Situational Analysis Of Abacus Van Hire Car Rental Service In UK

Situational Analysis

Describe about A business report and also choose and organisation brand owner offering and marketing a car rental service (firms in this industry rent cars and small commercial vehicles to private users and businesses on short-term basis)?

Market analysis is related to determine the attractiveness of market and to analyze the opportunities and threats of market as it is related to the strength and weakness of the organization. Car rental organizations rent car to the customers temporarily based on the requirement of the customers. The Car rental company that will be chosen for this study is Abacas Van Hire. It is a leading car rental company at Ferdown in United Kingdom (Abacus-van-hire.co.uk 2016). The company was established in 1993 and it is trading over more than 23 years. The owner or CEO of this company is Dave Wolfenden. The company offers immense vehicles and services, with competitive weekly and daily rate for both personal and business use (Abacus-van-hire.co.uk 2016).  The study will demonstrate situational analysis of this company through SWOT and PESTLE analysis. The study will also analyze the competitive advantage and marketing strategy of the company. A STP analysis of this company will also be done in this study. Furthermore, the study will also include recommendation for marketing mix of the company.

Abacus Van Hire is a leading car rental organization in UK. It provides Vans, Minibuses, MPVs, car and Motorhomes hire for the customers. The company is holding its position for 23 years in the market of UK. The managing director of the company is Dave Wolfenden. The current asset of the company is £12,390.00 (Abacus-van-hire.co.uk 2016). The company is now focused on increasing its car rental facilities for getting more number of customers. The situation analyses of this company will show the internal and external business environment of the company.

Political

Political stability in UK majorly affects the operation of this company by growing its business with minimum political tension. Free trade agreement involved in UK also improves the market of this organization through providing easy penetration strategy where the company can easily enter to new market (Zalengera et al. 2014). The main customer of this company is tourist group. They do not carry their personal car while come to this country as the get the help of such a company who provide car rental service. Therefore, the rate of tourist inclusion in this country has been increased. It has also increase the revenue of the country though the tourism industry. Thus, there is a full support of Government to this car rental company.

External Analysis

Economical

The GDP of United Kingdom can be shown as 2988.89 USD Billion according to the survey of 2014 (Paterson 2013). Therefore, it can be easily identified that the economy of this country is rising. The economic rise in UK has improved the revenue of this company. They have also gotten financial assistance from various financial sectors because of this economical growth.

Social

The people of UK are moving towards a new trend while driving for a long journey. They like to have some music and videos while going by car. As this car company provides all those facilities when rents their car to the customer, this is like an opportunity to the company.

Technology

Rising use of e-commerce in the market of UK has helped Abacus Van hire largely. Through using this technology, this company has given some of their operation responsibilities to the third party company for acquiring more number of customers (Moffett et al. 2014). The organization also uses advance technologies in the car that they rent to their customers.

Legal

Abacus has increased its growth opportunity by reducing the concern for contravention of its intellectual property as the Government of UK has provided improved intellectual property rights. The company can also take the opportunity of providing more and safer and comfortable cars to fulfill the consumer law.

Environmental

Cars under rent that are provided to their customers are environmentally sustainable as the always provides new car. They never use such a car whose age is more than 7 years and thus emit less amount of carbon footprint (Bunce, Harris and Burgess 2014). They rent hybrid cars to their customers who love to drive in road by having less sound noise.

Figure 1: PESTLE Analysis

(Source: Menon et al. 2015)

Strength

The strength of Abacus Van Hire Company can be found in the integrated software systems that are used for connecting with various booking centers. The cars that this company rent to their customers give extreme leisure to them. The rental rates provided by this company always feed the needs of the customers. The brands of this company are known worldwide. Abacus Company always provides new vehicle to the customers and this vehicles are periodically maintained (Howard 2015). Clients of this company love the care that they get from the joyful employees. 

Weakness

Most of the time, the agents who rent the care to the customers spend their time by checking the cars to be rented. Apart from that, the global positioning system of this company is not adequate as would be necessary and thus lacking the scope of expanding in the market (Lee 2014). Many car rental agreements seem to be incorrect in UK and thus this company face huge issues when rent the car to the customers.

PESTLE Analysis

Opportunity

Abacus Van Hire are looking forward for making long-term rental and leasing of the car and thus increase the profit of the company. Many times, foreign clients ask for chauffeurs, who will drive their luxury car (Guerriero and Olivito 2014). This is like an opportunity for the company as they have efficient chauffeurs with them.

Threat

The Chaotic traffic of in the road of UK is decreasing the interest of the customers hire for their travelling. There is increasing theft of rental car in UK and thus, it seems to be great loss of revenue to the company. Apart from that, the company is facing an increasing competition from their competitors like Alamo Rent a Car, Apex Car rental, Avis Rent a car UK, Budget Car hire, Car hire OK (Abacus-van-hire.co.uk 2016).

