Business Administration: Car Rental

This report discusses the importance of market segmentation and positioning in the car rental industry. It includes secondary research findings, PEST analysis, demographic profile, local competition, and marketing trends. The report provides opportunities and threats for the entrepreneur who is planning to introduce a car rental business in Hertfordshire, UK.

Running Head: BUSINESS ADMINISTRATION 1
Business Administration: Car Rental
Business

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Table of Contents
Section 1: Introduction................................................................................................................................3
Section 2: The Importance of Market Segmentation and Positioning and the Role of Secondary Research
in Identifying Target Markets......................................................................................................................3
Section 3: Secondary Research Findings......................................................................................................4
General Market Trends............................................................................................................................4
PEST Analysis...........................................................................................................................................5
Political................................................................................................................................................5
Economic.............................................................................................................................................5
Social...................................................................................................................................................6
Technological.......................................................................................................................................6
Demographic profile and trends in Hertfordshire...................................................................................6
Local Competition....................................................................................................................................6
Trends within marketing such as the growth of digital communications................................................7
Section 4: Interpretation and Analysis of the Findings 500.........................................................................7
Opportunities..........................................................................................................................................7
Threats.....................................................................................................................................................8
Perceptual Map.......................................................................................................................................8
Section 5: Marketing Recommendations 500..............................................................................................9
Target Market Segment...........................................................................................................................9
Market positioning................................................................................................................................10
Product strategy....................................................................................................................................10
Price strategy.........................................................................................................................................10
Place Strategy........................................................................................................................................10
Integrated Marketing Communications.................................................................................................10
Section 6: Conclusion................................................................................................................................11
References.................................................................................................................................................12

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Section 1: Introduction
When an organization plans to introduce a new business and operations in the market, it needs to
consider various aspects of the market. Considering these different factors, an entrepreneur can
launch his/her new business in the marketplace. The major factors are such as competition,
strategies, changing market trends, changing preferences and tastes of customers etc. This report
is focused on preparing a report for an entrepreneur who is planning to introduce his business in
car rental industry in UK. The entrepreneur is launching this business within Hertfordshire and
he has £250,000 to establish this business in this county. This report defines the significance of
positioning and market segmentation. Secondary research plays an important role recognizing
the target markets. It includes some of the strategic frameworks such as SWOT analysis and
PEST analysis to identify the market trends and target markets. At the end, it includes some
marketing recommendations which will help the entrepreneur to establish this car rental business
successfully.
Section 2: The Importance of Market Segmentation and Positioning and
the Role of Secondary Research in Identifying Target Markets
In today’s competitive business world, marketing and promotion are two important aspects.
Organization includes various processes which are recognized as marketing process. There are
various organizations which emphasize on their customers within their resources and
competencies. They use different methods and techniques to understand their customers. To
approach the potential customers for their products and services, firms use three marketing
aspects i.e. market segmentation, target market and positioning. According to Peteraf, Gamble
and Thompson (2014) these are very important aspects which assist an organization to get most
appropriate customers for its products and services. The major purpose of market segmentation is
to divide a larger targeted population into more defined targeted groups (Peteraf, Gamble and
Thompson, 2014).
Under this process, the entrepreneurs use different strategies and factors like lifestyle,
demographic and usage to recognize the particular market segments. When a company
introduces a new business in the market, it is very important to identify the target market
segment because it helps it to develop the impactful marketing communication and advertising

