Zipcar Case Study Group

Nova Southeastern University
H. Wayne Huizenga School
of Business & Entrepreneurship


Assignment for Course: ISM 5014
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Title of Assignment: Group Case Study – Zipcar

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Zipcar is a company that shares cars among members only. The company is managed with a small team. There is almost no interaction between the employee s and the customers. Because the cars are built with wireless technology capabilities Zipcar is able to monitor its car anywhere. For instances, if a member leave the headlight on of a rental car while not using the car Zipcar can see it and send a message to its member. This sophisticated technology gives information about car’s availability, location, type. Members receive a zipcard who allow them to make reservation and unlock their rental car. Also members have access to a social media to read or add any type of comments about Zipcar services. Members can make reservation through the phone or online for few hours or for the entire day to the home city at any location for any type of car. The charge will be only for the time using the car. Insurance, gas and parking fees are included in the fees. Members pick up the car at the parking lot or the garages by swiping their cards on a windshield reader. They return them to the same site. To be an active member a monthly fee is required plus an additional fee when there is a car’s reservation. The goal of the company is to eliminate the time for customers to come in a rental car facilities to wait hours to rent a car.

  • What happened?

2. What was the cause?

The cause for Zipcar going a different way than the traditional car rental company is the demand for short-time car renting. Travelers all over the world may prefer to drive a car in a different city in order to be able to drive wherever they want without having to wait for a taxi or having to take specific bus routes. Travelers in the past were forced to taking buses or taxis in different cities because they only needed transportation for a few trips in few hours, and car rental companies only offered their cars to be rented for at least a full day. Zipcar acted quickly on this demand and started the renting of cars for only a few hours. The need for few hours of transportation for fast travelers as well as the availability of locations for car pick up were the cause for Zipcar’s business.

The impact of car sharing in city environments is noticeable with reduce car ownership, leading to less traffic congestion, fewer parking concerns, miles driven and more environmentally friendly cars on the roads. The average cost savings of $435 per month compare to the average price from owning a maintaining a car in a city was another important noticeable factor. Zipcar had a tremendous impact in people’s mind showing and proving that the impossible, was possible.

  • What was the impact? 

It created a new profitable category for transportation; turning it into a unique life style brand. It was a cost effective, friendly, and an alternative to car ownership.

Zipcar impact in the car rental business was very attractive due to his low rental rates an hour and its benefits with it, like gas, insurance, and designated parking. Low cost, ease of use and the convenience of having a Zipcar within blocks of where people lived and worked became essential elements for its continuous growth and success.

Zipcar also impacted people’s economy and indirectly helped public transportation too. After been a Zipcar member for a while; members reported saving more than $500 per month and increasing walking, biking, using public transport, and less driving.

One of Zipcar’s biggest impacts was in colleges and universities. It business model opened opportunities for students who didn’t have a car and couldn’t afford one either. Zipcar was recognized not only for its success on rental cars business, but also for its unique technology.  Zipcar had to build its technology since this type didn’t exist. They had to build everything from the in-vehicle technology to the reservation system. Their innovation and unique technology took an automobile for an individual and made it work just as well for many drivers. Its technology impacted across North America as the “next big thing” was definitely a key for their success over any other rental car company.

