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Lotus Car Rental Marketing Case Study

Essay by   •  June 23, 2011  •  Essay  •  2,681 Words (11 Pages)  •  1,287 Views

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Lotus Car Rental is evaluating the feasibility of adding alternative fuel vehicles to

its fleet of rental cars. Alternative fuels history dates back to the 21st century. Some of these

vehicles during this time, used various sources for combustion. Not only was regular

gasoline used, but other natural resources were used, namely coal, charcoal petroleum and wood.

These materials were discontinued due to the hazardous gasses and fumes these materials

released into the environment. Electric cars were the choice for most consumers of the day. Not

only were they cheaper and easier to produce, but they were also quitier than the traditional

gasoline engine. The electric automobile during this time period, became extinct due to the

booming oil industry being discovered. The most famous cars to be the first to use alternative

fuel was the Ford Model T. This vehicle was manufactured in the year 1908 to 1927. What was

significant about this vehicle is that Henry Ford designed its' engine to run on 3 types of

alternative fuel, petrol, kerosene, and ethanol. One other important fact about the Model T is that

the cosumer could purchase other variants of its flagship vehicle. They consisted of the Models'

T, K, U, A, S, N, and these were merely concept vehicles. Since that crucial time in history, there

are multiple companies with alternative vehicles.

Marketing

Altenative fuel vehicles need to be available to the public for rent because there is a

definite desire to operate vehicles that are more efficient and limit the carbon footprint on the

planet. In most cases, rental car companies charge higher fees to rent alternative fuel vehicles.

Looking at the annual revenue of a popular rental car company like Enterrprise Holding,

comprised of Enterprise Rent- A-Car, Alamo Rent a Car, and National Rent a Car, we found that

the Company's revenue was 12.6 billion dollars for 2010. Since 2005, Enterprise Holding's

revenue has more than doubled and has increased every year. Martini mentioned that Enterprise

has thousands of alternative fuel vehicles including hybrids and electric vehicles. Approximately

35 percent of Enterprise Holdings' vehicles average a highway efficiency rating of 32 miles per

gallon or better. Furthermore, 55 percent of the company's vehicles average at least 28 miles per

gallon (Enterprise Holdings, 2011).

Lee Broughton, head of corporate sustainability for Enterprise Holdings at the 2011 Car

Rental Show in Las Vegas, encouraged car rental companies to focus on the "triple bottom line"

- economic, social and environmental sustainability - while also challenging the industry to start

offering more fuel-efficient rental options as well as opportunities to offset carbon emissions

associated with rentals (Enterprise Holdings, 2011). Enterprise Holdings' inventory is

comprised of over 50 percent of the alternative fuel vehicles. Opportunity is knocking for Lotus

Car Rental to enter into this market. As plug-in hybrids and electric vehicles begin to gain a

foothold in the Americam marketplace, rental car companies can help build awareness, so that

consumers understand and accept the advances being made in this new technology. Rental car

companies that are positioned in major cities at airports, in metropolitan areas, or in the vicinity

of resorts have the majority of the market opportunity. Car rentals can be on an hourly, daily,

weekly or monthly basis. Due to high fuel prices, there is another opportunity for Lotus Car

Rentals to expand the business. With the efficiency of the hybrids and electric vehicles, Lotus

can offer cars for lease under ride share programs. Enterprise is once again leading the way with

its purchase of the Chevrolet Volt electrical car in January 2011 and will market it for daily and

weekly rental customers.

Economics

Alternative car vehicles normally cost more than the regular fuel vehicles. The United

States Governement and State Government offer incentives to those companies that buy and rent

these vehicles to the public. For Lotus Rental Car Company, we recommend that the inventory of

rental cars should be approximately 30 percent alternative fuel vehicles. A study was performed

by Professor Rosanna Garcia, associate professor of marketing at Northeastern's College of

Business Administration, which consisted of her review of 7,500 survey respondents with

various questions on alternative fuel vehicles. The focus on the survey was on how consumer

product knowledge may affect purchase intention of the different types of alternative fuel

vehicles. The survey found that factors such as distances between fueling price, fuel type and car

type among the most important attributes. The survey results also suggested that word of mouth

advertising may be influential (Northeastern University, 2009). During our research we

discovered that consumers still

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