Avis Rental Car in Singapore: Marketing Analysis

Introduction

Avis is one of the car rental companies with a strong brand identity all over the world. It has its origin in the United States of America. Avis always promises its customers the extra mile in terms of its service quality. Avis is an international reputed company which is engaged in the renting of cars and truck around the globe where the company is headquartered in Parsippany, in the USA. Avis functions under two major brands viz. Budget and Avis.

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In the travel industry around the world, Avis offers a competitive car rental package to leisure, commercial, and premium segment. For conscious travelers, Avis offers low rental cars, which are in the ambit of Avis budget operations.

Avis functions at various locations around the world, including Singapore, and it operates about 6500 trucks and cars at various locations in the US, Australia, Latin America, Canada, New Zealand, the parts of the pacific region, and the Caribbean regions. Axis owns more than 350,000 vehicles which it is using for its renting a car operation around the world, including Singapore. Around the globe, more than 23 million vehicle rental transactions had been completed by Avis in the year 2009. (ICD Research, 2011).

SWOT of Avis Singapore

Strengths

The Avis Singapore operation was initiated in the year 1972 and since then it has grown steadily to the point of launching four other operations in Singapore. Avis Singapore is the second-largest branch internationally and ranks fifth in the Singapore market. Its key strengths are strong pricing performance, taking of orders and billing and processing of payments completely through automation. Avis Singapore has exceptional supplementary services hence making it a preferred brand. (Ho 2010, p. 1).

Avis, Singapore offers a variety of luxury cars like Toyota Vios, Toyota Altis, Toyota Camry, Kia Picanto GL, MPV Honda, SUV-Nissan x starting from just $75 per day to $109 per day. Avis, Singapore also offers business promotion schemes like a discount, coupon, promotion incentives either by itself or in collaboration with other business partners or affiliates. (Ho 2010, p. 1).

Weakness

The main competitors of Avis Singapore are: Comfort Delgro, Orix Corporation, Hertz and C & P Rent-A-Car. Car rental market in Singapore is not such booming due to the cheap and good system of public transport; this has contributed to the competitive nature of car rental industry in Singapore.

There is also a low barrier of entry into the car rental and leasing market hence leading to an increased number of players in the sector, especially when it is compared to the large authorized car rental companies like Avis that have caused the car rental charges to surge and become more competitive. Cut-throat competition and low barrier to entry have compelled Avis to enhance and assert their standing in the Singapore market. Avis needs therefore to continue increasing its services and to meet the expectations of the customers (Auto 2004).

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The Singapore car rental and leasing sector are affected by the following factors: car ownership, infrastructure in public transport, off-peak cars, and low entry barriers. Car ownership in Singapore is a costly investment due to high import duty, high costs of maintenance, and a strict regulatory environment that require an owner to have a certificate of entitlement; rapid depreciation is also a matter of concern among car owners. All these make the car use as the core service for renting and leasing companies. The prospects of Avis, Singapore are impacted by the above factors (Ho 2010, p. 1).

Opportunities

Avis is a well-known name and a global brand in the car rental industry and it operates in more than 160 countries and operates approximately 5000 rental outlets. Avis Singapore has an unmatched reputation and a wide variety of services that are instrumental in eliminating perceived physical and psychological risks for the kind of customers who value reputation and service quality. Expatriate in Singapore often chooses to stick to household names in the industry like Hertz and Avis since they considered small dealers to be a risk in a foreign country (Ho 2010, p. 3).

Avis has embraced the Smartphone technology as their customer service function; customers can easily rent a car by using their handsets. Avis, Singapore, introduced GPS to minimize the number of its customers who get lost for direction; it has simplified their rental contracts and provided possibilities for its loyal customers to hire their Aston Martins (University of California 2011, p. 83).

Avis spiced its services by introducing Avis interactive, which is an internet-based information management system to manage its fleet hence becoming the first car rental company to implement it (Avis n.d, p. 1).

