Strategic Marketing Plan Car2go

June 18, 2013 BMKT 161 Jintao Shao Hongtao Lou Yi-Chien Chen(Claire) YaweiWang(Martin)

1. Executive Summary Car2go is a subsidiary of Daimler AG, which provides car-sharing service in North America and Europe.

Basically, Car2go offers exclusively two-seats cars that

charging by the minute (with hourly and daily rates available). The creativity and multi-cultural appeal of the product will be coupled with a premium price and socially responsible business practices to target young urban professionals. Car2go will compete with the Zipcars and other car rental companies in BC. The financial focus will be on short-term sales, as the company will work on establishing and maintaining brand loyalty among its target markets, which requires reasonable price, diversity of vehicles, a number of service location, and special promotion, such as corporation with Cineplex. Even though car2go may face a big challenge by the marketing improvement, the customers’ need is a significant segment that the company will pay more attention.

2. Strategic Focus and Plan a. Mission statement Recommend new ideas to help Car2go expand their business in British Columbia, including increasing Car2go’s market share and brand awareness in the car rental industry by equipping with diversified vehicles, providing good customer services, and setting reasonable prices. b. Corporate goals Car2go strives to achieve both nonfinancial and financial goals in the coming two years. Nonfinancial goals: o Establish the brand as offering convenient car rental services. 1

o Distinguish the product as convenient and comfortable to those offered bycompetitors. o Create brand loyalty through customer loyalty cards, gift card and social responsibility o Attract special customer group such as environmentalists by providing environmental friendly vehicles. o Provide different kinds of vehicles rather than only 2 seats cars in order to meet all kinds of customers’ needs. o Collaborate with other companies from different industries, such as Cineplex to provide free movies to loyal customers. o Develop brand awareness through social media and professional website about Car2go. Financial goals: o Achieve sales revenue of $2,000,000 by year one o Increase sales revenue to $2,700,000 by year two o Attain a membership increase of 10% by year one o Increase new members to15 % of total by year two c. Core Competency and Sustainable Competitive Advantage Car2go want to increase memberships and revenues in car rental industry with convenient services, comfortable consumption experience and diversity of loyalty rewards. Car2go locates in downtown which is a busy and full of opportunities place. A sustainable competitive advantage will be achieved by annually evaluating the customer needs to ensure the services remain convenient, comfortable, and appealing to a variety of customers.

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3. Situation Analysis SWOT TABLE Internal Factors

Strengths

Weaknesses

Offerings

High quality vehicles, convenience, unique

Less kinds of vehicles, only provide 2 seats cars

Marketing

Significant in using social media, relationship marketing

Restriction of categories of the vehicles

Management

Strategic price, Location

Low face to face orientation and services

Finance

Well constructed plan for expenditures and financial management

Little contributed capital

Social Responsibilities

Low pollution for the environment

Net Profits decrease as expenditures for more eco-friendly products occur

External Factors

Opportunities

Threats

Demographic

A large group of people who have the drive license

Different incomes

Socio-cultural

Environmental awareness

The difference in values, personal privacy

Economic

High GDP & Car rental industry

Industry is effected negatively during recession

Technological

gasoline-powered& electric-powered, usage of social media and smartphone apps

Limited funds for technological advances

Competitive

Flexible time renting, low price, easy parking, and market growth

Lack of kinds of vehicles

Regulatory

Under the protected and equal standard

Hard to control danger and impair driving

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Growth strategies Market-Product Analysis  Market penetration 1. Price Adjustments: One common market penetration strategy is to make price adjustments. By lowering prices, the business hopes to generate more sales volume by increasing the number of units purchased and to make prices more appealing to consumers when compared to the competition(Chris). In this case of car2go, the company decides to decrease their listed price by hourly and daily. 2. Increased Promotion: Companies may choose to increase market penetration through greater promotional efforts. They may launch an advertising campaign to generate greater brand awareness or implement a short-term promotion with a finite ending date. A promotion is often linked with pricing, such as advertising a special sale price for a limited period(Chris). 3. More Distribution Channels: A company can attempt to increase market penetration by increasing the methods it uses to get products into the hands of consumers, making them more readily available. For instance, car2go could establish some official car rental offices that may continent for the customers(Chris). Apart from this, the company should have the relationship with some car selling companies and get the permission to leave their cars there. 4. Product Improvements: Making product improvements can be used to create new interest in a stagnating product or to offer an extra benefit when using it. Consumer products manufacturers have often used the "new and improved" claim to entice customers to give a product another chance or to improve the perception of quality. Companies can also change 4