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strategies. It enables an organization to approach the right audiences for right products and
services. By identifying the target markets, the entrepreneur will be able to identify its customers
and to develop a strategic plan. This strategic plan helps the organization to attract targeted
customers. Moreover, positioning is also one of the most significant factors which marketers use
to determine how to effectively communicate the attributes and features of their products to the
targeted markets. Identifying a positioning creates an image of firm’s products in customers’
mind, defining the most significant advantages which differentiate it from similar products of
competing brands (Upton, Teal and Felan, 2010). It is important because it allows the
organization to differentiate itself from its competitors.
Secondary research plays an important role in identifying the target markets and market
opportunities. The major sources of secondary research are company’s reports, newspapers,
internet, competitive intelligence, government reports, political agencies, financial and economic
departments etc. By using internet and competitive report, a business can find the information
about competitors’ strategies and current market trends. To conduct secondary research for this
car rental business, the major secondary resources are such as internet, company’s report,
political reports, competitors’ website, customer’s response on social media etc. For this
research, these resources will be used because they will assist the market consultant to find out
the market opportunities and competitive pressure in the England car rental industry (Sekaran
and Bougie, 2016). Internet and social media are the most useful sources as a larger population in
the country is active on internet and social media sites. So, it is the best way to analyze the
opportunities and market trends in car rental industry.
Section 3: Secondary Research Findings
The above secondary research found out that there are various trends and external factors which
may have a huge impact on car rental business in Hertfordshire (Sekaran and Bougie, 2016).
Before introducing this new business in the market, it is very important to consider these factors
and aspects. The major findings of secondary research are stated below:
General Market Trends
According to the findings of secondary market research, the enhancing incorporation of
advanced technologies in car rental services as one of the most important factor which will cause

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the growth of car rental sector in coming years. With the introduction of internet and increasing
number of smartphone users, the dependence on technology has been increased. There are
various car companies which are using smartphone based applications to communicate the fare,
discount coupons, availability of cars, promotional offers and tracking details to the customers.
The secondary research shows that people prefer using rental car services rather than owning
them as they need to give time for car’s maintenance. Nowadays, there is a rise in the business of
online car booking industry as people think that it offers the rides at reasonable rates. As per a
report, the global car rental industry is valued at around USD 59 billion in the year 2016 and it is
estimated to approach approximately USD 125 billion by the year 2022. It indicates that it is
expected that it will be growing at a growth rate of about 14% between 2017 and 2022 (Zion
Market Research, 2018). Additionally, the needs and wants of customers have been increasing
towards car rental services because people prefer taking a car on rent than purchasing their own
cars. They think that they need to make a huge one-time investment to buy the cars. It indicates
that the market for car rental services is growing significantly.
PEST Analysis
The research resulted that there are some trends and factors which can affect the domestic
businesses and business in car rental industry. These factors are illustrated below:
Political
There are several political factors which may affect the business of car rental sector in England’s
county. Some of the major factors are such as rules and regulations of government, political
stability and other related factors. Political trends have direct impact on the business connected
with tourism. In Hertfordshire, tourists mostly do not bring their vehicle so they rely on renting a
car to explore the city. This new business will need to meet all the vehicle and employment
standards to operate car business in the city (Ho, 2014).
Economic
Economic factors will have a large impact on the local businesses and businesses in the car rental
industry. These factors are like recession, GDP, employment rate and disposable income of
population. For instance, recession affects the budget of customer directly. Hence, the purchasing
power of customers is also affected by this economic trend. In UK, fluctuating fuel prices may

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have a significant impact on pricing strategy of company. This new business will have a hard
time in meeting competitive prices if there will be economic downturn.
Social
In addition to above, there are some social trends which affect the growth of car rental business
in the chosen location. Some of the major factors are such as life style, changing trends, social
class and increased use of smartphones (Skok, and Baird, 2015). These trends show the demands
and needs of customers which brings them to the market. Moreover, it is very important to focus
on the safety and security of passengers while taking a ride.
Technological
This is the most significant factor that can support the development of this new business in car
rental sector in Hertfordshire. Innovation and development in technology will have great impact
on its business operations. From the secondary research, it is found that today’s customers are
demanding faster and broader manner to access the information. This entrepreneur can operate
its business through a mobile app so that people can book their ride through application easily
(Percy, 2014).
Demographic profile and trends in Hertfordshire
The demographic report of Hertfordshire shows that current population of Hertfordshire is
1,154,800 and it is constantly increasing due to rising birth rate, higher life expectancy and
inward migration. Among this population, 16.5% of total covers 25 to 34 years people and
27.3% is covered by the people of 35 to 49 years old (Herts Insights, 2018). Hertfordshire lies
across the major rail and road routes linking London to Northern England, Scotland and
Midlands. In this area, the people generally use local bus services to travel from one place to
another. There are various private operators who operate local busses. This car rental business
can provide more substitutes to county’s population (Del Giudice, Della Peruta and Maggioni,
2015). Thus, the demographic profile of Hertfordshire indicates that the entrepreneur can run this
business in this location successfully.
Local Competition
As mentioned above, there is a strong increase in car rental business as people prefer to travel by
rented cars. This new business may face an intense competition from other local players in
Hertfordshire car rental industry. There are various domestic players which operates similar

