicle location determination, administering of payments and membership management. In this context, the utilisation of Google Maps, CityMapper and MyTSA applications could be utilised for the purpose of planning the journeys of the rental customers.

Action planning

Internal operations

According to Le Vine and Polak (2017), the initial phase of market penetration would necessitate the utilisation of administrative reforms within the Hertz Corporation in the form of establishment of internal operational systems which could be effective in supporting the swift supervision of marketing, sales operations and vehicle maintenance. Furthermore, the payment and pricing infrastructure would be required to be synchronised with the most effective methods of payments which could be identified through evidence based empirical market research. To this effect, negotiations would be necessary to be held with the key payment service providers so that the payment modes could be effectively facilitated.

Vehicle numerical strength management

According to Campbell, Ryley and Thring (2018), it would be imperative for the Hertz Corporation to recycle the motor vehicles spare parts and concentrate the utilised and returned vehicles from other locations of the UK, at the London branch. This could be undertaken with the explicit objective of expanding the fleet strength to the numerical measure of 250 vehicles so the effective inventory could be equalled with those of the market rivals including that of the closest competitor Zipcar. As has been opined by Clark et al (2015), such a process would be also entailing the necessary integration of efficient software and hardware mechanisms such as the locking and fire alarm systems, anti-intrusion detection devices and additional software suits for the purpose of effective GPS tracking.

Market infrastructure management

Research undertaken by Czerny, Shi and Zhang (2016) is indicative of the necessity of mutual alignment of the marketing strategy and brand value so that formulation of effective infrastructure to generate the maximised measure of returned value could be achieved. To this effect, the formulation of organisational mission statement would be critical so that effective integration of the previously identified and distinguished marketing strategies could be achieved in the concurrent business context of the Hertz Corporation. This could as well contribute to the overall brand alignment strategy undertaken by the organisation under consideration. Akyelken, Banister and Givoni (2018) have specified the necessity to determine the most effective market distribution channels as well. Hertz Corporation would have to employ the identified and selected strategy for the purpose of development of the marketing content as well as product and service specification distribution channels. Effective business operations proposals would be required to be formulated in this regard so that future negotiations between strategic market partners could be successfully managed. The prospects of development of effective customer relationship management would have to be undertaken consequently by Hertz Corporation with specific focus on the demographic profile of the targeted customer segments so as to formulate the most efficacious marketing incentives and messages in this context. The identified consumer profiles could be analysed by the company under consideration so as to develop the progressive improvement methods through which the existing user journey procedures could be bettered. This process would also entail the management of complaints, vehicle performance notifications, price related queries and non-delivery related customer reports. Perboli et al (2018) have thus outlined the necessity to put in place the most coherent mechanism of operations through which management of partners and clients could be finalised.

Product and service differentiation

Radeschütz, Schwarz and Niedermann (2015) have suggested the significance of electric vehicles for the applicability spectrum of such vehicles and the appeal associated with the comparatively environmentally conscious consumer groups. Furthermore, for the Hertz Corporation, the introduction of such vehicles could be beneficial regarding the opportunity such vehicles could provide to the drivers to opt for e-solutions with interest on attempting to undertake trials of new automobile technologies. Another added benefit could be acknowledged to be the development of effective distribution of the capital costs amongst multiple vehicles since the battery purchase and maintenance of the same could considerably cost less than fossil fuel driven engines of vehicles of similar size and disposition. In this context, Sharman (2015) has observed that the best theoretical construct to support the proposed methods of concentrating on the innovative automobile technologies could be the Diffusion of Innovation theory (DOI). This theoretical construct is reflective of the perspective that a gradual and temporal distribution progression avenue is required for any innovation to take hold and get adopted by the mainstream industries. This could be analysed from the research perspectives of Lazov (2017) that the Millennial population, within the ranges of the age group of 20-34 years, are the best suited to generate increasing capacity to earn better salary and achieve considerable career progression. Such observations have to be evaluated in light of the previous observations that a major section of the young adult consumer groups consist of the age groups which prefer utilisation of service based offerings (such as car rental services) without having to own the tangible products such as the vehicles.

Marketing message communication through event management

Szmelter and Woźniak (2016) have stated that an extensively effective method of public attention acquisition could be acknowledged to be that of event management since events, hosted for particular purposes such as for propagation of product and service information, could generate greater publicity in comparison to other similar endeavours such as door to door marketing. Hertz would be better disposed towards effective marketing strategy application through hosting events which could be oriented towards information provisioning involving technology and business related contexts. Such individual events encompass a large number of potential consumers and thus could minimise the marketing expenditure considerably as well. Thus, it is necessary for Hertz to host corporate events such as conferences of business executives and general transportation service providers and then announce the new vehicle rental services and policies at the backdrop of such events. Some instances of such conferences could be outlined as the Big Data utilisation and Artificial Intelligence conferences which could be organised at London. The emphasis, in this context, would have to be concentrated on the carefully crafted presentation of the marketing messages developed by Hertz services highlighting the advancements which the company could offer in terms of integration of luxury services with technological amenities in the vehicle rental and car sharing sector.

Marketing campaign and logistics management

Logistics management

This phase would require Hertz to hold active negotiations with the private partners and public authorities to finalise the service infrastructure completely. This would necessitate active involvement of key stakeholders such as Transport Authority for London, City Council of London, Hammersmith Council, Kensington, Chelsea and Westminster councils as well. Hertz Corporation would be required to hold negotiations to secure the terms and conditions for the introduction of new services within the targeted market segments and regions such as the imperatives associated with parking permissions and subsidies based on location, environmental imperatives related bargaining and community engagement related factors. Fall back options and alternate engagement areas would be required to be identified during this process as well. The project finalisation preparations and initial market penetration operations are related to this phase. The logistics phase would also involve analysis of the vehicle insurance and security policy based implications on the marketing effort and budgetary exchequer, location testing and payment mode management related evaluations. Furthermore, scouting of the business areas for the purpose of proximity determination to the charging stations (for EVs) and refilling stations (for CNG/conventional fuel driven vehicles), testing of software applications involving integrating apps and Google localisation apps such as Google Maps and finalisation of pricing negotiations with the public authorities and private stakeholders would have to be undertaken.

Marketing Campaign

The initial launch of services would have to be followed up through identification of potential service subscribers through the analysis of Social Media reports and traffic involving the leading Social Media channels such as Twitter, Instagram, Tumblr, Facebook, Linked and YouTube. This could provide effective information regarding the customer profiles involving locations, interests, age, employment status, educational qualifications, travelling patterns and ethnicity and such analytical outcomes then could be utilised to develop customised advertisements to target such consumers. This is the method of direct segmentation of consumers and markets on the basis of social advertisement channels and other supplementary, online services such as AdWords. The emphasis would have to be on obtaining critical information regarding the interests and service consumption dispensations of such consumers.