There was a niche market in which Zipcar saw an opportunity to provide customers an alternative to car rental services and car ownership. Zipcar found an innovative way to provide services to customers who were interested in renting cars from a couple of hours up to full days. Their response to this need was to provide customers with rental vehicles that were available for pick up at various locations around the city. Zipcar made renting a vehicle a convenient, easy and hassle free task. Interested customer could become members and rent a vehicle depending on their specific needs. Zipcar has monthly plans that accommodate the users need and the driving rates that are offered include gas and insurance for the customer. This is something that is different from the traditional rental services that require renters to bring the vehicle back with the amount of gas that was provided at the time of rental. Zipcar took into consideration the many hassles of owning or a car and created a solution. With Zipcar customers are able to rent car at a fee that is not subject to price increases due to peak-time renting, flexible rental timing, insurance coverage included, gasoline charges included and free parking in assigned areas. Customers are to make reservations online and with the tap of their Zipcard they were driving to their needed destination. Zipcar also saw a need for businesses; according to NASDAQ (2014) “The Zipcar for Business program that offers discounted driving rates Monday through Friday. This program helps businesses save money, meet environmental sustainability goals and reduce parking requirements by providing their employees with access to Zipcar’s for business needs and other uses”. Zipcar used technology in order to provide its customers with 24-hour rental services and allowed the customer an online social media platform where they could engage in interactions with other Zipcar users and share their Zipcar experiences.

  • What was the outcome?

Not only is the public catching on to the Zipcar trend, businesses and schools are also getting involved with the car-sharing company. According to Keegan (2009) “About 8,500 companies have signed up for the service, including Lockheed Martin (LMT, Fortune 500), Gap (GPS, Fortune 500), and Nike (NKE, Fortune 500). So have 120 colleges and universities, such as Carnegie Mellon and the University of Miami.

Keegan, P. (2009). Zipcar – The best new idea in business. CNN Money Fortune Magazine.

Retrieved from

Zipcar had numerous concepts and theories that led them to become so successful. The use of well-placed technology allowed Zipcar to keep a small and efficient staff. In the current world technology is growing and human interaction is diminishing. Zipcar is simply riding on the coat tails of this trend by minimizing the usual interaction necessary when renting a car. It eliminated the hassle of paper by automatically billing your credit card and allowing customers to view or print their statements or receipts online. A concept that also worked was the fact that customers can rent a car through their IPhone or Andriod app. This eliminated miscommunication between renter and Zipcar by putting all responsibility on the renter. Up-to-date technology also is a theory that works. For example, they fit all of their rental cars with technology that allows them to be informed when a customer leaves headlights on that we all know can kill a battery in minutes. A great marketing theory is the fact that Zipcar created the word Zipsters for their customers. This created a huge buzz on social media and allowed customers to post feedback and ideas.

  • What concepts and theories did you notice in your examination that worked and if so, why? 

6. What concepts and theories did not work or were ineffective and if so, why? 

A concept that may not work with Zipcar, is the availability of cars. When you go to rent a car in an airport, there is usually a huge parking lot full of different car models. Renting with Zipcar, one is not always guaranteed the car they are looking for in the places they are looking for because you never know if the previous renters could not make it back on time. 

Zipcar started with very low rates, and quite appealing benefits to gain customers quickly.  However, Zipcar’s owners had a few miscalculations at the beginning of the business. This led them to do a quick, and soon rise in prices to at least break even at the end.

Due to this, they lost some of their customers and with them some profit. It was only after they started investing in more noticeable marketing that they recovered customers that were lost before, and gain even more new ones. The lack of partnership was reflected in their business until they took the decision of spent some time and invest in partners.

Discussion Questions

Potential threat of new Entrants: The potential for new entrants to get in the market is very weak. Some traditional car rental companies have used the same business model as Zipcar, among them are Hertz on Demand, Enterprise’s WeCar, UHaul Car Share and Daimler’s Car2Go. Zipcar has regional competitors such as City CarShare in the San Francisco Bay, and I-GO in Chicago. Zipcar has even inspired new company including RelayRides and Getaround. Some international company has replicated Zipcar business model which are Ehi in China, Zazcar in Brazil and Zoom in India. This conclude Zipcar will need to develop a method to block the competitors to replicate its business model.

  • Analyze the business model of Zipcar using Porter’s five forces model.
  • Bargaining Power of Buyers: Zipcar had a niche market. Thus, as the case stated, Zipcar was the perfect answer for customers who wanted to rent a car for a few hours in their home city. They saw a great advantage in utilizing their technology contrary to the traditional car rental methods. They eliminated customers having to wait in lines for a higher rental cost. Customers were instead guaranteed to have the car of their choice. Zipcar’s convenient rental process definitely creates a big differentiation within competitors, giving them a sustainable advantage.