the product's packaging to give it a more modern design that might appeal to a younger customer base(Chris).  Market development 1. Expanding Geographically: Geographical expansion works well for a company that wants to expand its service territory because it needs a physical location to serve its customers. Many of the big boys of business, including McDonalds, Wal-Mart, and Home Depot, have exported their operations to other countries(strategically speaking blog). For car2go, the company can expand more areas in airport, universities, or other cities that do not have car2go. 2. Reaching into new market segments: You can also grow by reaching a completely new set of customers or market segments. This area is such a popular growth strategy because you leverage the products and services you already have developed. Product development New product development is an important way for businesses to stay ahead of the competition and continue to appeal to the changing needs of existing customers. In addition, new product development can open up new marketing channels and help to increase market share. For instance, car2go may introduce new types of vehicles, such as SUVS, 4 seats cars, or small trucks. 1. Customer Needs: A classic strategy for product development is simply focusing on customer needs. "Necessity is the mother of invention" they say, and this is certainly true when it comes to new product development strategy. Having a problem and coming up with a solution to solve that problem has generated a wide range of new product ideas from the wheel to the Twitter applications that pop up virtually every day. Spot a need and 5

then take steps to fill it(Leigh). 2. Brand Extension: Brand extension is a common strategy for new product development. Brand extension simply involves using a commonly known brand name to introduce another similar, but different product(Leigh). For instance, car2go only have smart cars, so they can bring different kinds of brand, like BMW, HONDA, TOYOTA, and so on. This changings will face different needs for customers. 3. Technology: Companies that can strategically identify opportunities to capitalize on technology to provide products and services more conveniently, less expensively and in new ways, can stay ahead of the curve and avoid the unfortunate situation of having their products and services become obsolete(Leigh). Diversification A product diversification strategy is a form of business development. Small businesses that implement the strategy can diversify their product range by modifying existing products or adding new products to the range. The strategy provides opportunities to grow the business by increasing sales to existing customers or entering new markets(Lan). As car2go, the company may introduce different types of cars with different brands in different location in BC.

4. Marketing and Product Objectives a.

Objectives

In order to help Car2go grow their business in British Columbia, the current objectives include establishing a presence in the premium in the car rental industry by providing different kinds of vehicles, good customer services, and reasonable price. Brand awareness will be improved by a comprehensive social media promotion plan, 6

own official websites for B.C. Also, the customer loyalty will be built by points’ card and discounts. In addition, sales objectives involve attaining sales of $2,000,000 for year one. At the end of first year, customer evaluation will be accessed, and the company is going to make some changes to increase customer satisfaction. Besides, the number of people who sign up for Car2go Company’s membership would be 360 for the first year. b.

Target Market

Car2Go will primarily target young urban people whose age is from20-35 living or working in Vancouver. The individuals will be university graduates working in a professional setting. The company will provide new vehicles, such as SUV, 4-seats cars, and small trucks. Due to the differences of income, we offer different reasonable price for different vehicles. Also, they are appreciative of cultural diversity and admire social responsibility. c.

Points of Difference

Basically, Car2go offers exclusively two-seats cars. It only fit a small group of people. According to this restriction, car2go is going to corporate with different car companies to bring new types of vehicles, so the customers can have more choice. Also, car2go will have a partnership with Cineplex. The customer can have free movie tickets by consumption in car2go through point’s reward. In addition, they provide face-to-face service to solve the problem and delivery the cars when the customers cannot reach their vehicles or in trouble. d.

Positioning

The image is used to identify the brand Car2Go, a subject of public interest. The entire logo is used to convey the meaning intended and avoid tarnishing or misrepresenting the intended image. To appeal more customers, the company will communicate through the new official websites for BC and social media, for instance; 7

car2go will post some events, campaigns, and reward information. 5. Marketing Program  Product strategy a. Product/Service Components i.