The pre-booking mode of rentals is much possible with Avis, and it is safe since it cannot fail overnight. Avis has various types of cars from the common to sub-compact luxury hence one can easily find his or her selection, whether it is a money-saving one or a rental to impress a fresh client. Avis has various deals on different cars and in various locations; this can enable the customer to save his money for future rentals (University of California 2011, p. 83).

Threats

Rising fuel prices may be one of the reasons for Avis Singapore operations to have a thin bottom line. Retention of employees and their availability also pose a great threat to Avis, Singapore. The fares for buses and trains in Singapore are considerably low; there are also low fares for taxi hence making traveling around Singapore easily. These are among the challenges that are faced by car rental companies like Avis in Singapore. There is also the Private Car Rental Scheme introduced by the Singapore government that is considered to be the greatest challenge to the car rental and leasing market for companies like Avis Singapore (Ho 2010, p. 1).

Recommendations on How Avis Singapore can Increase its Market Share to better Compete with the Top Four Car Rental Companies in the Singaporean Market

When Avis was ailing sometime back, Robert Townsend of Avis introduced a very famous advertisement namely ” We Try Harder ” which was coined by an advertising agency, mainly to search for a competitive benefit that appeared to be ” try harder ” probably since they had to do so. At Avis, this had been regarded as one of the highly triumphant turnaround stratagems, and it should be observed, at the initial stages, this was opposed from the outset from top executives who had a more traditional experience in the car rental business.

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It is suggested that Avis Singapore should try to adopt the same methodology to improve its business in Singapore. Efforts should be taken by Avis Singapore to coin such an attractive slogan and should make continuous advertisement in the media so that it becomes the number one rent a car company in Singapore thereby pushing back all the other present front runners (Hooley & Graham 2008, p.148).

For instance, Enterprise Rent-A-Car observed that its customers did not prefer to have to come to their office for availing services. Hence, Enterprise started to deliver its vehicles at the doorsteps of customer’s offices or their residences. Hence, to improve its business, Avis Singapore should introduce such business strategies. Further, Disney understood that some of its loyalists are not liked to wait in long queues. To overcome this, Disney started to offer FastPass at some premium price that permits its loyalists to shun waiting in long lines to see its theme park. It is suggested that Avis Singapore should peruse the same strategy to attract and retain its patrons (Gitman & McDaniel 2008, p.290).

For example, Enterprise Rent-A-Car introduced an evaluation technique namely ESQI (Enterprise Service Quality Index). It is nothing but a customer satisfaction feedback form. The ESQI form will consist of a few questions viz. 1) the rating by a customer about his satisfaction level.2) It will ask the customer, whether he is interested in availing of service from Enterprise in the future also.3) the form will have also questions, which will touch on the cleanliness of the vehicle used, the speed of the transaction, and the approach and helping tendency of employees of the Enterprise. (Mehra et al 2009).

The results from the ESQI have tremendously assisted Enterprise to know what obliges the customer contentment. It has been demonstrated in ESQI that customer satisfaction has a direct effect on the company’s profits and sales.

Further, Enterprise has initiated a promotion policy and annual increment and performance bonus for its employees which were directly linked to customer satisfaction markings. This has made a sea change in the employee’s attitude towards customer satisfaction. Further, Enterprise organized a frequent employee’s orientation program which helped to teach the employees how to take care of their customers.

This has also resulted in high employee satisfaction ratings, which resulted in a fantastic increase in their sales figure. Due to highly motivated employees, Enterprise has achieved a fabulous increase in its sales revenue from just $2 billion in 2004 t a whopping $ 7 billion currently. It is suggested that Avis Singapore should also adopt the same strategy of Enterprise like feedback from its customers, linking employee’s promotion and annual increments with that of customer rankings will make it number one in the car rental industry in Singapore.. (Mehra et al 2009).

In the case of rent, a car company that predominantly concentrates on airport services may not see a customer once again but Enterprise concentrates on providing enduring happiness to its local customers which is more essential to the bottom lines of the company. It is suggested that Avis Singapore should follow the same strategy to improve its customer base in Singapore. (Mehra et al 2009).