Figure 2: SWOT Analysis

(Source: Shaheen and Cohen 2013)

Factors	Abacus Van Hire	Apex Car rental	Alamo Rent a Car
Market Share	37%	21%	19%
Top orders	11000	7500	6000
Market growth (2011-2015)	19%	16%	13%
Number of competitors	7	10	10
Average Profit (2015)	£ 5464	£ 4894	£ 4500

Table 1: Competitive Advantage

(Source: Magretta 2013)

Unique selling proposition describes the unique value of the company for which it is different from other company. The unique selling proposition of Abacus Van Hire is “To Provide Best Leisure to the Customer”. According to Conejero,  Jordán and Sanabria-Codesal (2014), the company provides huge scope to the customers to choose cars from their fleet of 300 vans, trucks, minibuses, cab, motorhomes and trailers. On the other hand, Czerny, Shi and Zhang (2015) opined that the competitor company like Apex Car rental is not that much able to provide variety of car to their customers. Apex Car Rental Company is not able to provide wide range of Cabs to their customers. Thus, the customers of Abacus Van Hire are rapidly increasing than their competitors company and they are able to rent more number of cars to their customers. In this way, the average profit of Abacas Company is higher than their competitor company.

According to Shaheen and Cohen (2013), Abacas Van hire provide huge discount to the customers on renting the car. They usually provide 14%-15% discount on online booking of car renting. Through this unique selling proposition, the company has gained huge portion of market share and this market share is too much high than their competitor company. On the other hand, Czerny, Shi and Zhang (2015) suggested that the joyful employees of this company are always engage in serving the customers. They always keep in touch with existing customers and find new customer through the referrals of existing customer. Thus, the booking order of cars that this company gets is much higher than their competitor company.

Internal Analysis

Figure 3: BCG Matrix

(Source: Palia, De Ryck and Mak 2014)

The position of Abacas Van Hire Company can be viewed through Boston Consultancy Group Matrix (BCG Matrix). This matrix shows that cash required for rapidly growing business comes from the company’s other units that are at more mature stage. This matrix also shows the product of the company, which are declining in the market.

Dog

The products in this stage have low market share and low market growth. Thus, this stage does not consume any money and also does not earn any money. It has been found that car like Ton Dropside has no market growth and thus the market share of this product is also low (Talebian 2013). The customer does not like this car because of its high weight and maximum consumption of diesel. Therefore, the Abacas Van Hire Company has decided to wrap up this car.

Question Mark

It has been found that van Small and Crewbus LWB have huge market growth but the market share is very low and thus it results in large net cash consumption (Abacus-van-hire.co.uk 2016). Although this carhas high potential to gain market share but if this cardoes not succeed within a certain period of time then it will be in the Dog stage.

Stars

The car like MWB Hi-Top has huge market growth and thus consume large amount of money but on the other side, it also has high market share and for this it earns lot of money. It this car can retain its market share then it can be cash cow and be the market leader.

Cash cow

As the leader of the market SWB Standard 18 cwt, Maxi Mover, Crew us MWB exhibits return on assets and thus, it is greater than market growth by earning huge money (Abacus-van-hire.co.uk 2016). The earning collected from this unit are provided to manage the consumption of money for the car in Question Mark stage.

Vehicle Hire Reception Centre

In order to connect with more number of customers, Abacas van hire has opened some new vehicle hire “reception centers” in Andover. This centre is especially established for meeting the huge demand of truck, vans, cars and minibuses (Lovelock, Patterson and Wirtz 2014). The company is also hiring huge number of staffs for taking care of this reception centre.

One of the more important strategies of this company is that it rents high valued car to the customers with an affordable price (Kapferer 2012). Apart from that, the company also offers large discount on online booking of the cars. The customers also get discount on pre-booking the cars.

SWOT Analysis

The company majorly targeted the tourist groups who come from different countries. The tourists do not take their cars when come to another country therefore; they need cars in rent while go for an outing. Hence, the company mainly targeted tourist groups.

In order to reach mass customers, the company use social media advertising. The customer can see the facilities provided by the company in their social media profile and put an order if become interested to hire the car (Scott 2015).  The company also uses market campaign for getting close interaction with the customers. Thus, they can better convince the customers in taking their service while going for an outing.

Segmentation, targeting and position are the tools for aligning the product and services with right customers. The fundamental practice in this strategy is that every product offers different values for different customers. Segmentation, targeting and positioning jointly comprise there stages. In the first stage, the company determines the types of customers who will be interested in the existing market. In the second stage, the company determines which customers are to serve first. In the third stage, the company is focused with providing unique product to the customers for meeting different needs. Abacas Hire Van has adopted the following segmentation, targeting and positioning strategy:

The focus of Abacas Hire Van in this stage is to find out customers with different needs. In car rental market, some people want car, which are of high speed, and some people want car, which provided more safety (Osborne, Radnor and Nasi 2013). Based on the different needs of the customers, this company has segmented its market according to following criteria:

Abacas Van Hire has segmented their customers according to age, gender, income and marital status. It has been seen that the age group between 18-55 can afford the car rent for their travelling and therefore, it will be better for the company to choose this age group. The company will also segment customers who hold a good job so that they can afford the expense for car rent (Pride and Ferrell 2016). On the other hand, it has been found that mostly male groups are interested in going out for travel and therefore the company will mostly segment male customers. The other segment that will be most preferable for this company is married couple.