Product

Offer Smart vehicles that are easy to use, technologically innovative and environmentally beneficial to achieve car2go’s marketing and strategic objectives. ii.

Service

The website and Go2Car application(app has already available on ios and android)provide up-to-date information on rates, user guidelines, quick rent services and vehicle locations that save the consumer’s time. Registration is designed for simplicity, security, and speed for maximum ease of use. b. Branding i.

Brand Personality:

car2go will position itself as a flexible, innovative, and eco-friendly alternative to owning a car in Vancouver. The capacity for one-way trips, no reservation requirement, charging by the minute, and undesignated parking provide flexibility. Innovation is delivered by advanced telematics, onboard touch screen, GPS, Go2Car mobile application, and easy access license chip. Offering small, fuel-efficient vehicles and pursuing an electric fleet achieve environmental differentiation. ii.

Brand loyalty

Car2go membership card is a onetime life card without any monthly fee. People can reserve their car when they need. We are much consider about user Experience, We always believe positive feedback loop will translate in to a product demand by building a familiar relationship and sense of ownership with the brand. iii.

Brand Name 8

“CAR2GO” implies quick service that will get you wherever you want to go, acknowledging the target market’s need for instant gratification. car2go colors are distinct from other brands and cover vehicles to promote brand recognition.  Pricing strategy a. Pricing factors considered Price consists of a one-time registration fee and a rate based on usage time: $0.38/minute, $13.99/hour, $72.99 for 24 hours and $0.45/km after 200 km. car2go uses “odd pricing” based on the psychological theory that it will elicit a greater demand for the product. b. Pricing objective To support the goal of becoming the first choice alternative to owning a car and to translate 35% of Zipcar and modo users into car2go users. 11,000 (Zipcar) + 7,000 (modo) = 18,000 total members. car2go is committed to attracting 6,300 of these members. c. Special adjustments Provide car2go gift card which people can choose different price of card and they can get $5 discount if they purchase up to $100 every time. The car2go gift card is flexible to recharge and do not have minimum charge. d. Quarterly target revenue projections for the first 12 months Increase total revenue per member per period by 5% in the first 12 months. 

Revenue per member is estimated at $75 per period (Zipcar, 2011)



To increase by 5%, next period’s usage minutes must increase by 11 minutes per member.

i.

August 2013- October 2013: $472,500

ii.

November 2013-January 2014: $496,125

iii.

February 2014-April 2014 $520,931 9

iv.

May 2014- July 2014: $546,977

 Distribution (Place) strategy a. Marketing Channels The marketing channels will involve the user experience and also a good service.To maximize product exposure by securing designated parking spots where the target market lives and works will achieve high visibility and awareness, contributing to all three of marketing objectives. b. Specific location and rationale  Service Area i.

The current operating area does onlyUBC campuses, downtown Vancouver, and North Vancouver.

ii.

Other car sharing companies operate Downtown, North Shore, Burnaby, New Westminster, SFU, and UBC.

iii.

Plan expand car2go service area, will operate Burnaby, Richmond, New Westminster and Coquitlam in next 3 years.

 Promotional strategy a. IMC objectives i.

Objective

car2go’s promotion objective is to combine interactive and traditional media(Youtube ads, TV ads and poster on bus or stations) and become the first choice alternative to car owning and capture 20% of the current market share. ii.

Loyalty

Car2go's primarily job is to create a good relationship between Car2go and Customers, The purpose is try our best in order to satisfy customer that make these people trust, believe and like Car2go. These customer will threat car2go as one part of life. When they consider rent a car, car2go will always the first choose. 10