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To improve its performance, Avis Singapore should expand and peruse novel technologies to have a longstanding presence in Singapore’s market, to offer to the customer the best customer services and the greatest magnitude of convenience. Avis Singapore should add more fuel-efficient cars in its fleet to remain as a green company which would reduce its variable costs and will enhance its profitability. (Mehra et al 2009).

It is suggested that Avis Singapore should also penetrate the Malaysian market which is a neighboring nation of Singapore as it is having a wide market than Singapore, and its successful Malaysian operation would make it number one in the rent a car service operator in the region. (Mehra et al 2009).

Apart From the Forces Mentioned in This Case Study, What Other External Forces or Factors Might Affect Singapore’s Car Rental Market?

No doubt, rent a car industry in Singapore is a “bloody “business due to its tight margins and competitiveness, it is also an industry rampant with new opportunities for exploring new technologies. Rent a car industry can derive many benefits from novel methods of information processing and automation as a way to accomplish growth and to increase its bottom line. Avis Singapore can minimize its operating costs by about 30% by not downsizing its employee strength but by increasing its automation technology. With further investment in the up-gradation of automation technology, Avis Singapore can have maximum control and command over its operations and assets. (Richman 1991, p.75).

For developing its business in Singapore, Avis’s management in Singapore should concentrate more on cultivating relationships with car insurance agents, car body shops, and auto dealers who can secure more business for the company instead of relying more on travel agents.

More attention should be paid by Avis Singapore to the infrequent leisure traveler by providing not only more competitive rates but also by providing services like offering directional advice, recommendations on the good restaurants and to assist them with their luggage. Tie-up with famous restaurants may help Avis to increase their profits from the commission earned through customer referrals. (Besanko et al 2009, p.480).

Despite its leading market position and excellent customer services, the trend for car renting, incorporation of the internet on its services, big presence on the airport, and targeting of green customers are some of the gray areas that Avis needs to target.

Avis should capitalize on its strong brand and international presence in the Asian market to realize its potential in the Singapore market, and they should move away from airports and orient its market towards non-airport operations (Indiana University 2010, p. 67).

The external market forces that directly affect the car rental market in Singapore have forced Avis to reconsider and evaluate their business interests to effectively deal with the changing threats in the market. Avis through their market slogan ‘we try harder’ has gained prominence in the 21st century. In its marketing campaign launched in 1963, Avis acknowledged and accepted the number two position in the USA and that it could not directly compete with Hertz that is the world’s number one car rental company.

The slogan forms part of the company’s corporate culture and in Singapore, it is still trying harder to amass a large market share and to expand in size. Avis capitalizes on its legacy and strength to follow and meet the dynamic customer needs. The management of Avis emphasizes meeting customers’ demands like safety, price affordability, and moving their brand beyond expectations. For future expansion, an analysis of the current market is critical.

References

Auto 2004, Advantages and Disadvantages of using Avis. Web.

Avis n.d., Avis: Still trying harder. Web.

Besanko, D, Dranove, D, Shanley, M & Schaefer, S 2009, Economies of Strategies. John Wiley & Sons, New York.

Gitman, L J & McDaniel C 2008, The Future of Business: The Essentials, Cengage Learning, New York.

Ho, L 2010, Case Study 1 Avis car rental in Singapore: have they tried harder? Minot, Minot State University.

Hooley & Graham H 2008, Marketing Strategy and Competitive Positioning, Pearson Education India, New Delhi.

ICD Research 2011, ‘Avis Budget Group, Inc. Company Profile and Swot Analysis, Marketing Strategy and Competitive positioning’. Web.

Indiana University 2010, Business two-point-zero, Media Inc, Indiana.

Mehra, N, Zephir, M, IIous,D, Patel ,D & Sultan, L 2009, ‘Enterprise Rent –a-Car’. Web.

Richman, D 1991, ‘Turning the Full Impact of automation on the Car-Rental Industry’. CIO, 6, 75-77.

University of California 2011, Singapore business, Volume 4, Issues 7-12, Singapore Press Holdings, California.

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