1. Car Rental Industry Stephanie Jaw Daniel Lyon Hermela Nadew Samantha Tierney

2. Agenda  Introduction  Industry Structure: Background  Advertising Strategies  Investment Recommendations

3. IntroductionIndustryAd StrategyRecommendation Why Car Rentals? In 2010, $20.55 Billion Market in the US Selling the same product: where is the differentiation? – Price – Customer Service – Convenience Mix between credence and experience good Not a product you keep – not an investment

4. Industry: Background

5. IntroductionIndustryAd StrategyRecommendation

6. IntroductionIndustryAd StrategyRecommendation 1.Enterprise Holdings Inc. (38%) 2.Hertz Global Holdings Inc. (18.9%) 3.Avis Budget Group Inc. (18.5%) 4.Dollar Thrifty Automotive Group (5%) Four Major Players

7. IntroductionIndustryAd StrategyRecommendation Competition 4 Firm Concentration Ratio: 80.4 HHI: 2168

8. IntroductionIndustryAd StrategyRecommendation What service does the industry produce? Service of renting and leasing passenger cars for a short period of time (daily, weekly, monthly) Various rental deals to accommodate the consumers needs – Millage rates, time rates, etc.

9. IntroductionIndustryAd StrategyRecommendation Basic Technology Technologies within the automobiles Online reservation systems and self service kiosks – Direct link to consumer base – Saves cost of acquiring bookings Back office technologies – Centralized fleet acquisitions, rental rates and other business logistics

10. IntroductionIndustryAd StrategyRecommendation How is it distributed? Cars are bought from automobile manufactures (Ford, General Motors, etc.) – Ex. Hertz acquired 31% of their US market vehicles from Ford Use “pools” through independent rental facilities to insure vehicle availability

11. IntroductionIndustryAd StrategyRecommendation Financing of Production Costs Vehicle acquisition and depreciation are the largest costs Vehicle financing programs Sell older models back to manufacturers to gain back some of the cost Tariffs on imported cars effect the cars in a company’s fleet

12. Who uses services? Business Leisure

13. IntroductionIndustryAd StrategyRecommendation Employees Labor in industry is mainly face-to face- consumer contact – Outsource maintenance and other labor intensive jobs

14. IntroductionIndustryAd StrategyRecommendation Industry Structure Barrier to entry and exit: Medium – Capital Capital intensity: High – $1.22 spent on capital for ever $1.00 spent on wages Government regulation: Medium – Federal, state, and local laws – Large petroleum containers – Additional state taxes - Washington

15. Fleet Acquisition Remarket Fleet Distribution Insurance Resale Manufacturers Buy Lease Relationship / Partnership Marketing Online On-Site Location: Airport, hotel, neighborhood Outside Insurance Self-Insured Used car sales Sell back to manufacturer Supply Chain

16. Brand Equity Not in the top 100 brands Small industry Not frequently consumed IntroductionIndustryAd StrategyRecommendation

17. Advertising Strategies

18. Dollars Spent on Advertising

19. IntroductionIndustryAd StrategyRecommendation Target Market Age 35-50 70% Male 30% Female Yearly Income: $40,000+ Urban and Suburban Has Children

20. IntroductionIndustryAd StrategyRecommendation Owns National, Alamo, and Enterprise Largest market share (38%) Spent $78.9 Million on TV advertising in 2011 Not publicly traded

21. IntroductionIndustryAd StrategyRecommendation “Drive Happy” 1% of Enterprises Ad Budget ($.82 Million) Muppets Primarily advertise on: – Suspense/Mystery – Slice of Life – Feature Film

22. IntroductionIndustryAd StrategyRecommendation “Go like a pro.” 30% of Enterprise advertising budget ($23.8 Million) Primarily advertise on: – Professional Football – Golf – News

23. IntroductionIndustryAd StrategyRecommendation “We’ll pick you up” 68.8% of Enterprise Ad Budget ($54.3 Million) Customer Service Primarily advertise on: – College Basketball – Situational Comedy – Slice of Life

24. IntroductionIndustryAd StrategyRecommendation Owns Budget and Avis Has 18% of market share Spent $19.8 Million on TV Advertising 1.81% Ad to Sales Ratio

25. IntroductionIndustryAd StrategyRecommendation “Go budget” 26% of Avis-Budget’s advertising budget ($5 million) Advertises Price and uses Celebrity (Wendie Malick) Primarily advertise on: – Situation Comedy – Feature Film

26. IntroductionIndustryAd StrategyRecommendation “We Try Harder” Uses 74% of Avis-Budget advertising budget ($14.5 Million) Advertise almost exclusively on Golf (98%)

27. IntroductionIndustryAd StrategyRecommendation No other brands Have 19% of market share Spend $16.1 Million on TV advertising in 2011 1.76% Ad to Sales Ratio Primarily advertise on: – Drama/Adventure – Slice of Life

28. IntroductionIndustryAd StrategyRecommendation Commercials: Enterprise Holdings National CommercialAlamo Commercial

29. IntroductionIndustryAd StrategyRecommendation Total Ads by Day

30. IntroductionIndustryAd StrategyRecommendation Number of Ads by Day of Week Number of Ads Number of Ads(Hundreds) Weekends Weekdays

31. Top Daypart by Number of Ads IntroductionIndustryAd StrategyRecommendation

32. IntroductionIndustryAd StrategyRecommendation Top Daypart by Expenditure

33. IntroductionIndustryAd StrategyRecommendation Total Ads by Month

34. IntroductionIndustryAd StrategyRecommendation Ads by Month

35. IntroductionIndustryAd StrategyRecommendation Number of Avis Ads

36. IntroductionIndustryAd StrategyRecommendation Types of Ads Primarily Persuasive Some informative with Price Few Promotions

37. IntroductionIndustryAd StrategyRecommendation Case Study: vs. How Avis’ motto became “We Try Harder”

38. Analysis and Recommendations

39. IntroductionIndustryAd StrategyRecommendation Investments Avis Budget Group Hertz Holdings Volatile markets

40. Investment Tied to the success of airline and car industry – Financial troubles negatively effect car rentals Recommendation: due to financial instability, we would advise to NOT invest in the car rental industry IntroductionIndustryAd StrategyRecommendation

41. IntroductionIndustryAd StrategyRecommendation Advertising Strategy More interactive advertising efforts – Commercials, Facebook, Twitter – Ex. Enterprise and NCAA campaign Start combatively advertising fleet prices – If price is mentioned, consumer assume it’s a bargain

42. Questions?