Marketing 70 --- International Business
Chao Gao, Heejin Kim, Minjian Ruan
Table of Content
2. Competitors’ Market5
3. Competitors’ Advantage5
4. Competitors’ Status6
Financial & Other Risk Assessment10
1. Financial Analysis10
2. Other Risk12
1. Pull Strategy15
2. Push Strategy16
1. Growing Stage16
2. Maturity Stage17
America car rental company, Hertz corporation is going to enter the Chinese market by doing Joint Venture with eHi Auto Services Co., Ltd, which is second largest car rental company in China. By using Joint Venture, Hertz and eHi Auto Services Co., Ltd can compete with the first largest company, China Auto Rental Holdings Inc. and our services will be competitive in this market. In the environment analysis perspective, GDP of China was 7,298,147 million in 2011 and it has increased continuously, ranking as the second following the US. Chinese people think that a car has become more and more important role in their normal life than past. So we expect that the demand of a rent car will be high. In China, having a car is a symbol of position and wealth so many people want to have a car. Leasing or short-term rentals are good alternatives for them. Some companies provide their employees rental car for their business, such as sales, meeting etc. And when someone has a car but get drunk in get-together, she/he can call our company to drive her/his car instead, called designated-driver service. Eastern culture emphasizes term “Guanxi” is important for business and their life especially in China. So it happens frequently and this is why Hertz is doing Joint Venture together with eHi Auto Services Co., Ltd to know Chinese culture, such as “Guanxi” well. Lastly, geographically China is number 3 largest country in the world. When people take a trip from this city to another city, it is hard to drive with their own car because of concerned of their own car’s overheated engine and different climate and terrain in different location. In terms of SWOT analysis, our strength is that we have various kinds of car model (luxury, economy, hybrid..) and built-in GPS, new services, such as designated-driver services. And Hertz is entering in Chinese market with sufficient capital. Weakness is the barriers caused by cultural and geographical distance and brand awareness is not as high as our major competitor. Our opportunity is that the car rental market size has increased year after year. The threat is transportations such as taxi and train are good substitutes of our services. Our target market is travellers, young adults, corporations and weddings. For weddings, we will provide luxury cars for wedding events, such as photo, parading etc. With regard to promotions strategy, we will use pull strategy and push strategy both. We will place many advertisements in newspapers, travelling magazine and Internet. And with push strategy, we will have cooperative relationship with major travel agencies in China. They will introduce our services in their customers’ destination cities. Since we are not the very early player in this market, we can not get benefit from the experience curve effect by just setting the price lower than our current cost even competitor’s cost in order to gain the market share. But we believe that we can eventually benefit from the experience curve effect in the long run.
Since the car rental business in China just starts up, our company doesn’t have many competitors. However, we do have a major competitor called China Auto Rental Holdings Inc....