END-OF-CHAPTER CASE ZIPCAR: IT'S NOT ABOUT CARS-IT'S ABOUT URBAN LIFE Imagine a world in which no one owns a car. Cars would with promotional pitches such as "We V Earth" and "Imag- still exist, but rather than owning cars, people would just ine a world with a million fewer cars on the road." Zipcar's share them. Sounds crazy, right? But Scott Griffith, CEO vibrant green logo reflects this save-the-Earth philosophy of Zipcar, the world's largest car-share company, paints a And Zipcar really does deliver on its environmental prom- picture of just such an imaginary world. And he has nearly ises. Studies show that every shared Zipcar takes up to 800 000 passionate customers-or Zipsters, as they're 20 cars off the road and cuts carbon emissions by up to called-who will back him up. 50 percent per user. On average, Zipsters travel 44 percent Zipcar specializes in renting out cars by the hour or fewer miles than when they owned a car, leaving an average day. Although this may sound like a minor variation on of 219 gallons of crude oil in the ground. Multiply all this the established rental car agency business, it's actually an out by 11 000 cars in Zipcar's fleet, and that's a pretty sub- entirely different concept. stantial impact on the environment. But it wasn't long before Griffith realized that if Zip- A CAR RENTAL COMPANY THAT ISN'T car was going to grow, it needed to move beyond just ABOUT CARS being green. So the brand has broadened its positioning to As Griffith considered what Zipcar had to offer, it was include other urban lifestyle benefits, based on the most apparent that it couldn't be all things to all people. The common needs consumers have: I don't want the hassle of market for car rentals would have to be carefully seg- owning a car; I want to save money; I take public transit, mented, and Zipcar would have to choose just the right but need a car sometimes; Once in a while I need a sec- segment to target. Griffith identified a segment of the ond car; I need a big car for a big job; and I want to market that was not being served by traditional car rental impress my boss. companies: Not travellers visiting another city, but people Another important benefit Zipcar offers its target who sometimes need a car for a few hours, or a day, in the market is convenience. Owning a car in a densely popu city they live in. People who live in big cities like New lated urban area can be a real hassle. Zipcar lets custom- York, Boston, and San Francisco, who don't own a car of ers focus on driving, not on the complexities of car their own. And students who don't have cars, and occa- ownership. sionally need one. In Canada, Zipcar has locations in Kitchener-Water- FULFILLING CONSUMER NEEDS loo, London, Ottawa, Toronto, Vancouver, and Zipcar operates on a membership plan. To join, you pay Victoria-all of which are university towns. The Zipcar around $60 for an annual membership and receive your concept is also particularly well suited to people who live personal Zipcard, which unlocks any Zipcar vehicle or work in densely populated neighbourhoods in cities, located in urban areas around the world. Then, when you where owning a car is difficult, costly, and environment need a car, reserve one- minutes or months in advance- tally irresponsible. Interestingly, Zipcar doesn't see itself online, by phone, or using a smartphone app. You can as a car-rental company. Instead, it's selling a lifestyle. choose the car you want, when and where you want it, "It's not about cars," says CEO Griffith, "it's about urban and drive it for as little as $7.50 an hour, including gas, life. We're creating a lifestyle brand that happens to have insurance, and free miles. When you're ready, walk to the a lot of cars." car, hold your Zipcard to the windshield to unlock the So Griffith segmented the market, identified a mar- doors, and you're good to go. When you're done, you ket that was underserved, and decided to target it. The drop the car off at the same parking spot-Zipcar worries next step was to position Zipcar in the minds and hearts about the maintenance and cleaning. of consumers. Zipcar not only eliminates the hassle of urban car Initially, the Zipcar brand was positioned exclusively ownership, it also saves money. By living with less, the round a value system. As an urban lifestyle brand, Zipcar average Zipster saves $600 a month on car payments, focused on traits that city dwellers have in common. For insurance, gas, maintenance, and other car ownership starters, the lifestyle is rooted in environmental conscious- expenses. That's like getting a $10 000 a year raise after ness. At first, Zipcar focused on green-minded customers taxes. In an era when consumers have become more 271 272 PART 3 I Designin and Marketing Mix frugal, this is a big plus, especially for those looking to live new members join up at the recommendation of existing more minimally. customers. "When I meet another Zipcar member at a Zipcar isn't for everyone-it doesn't try to be. Instead, party or something, I feel like we have something in com- it zeros in on a narrowly defined urban lifestyle