    Bargain Power of Suppliers: The Company owns their cars, which means the cars are available when customers need them. Also the company has strong relationship with the gas stations to allow customer to fill their tanks when need it. Suppliers such as Ford also have business with Zipcar’s competitors like Hertz. Based on that, they could exert pricing power over Zipcar. However, if Zipcar has other suppliers, it can continue its business with less risk of having to increase its prices to compensate from his suppliers. Zipcar can also have agreements and deal with its suppliers to ensure its benefit from them.

    Threat of Substitute products: Zipcar has quite a few threats for substitute products. Some of them are car ownership, public transportation, biking, walking. It’s up to the company to engage and work in innovating themselves to be attractive to customers. Having a low price and including insurance and gas in their rates are things that make them appealing.

    Industry Competitors: Hertz is their biggest competitor since they are also in the car sharing business. Hertz has good technology in its vehicles too. Things like a free audio-kit system that Zipcar doesn’t have. This creates a comparative advantage over Zipcar. Hertz members can connect with a care center representative for questions, assistance, or even extending their rental. It also allows Hertz’s representative to communicate with the vehicle to unlock, and locate vehicles.

    2. Discuss the synergy between the business synergy of Zipcar and information technology.

    There is a very complete and important strategy and synchronization between Zipcar and information technology. IT is a key part of Zipcar’s success. High technology is helping Zipcar bring the convenience of its primary goal. Technology was not only the key that allowed this business model to develop successfully; it was also encouraging the community in an easy way to support and develop around the idea. The community could participate by sharing their personal experiences in their online community Zipsters.

    3. What network effects are part of the strategy of Zipcar and informational technology? How do they add value?

    Zipcar created a platform where their customers could interact and share their thoughts on the Zipcar concept. Through social media networking technologies, Zipcar developed an online community for its members, whom they called Zipsters. On the social media platform, Zipsters could share their “Ziptrips” and interact with other Zipsters. Zipcar uses its Zipsters as a tool to obtain feedback from its customer’s experiences. A blog, or social network, allows people to be more honest and speak their mind more so than they would in person. Through technology and social media networking Zipcar was able to create a buzz about their product while also getting feedback from their customer at the same time. What better way to add value than to have current users share their positive experience with other users of the product. The feedback collected adds value to the business by helping them focus on improvements that could potential be the difference between keeping current customers and increasing new potential customers.

    4. As the CEO of Zipcar, where is your most threatening competition? What would you do to sustain a competitive advantage?

    I believe Zipcar’s most threatening competitions are the other car rental companies as well as regular transportation such as taxis and buses. 

    To sustain a competitive advantage over taxis and buses, I would increase the amount of cars available and the locations available for pick up. This will increase the availability for people to find cars at more convenient times in more convenient places. To sustain a competitive advantage over car rental companies, I would lower the price for the hourly rental of cars, it is important for a customer to pay a lot less for a car used in a couple of hours, than rent a car for a whole day for a small price difference.


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    Bary, A. (2011). Is zipcar’s new model reliable? Barron’s, 91(17), 19.

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    Keegan, P. (2009) . Zipcar – The best new idea in business. CNN Money Fortune Magazine.

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    NASDAQ OMX . (2014, Mar 26) . Houston — “We Have Zipcar”: Zipcar Offers Residents and Businesses Next Generation of Transportation. NASDAQ OMX’s News Release Distribution Channel.

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    Pearlson, K., & Suanders, C. S. (2001) . Managing and Using Information Systems: A Strategic Approach. New York: J. Wiley & Sons.

    get wheels when youwant them for $6 a month.. (n.d.). Car Sharing, an alternative to car rental and car ownership – Zipcar. Retrieved April 24, 2014, from



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