Importance of Market Segmentation and Positioning
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.
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 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 Market Research and Sources
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.
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 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.
Key Findings and 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:
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 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 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.
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.
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).
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.
Recommendations
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 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).
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.
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:
- 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 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.
- 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).
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:
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, 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).
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”.
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.
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.
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).
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).
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.
References
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