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Olympic Rent A Car US Customer Loyalty Battles Case Solution

Solution Id Length Case Author Case Publisher
2438 1466 Words (7 Pages) John Deighton, James T. Kindley Harvard Business School : 913568
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Olympics rent-a-car is a US-based car rental service. The company holds 7% of the total market share of US car rental services with leading competitors like Hertz holding 24% and Enterprise holding 50% of the market share. Laura Walkins and Andy Kim along with other key business personnel of Olympics have held a meeting to discuss how should the company respond to an aggressive move by one of their biggest competitors Enterprises, of launching a loyalty program with a new rewarding system of dollars spent as opposed to the rewarding system of days rented used by the industry. The case also discusses the loyalty program initiated by the Olympics called Olympics medalist which generates a major chunk of Olympics revenue. The team has various options to proceed with including matching the strategy of Enterprises, continuing with their own program, or changing their current Medalist program to compete in the market aggressively.

Following questions are answered in this case study solution

  1. What should Walkins do? What factors help explain the performance of Olympic Rent-A-Car U.S.? What market forces may impede it in the future?

  2. Assuming Olympic responds to Enterprise, how should it do so? What is the potential impact of emphasizing dollars spent versus days of rental? What is the potential impact of removing blackout dates?

  3. What is the cost of matching Enterprise? How much should Olympic be willing to spend on the Medalist program?

  4. What is the monetary value of a medalist to Olympic?

Case Analysis for Olympic Rent A Car US Customer Loyalty Battles Case Solution

1. What should Walkins do? What factors help explain the performance of Olympic Rent-A-Car U.S.? What market forces may impede it in the future?

Walkins and other stakeholders of the company discussed the prospective of Olympics’ and how it can steal market share from the leading competitors' Hertz and Enterprise. Walkins should change the medalist reward program to stay competitive in the market. As indicated by the market analyses and the points brought by Andy, the manager of customer relations, the customers of Olympic do not necessarily belong to the low-income group. Consumers from affluent households are most likely to travel and rent the service for business and leisure. With the penetration of the internet, resulting in online meetings and teleconferencing the number of business trips might decrease and the main consumer base might belong to leisure travellers in the future who mostly belong to affluent households. This group of consumers is most likely to be Olympic medalist members. They look for services and programs that have more to offer and in order to make sure this group perceives the loyalty program as a better offer than the competitors Walkins should change the loyalty program. 

The revenue growth stated in the income statement indicates that the Olympics is performing better than the other players in the Car rental industry. However, the operating profit margins are very thin and do not give room for taking any risks. The debt and depreciation were at par with the industry average however they did indicate that the company requires heavy capital investment to stay in the market in the future. However, some market forces can impede the performance of the Olympics in the future and therefore requires the managers to take the right decision. The demand for rental cars service might decrease with businesses being conducting online through the use of the latest technology. The improving socio-economic conditions might shift the demand for better service than better value making Olympics’ strategy incompetent.

2. Assuming Olympic responds to Enterprise, how should it do so? What is the potential impact of emphasizing dollars spent versus days of rental? What is the potential impact of removing blackout dates?

The loyalty program members contributed 21% to the revenue of 2012 making them the most important customers for the company.

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