position- mon," says one Brooklyn Zipster. "It's like we're both mak- ing. For starters, Zipcar "pods" (a dozen or so vehicles ing intelligent choices about our lives." And just as Harley located in a given neighbourhood) are stocked from a owners get together on weekends to ride, the Internet is portfolio of over 50 different models that trendy urbanites littered with announcements for Zipster parties at bars, res- love. The vehicles are both hip and fuel efficient: Toyota taurants, and comedy clubs, among other places. Priuses, Honda CRVs, MINIs, Volvo $60s, BMW 328s, As Zipcar has taken off, it has broadened the appeal of Toyota Tacomas, Toyota Siennas, Subaru Outbacks, and its brand to include a different type of urban dweller- others. And Zipcar now has plug-in hybrids, fully electric businesses and other organizations. Companies such as vehicles, and full-size vans for big jobs. Each car has its Google now encourage employees to be environmentally own personality-a name and profile created by a Zipster. conscious by commuting via a company shuttle and then For example, Prius Ping "jogs in the morning; doesn't say using Zipcars for both business and personal use during much," whereas Civic Carlos "teaches yoga; loves to the day. Other companies are using Zipcar as an alterna- kayak." Such personal touches make it feel as if you're bor- tive to black sedans, long taxi rides, and congested parking rowing the car from a friend rather than being assigned lots. Government agencies are getting into the game as whatever piece of metal happens to be available. well. The city of Chicago recently partnered with Zipcar To further eliminate hassles and make Zipcar as con- to provide a more efficient and sustainable transportation venient as possible, company promotional tactics are alternative for city agencies. And Washington, D.C., now designed to appeal to city dwellers. The company's goal saves more than $1 million a year using Zipcar. Fleet man- is for Zipsters to not have to walk more than seven min- ager Ralph Burns says that he has departments lining up. utes to get to one of its car pods-no easy task. "Even "Agencies putting their budgets together for next year are with today's highly targeted Web and mobile technolo calling me up and saying, 'Ralph, I've got 25 cars I want gies, it's hard to target at that hyper-local level," says to get rid of!"" Griffith. "So our street teams do it block by block, zip How is Zipcar's strategy of positioning itself as an code by zip code." Thus, in addition to local ads and urban lifestyle brand working? By all accounts, the young transit advertising, Zipcar reps are beating the streets in car-sharing nicher has the pedal to the metal and its tires true guerilla fashion. are smoking. In just the past five years, Zipcar's annual rev- With its eye sharply focused on maintaining the Zip- enues have rocketed nearly five-fold, to more than $270 car image, the company is consistently developing new million. Zipcar has also reached the milestone of being features that appeal to tech-savvy urbanites. Recently, the profitable. And with 10 million people now within walk- company has shifted its focus a bit from being a Web- ing distance of a Zipcar, there's plenty of room to grow. As based business to being an overwhelmingly mobile con- more cars are added, Zipcar's reach will only increase. cern. Soon, Zipcars will have in-car device holders for Zipcar's rapid growth has sounded alarms at the tradi- smartphones that will allow for easy plug-in and hands- tional car-rental giants. Enterprise, Hertz, Thrifty, and free navigation. The interface between the cars and the even U-Haul now have their own car-sharing operations. users will allow playlists stored on the phone to be played Avis also had one, but decided to shut down its own ser- through the car's audio system. Users will be provided vice and buy Zipcar for nearly $500 million. The Zipcar with information specific to the vehicle they are in, a per- brand will now benefit from cost savings that the large- sonalized deal recommendation service, and a real-time scale rental service enjoys. feedback loop where users can report on vehicle cleanli- As for the others, Zipcar has a big head start in terms ness, damage, and fuel levels. of size and experience, cozy relationships in targeted neighbourhoods, and an urban hipster cred that corpo- FOSTERING BRAND COMMUNITY rate giants like Hertz will have trouble matching. To Zipcar's orientation around the urban, environmentally Zipsters, Hertz rents cars, but Zipcar is a part of their conscious lifestyle fosters a tight-knit sense of customer hectic urban lives. community. Zipsters are as fanatically loyal as the hardcore fans of Harley-Davidson or Apple, brands that have been Sources: Based on information from Mark Clothier, "Zipcar Soars After Profit Topped Analysts' Estimates," Bloomberg.com, Novem- nurturing customer relationships for decades. Loyal Zipsters ber 9, 2012; Darrell Etherington, "Zipcar CEO Details In-Car serve as neighbourhood brand ambassadors; 30 percent of Assistant, Personalized Deals and Member Onboarding for Mobile