b. Target Audience “Young Urban Singles, 20-35, living and working in Vancouver” “Young Urban Singles, 20-35, living, working and studying in UBC campus” “Young Urban Singles, 20-35, living and working in North Shore” Sum up Car2go's currently target audience is young urban singles, car2go is the car sharing company which provide innovation, quality, eco-friendly and integrity. However, when other age of people get the idea and concept of car2go. They may become car2go's next target audience. c. Allocate budget The whole $50,000 budget will be divide as 5 parts. First, TV commercial will cost $19,000.In addition,Youtube In-Stream ads will cost $0.04 per viewer (Search Engine Watch, 2012). Transit/Bus shelter Posters cost $50/shelter ad (LinxPrint, 2013).Sponsored tweets and Facebook ads will also cost $5,000 per year. Finally, car2go plan to cooperate with Cineplex cinema, the total cost for this part will be $15,000. d. Promotional Program car2go will primarily communicate through TV ads Facebook, Twitter, Transit/Bus shelter Posters and YouTube. Videos will include commercials and customer-created content to be shared through friends, create buzz, and encourage word-of-mouth about the brand. Poster will include brand name, logo, basic concept about car2go(like eco-friendly, touch screen ect ) These channels allow car2go to manage the message, update instantly, and are inexpensive except TV ads. And car2go will have a partnership with Cineplex. The customer can have free movie tickets by consumption in car2go through point’s reward. e. Rationale 11

Social media and electronic newsletters are utilized, as the target market responds well to car sharing branding.Online and viral marketing costs will increase after the first year in order to sustain online engagement. In addition, when car2go accumulate more and more customer, Sales and marketing expenses will decrease as a percentage of revenue in the future. 6. Budget a. Year 1 sales projection YEAR 1

Attracted customers

August 2013- October 2013

6100

$472,500

2013-January 6250

$496,125

February 2014-April 2014

6390

$520,931

May 2014- July 2014

6510

$546,977

November 2014

(units)

Projection ($)

b.Operational budgetfor incremental, growth-related business Volume

Total Budget (Year 1)

Field Team Salary

20 new customer offices

$100,800

Customer gift Cards

10,000

$3,000

Website

1 Time

$5,000

Website Maintenance

Once a month

$1,000

charity

1 Time

$20,000

CSR-environment theme activity

1 Time

$10,000

Volume

Total Budget (Year 1)

TV commercial

N/A

$19,000

Sponsored Tweets and Facebook Ads

N/A

$5,000

Youtube In-Stream ads

$0.04 per viewer

$6,000

c. Promotional Budget

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Cineplex cinema

N/A

$15,000

Transit/Bus shelter Posters

$50/shelter

$10,000

7. Evaluation and Control By reviewing and interpreting business reports in both financial and managerial accounting approach, we will recognize company’s performance to make the evaluation. In advance, we will have different results to make any adjustment for different departments. Firstly, Car2go Company would have financial accounting report in order to present the company operating condition for external users. For example, by looking at income statement, we will have the list for Car2go Company’s revenue and expenses, in order to calculate the gross margins. By viewing at cash flow and balance sheet, Car2go Company will clearly know its arrangement of property and debts. Moreover, it will also show the dividend and share’s price to indicate Car2go Company’s popularity and profits. On the other hand, while observing the managerial accounting report, Car2go Company will have the formal analysis reports for internal users. To avoid from the perceptions of social network, it is significant to have well organized inventory and cost management to control good and service’s quality and quantity. In addition, Car2go Company already has the computer system to record members’ data and contact information; therefore, it is able to record the number of the memberships that is signed up per year. By calculating the number of Car2go members, the company can know its reputation and expansion.

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Bibliography Chris, J. (n.d.). example of penetration strategies. Retrieved from Chron: http://smallbusiness.chron.com/example-penetration-strategies-11699.html Lan, L. (n.d.). product diversification strategy. Retrieved from Chron: http://smallbusiness.chron.com/product-diversification-strategy-40375.html Leigh, R. (n.d.). examples of product development strategy. Retrieved from Chron: http://smallbusiness.chron.com/examples-product-development-strategy-3219. html strategically speaking blog. (n.d.). Retrieved from my strategic plan: http://mystrategicplan.com/resources/how-to-choose-a-market-development-s trategy/ Zipcar (2011, May 13) Form 10-Q Quarterly Report. http://ir.zipcar.com/secfiling.cfm?filingID=1193125-11-139687

LinxPrint. (2013, June 10). http://www.linxprint.com/products/transit_ads/. Retrieved from LinxPrint. Search Engine Watch. (2012, April 25). http://searchenginewatch.com/article/2169740/YouTube-Advertising-Options-for -Budgets-of-All-Sizes. Retrieved 6 10, 2013, from Search Engine Watch.

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