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business in the chosen area. It indicates that nature of competition in the area is monopolistic
competition (Lazov, 2017). One of the major competitors is Enterprise Rent-a-car that provides
cheap car rental services in this location. Car rental with this organization is very easy with the
flexible pick-up and drop locations and longer opening hours. Furthermore, Sixt Rent a Car is
another player that provides excellent customer services at lower prices. It provides a wide range
of vehicles to meet according to the needs of riders (Oliveira, Carravilla, and Oliveira, 2017).
Trends within marketing such as the growth of digital communications
The secondary research clearly indicates that companies are using various effective and
advanced marketing strategies so that they can reach to their targeted population. Nowadays, the
organizations are using internet and social media to approach the targeted audiences. They are
using digital communications to promote their services (Cawsey, and Rowley, 2016). In addition
to this, other modes of promotion like television, radio, public relations, hoardings, electronic
billboards are used to communicate the brand message to the customers.
Section 4: Interpretation and Analysis of the Findings 500
The above findings of research will have a great impact on the launching on this new car rental
business. These findings have resulted different opportunities and threats to car rental business in
Hertfordshire. The collected information indicates two major dimensions of SWOT analysis
which are discussed below:
Opportunities
 Introduction of Innovative car rental services
Considering the above research information, it can be stated that this entrepreneur can introduce
this car rental business by adopting different innovations in cars. It can fix the build-in screens in
the cars that will make it easier for the rivers to follow the route through navigation map.
Additionally, it can fix computer gaming system in cars so that kids can enjoy their ride. It will
allow this business to entice more customers.
 Trend for renting cars
In the chosen area, i.e. Hertfordshire, there is a trend for renting the cars. 80% of the total
population of United Kingdom lives in urban area which shows that there will be a good market

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for car rental businesses. The entrepreneur has opportunity to set up this business successfully
(Carpenter, Curtis and Keshav, 2014).
 Rapid Expansion of Business
After successful establishment in Hertfordshire, the entrepreneur can expand this car rental
business in other countries by developing franchisee relationship with a well-recognize brand
like Uber, Enterprise Rent-a-car etc. It will provide the further differentiation for the business
and its services.
 Hiring of in-house drivers rather than outsourcing
To operate this car rental business smoothly, the business can hire the in-house drivers rather
than developing contractual relationship with them. It can affect the business operations of
company. In-house drivers will drive the cars and perform their duties responsibly.
Threats
 Competitive Pressure
Competitive pressure is the biggest threat which can affect this car rental business. As mentioned
above, there are various players which may pose competition on this business like Enterprise
Rent-a-car and Sixt Rent a Car. These are the firms which are offering excellent car rental
services at cheaper prices.
 Fluctuations in Fuel prices
Fluctuations in fuel prices can pose threat on the business of this company. If there will be
increase in the fuel prices, the business will need to make changes in its pricing strategy. It can
have adverse impact on its customer base.
 Existence of substitutes
As discussed above, the people in Hertfordshire generally use local bus services to travel from
one place to another. There are various private operators who operate local busses. It can affect
the business of car rental firms (Del Giudice, Della Peruta and Maggioni, 2015).

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Perceptual Map
Perceptual mapping is a practice that is used by the marketers, which display the different
opinions and perceptions of its potential customers (Keller, 2009). Looking at the above research
and competition, perceptual map for car rental business is given below:
Enterprise rent-a-car
Sixt rent-a-car
Section 5: Marketing Recommendations 500
Target Market Segment
The findings of above research show that this business should target its customers considering
different market segmentation characteristics like demographic, geographic and psychographic
characteristics. It should focus on the people based on income and age of people. It should target
the people from age group of 20 to 55 years who wish to travel by private taxis (Hollensen,
Lower Quality
Service
Higher
Quality
Bad safety
Middle and
lower levelQuality with
rider’s safety
Good
safety
Car rental
Business

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2015). This new business should be very trendier so that millennial and business professionals
can enjoy taking the rides of car rental business. In addition to this, the business should target on
the different strategic locations of Hertfordshire, England (Jia, Wang and Xiong, 2017).
Market positioning
To position itself among targeted audiences, new car rental business should use multi-segment
type of positioning so that it can target more than one customer segment in the city (Kathan,
Matzler and Veider, 2016). It should use effective and attractive statement which assists the
business to grab the attention of targeted people. It should place the business by using a slogan
i.e. “Quality rentals to get you moving”.
Product strategy
As discussed above, the organization is planning to provide car rental services in Hertfordshire.
The products and services of the company should include some innovative and unique features
so that it can attract more customers. In the city, it is very common to operate traditional car
rental services. So, this business should offer the services through website and mobile
application. By this, it will be able to make the transportation easily accessible and more
comfortable. Additionally, it should install a big screen for navigation and gaming system in the
vehicles.
Price strategy
Pricing strategy has a significant role in popularity of a car rental business. Considering this fact,
this new business should offer the comfortable rides at the lowest prices possible. In the
beginning phase, it should provide various benefits to the people. For example, it can provide
referral bonuses and cash back offers to its new users (Fan, Lau and Zhao, 2015). Moreover, it
should give promo codes to regular riders so that they can enjoy cost effective rides.
Place Strategy
Initially, the business will be established in Hertfordshire county of England. After successful
establishment, the organization should expand the operations in other cities. It should develop its
website and application which can allow the customers to take a ride. Furthermore, there should
be booking stations and help desks of this new car rental business at crowded areas of city like
airports and shopping centers (He and Shen, 2015).

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Integrated Marketing Communications
It is an important process in marketing and promoting the products and services among targeted
population. This new business should adopt both online and offline media for promoting its
services. The car rental business should be promoted on social media sites like Facebook,
Instagram and Twitter. People are actively using internet sources so it will be the best mode to
approach a large population (Cawsey, and Rowley, 2016). Additionally, the business should use
offline and broadcasting media like newspaper, magazines, TV, radio and billboards. It should
give ads in newspaper so that it can approach to targeted population. By using these sources, the
company will be able to communicate its brand message that this rental business will be offering
excellent riding experience on lowest prices in the city (European Commission, 2016).
Section 6: Conclusion
From the above analysis, it can be concluded that Hertfordshire provides a better marketing and
external environment to this new car rental business. The secondary market research indicates
that external factors may have positive impact on this business. However, there are some
competitors but this business can deal with them by implementing effective strategies and tactics.
This market offers both opportunities and threats to new car rental business where business can
use these opportunities to overcome the potential threats. The recommendations show that the
entrepreneur should implement all the strategies effectively. The focus should be given to the
promotion and advertising process so they can reach to the targeted market segments.

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References
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Cawsey, T. and Rowley, J. (2016) Social media brand building strategies in B2B
companies. Marketing Intelligence andPlanning, 34(6), pp.754-776.
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Keller, K.L. (2009) Building strong brands in a modern marketing communications environment.
Journal of Marketing Communications.

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