The customer who likes luxury life style will be the customers of this company. In this segment, youth generation will be selected who have interest in travelling but have no car with them for travelling. Businesspersons will also be segmented, as they need trucks for delivering the products to the customers.

Competitive Advantage (USP)

In this segment, Abacas Van Hire will select their customers who want to travel by high quality car. The customers who are aware of brand loyalty will be the customers of this company, because the company usually provides car from renowned car company (Webster and Lusch 2013).

In this stage, the company will decide which segment to choose as their target customers. It is all about specifying the segmented customers and selecting most attractive customers. Abacas Van Hire will mostly select the tourist group of UK. The tourist people do not usually take their car when travelling in the foreign country (Achrol and Kotler 2014). Therefore, they need to take car by rent when go out for an outing. Thus, this company will better serve these kinds of customers. On the other hand, the company will also target those customers who will be interested in making frequent holiday. In such case, the people who do not have their own car will be needed to hire a car form a car rental company. Therefore, the company will be able to meet the requirement of these types of customers.

The company can also target business owners who need trucks in rent for delivering their products to the customers. Married couples are very much interested frequent travelling in their holidays and thus, they need sophisticated cars for their travelling. Hence, the company can also target these customers group. Many logistical companies can also be the target of this company because they need many vehicles for delivering goods in different countries. Thus, the company can better serve these logistics company through providing trucks and cargos that gives extra mileage (Christopher and Peck 2012).

Abacas Van Hire is renowned for providing best vehicles and services with a very competitive weekly and monthly rate. They rent car both for business purpose and for personal use. The company is reputed for its quality service and excellent price. One of the most important competitive advantages of this company is that it provides car with a very less price. Almost all kinds of customers will be able to afford their car. The company will be better position their service if they offer discount on pre-booking of cars by the customers (Scott 2015).On the other hand, people need various accessories when going out for travelling like sack trolley.Hence, if the company starts to provide sack trolley it will be advantageous for them. The company can provide free onsite parking and 14 hrs vehicle assistance for the assistance of the customers. It will enhance the reputation of the company and attracts more customers.

Segmentation	·         Age: 18-55 ·         Life style: Luxury Life style ·         Behavioral: Want to travel by high quality car, have brand loyalty
Targeting	·         Tourist Group ·         Married Couple ·         Businessman having logistic business
Positioning	·         Safe car ·         Environmental friendly car ·         Affordable car rent ·         Excellent customer service

Table 2: STP analysis

(Source: Armstrong et al. 2014)

SMART TARGET
Specific	·         The sales executive, marketing executives, staff and administrators will be involved in serving the customers ·         The staff will be available for 24 hrs in serving the customers ·         Provide more discount on service for collecting huge customer group ·         Providing more comfort and safety to the customers ·         The customers will be more satisfied while get 24 hrs excellent services from the staffs
Measurable	·         The market share will be increased by 30% within the first quarter of goal implementation ·         Decreasing the distortion of car in a significant rate ·         Implementing safety measures for the customers while travelling by car
Attainable	·         Company will ensure all the employees are aware of the safety measures while serving the customers ·         Staffs will be provided with training for precisely serving the customers while offering self-drive car ·         Chauffeurs will be given instruction in a regular basis, as they will be responsible for driving the cars of customers. ·         Employee will be agreed with all the term and conditions of the organization
Realistic	·         Providing training to the employee is realist as it is within the budget of the organization ·         Providing regular instruction to the chauffeurs is also realistic as it needed for proving a safer journey for the customers
Timely	·         The company will aim to achieve their aim within 2 years ·         There will be a yearly checking system to measure whether the aims are actually meeting or not.

Table 3: SMART target

(Source: Kumar and Rajan 2012)

Product

Though the company provides a wide range of car in rent to the customers, the company lacks differentiated product. It is recommended for the company to provide differentiated product or service to the customers for earning more profit. The company can launch various spare part and accessories for assisting the people while facing vehicle break down in the middle of the road (Litman 2014). They can also provide numerous types of machine related to car in making new car of another company.

Abacas Van Hire can open their office within some popular retail supermarkets where the customers can avail the car rental service. The company should also open some new outlets in famous cities of UK so that premium customers can avail the rental services. On the other hand, it will be better if the company open some franchises in rural market (Payne and Frow 2013). It will help the customers of rural market to get the car rental service of this company without facing any difficulties.

The promotional strategy of Abacas Van Hire will cover all the tactics of marketing communication. The company will use the personal selling process in their promotional strategy. In this process, the company will directly meet with the customers and convince them to take their car rental service. They can also use advertising strategy for promoting their service. They will use advertisement tools like TV, Newspaper, Website and Social Media. On the other side, they can also use the use of Whatsapp Messenger, where the customers can directly ask about their service to the company (Scott 2015). It will help the company in reaching mass market. The company will use public relation strategy where it will provide various attractive discount and offers in the car rental service to make a close relation to the customers.

Abacas Van Hire Company will actually use two type of pricing strategy. The first one will be Market-oriented pricing and the second one will be value-based pricing. In Market-oriented pricing, the company should set their price for the service based on the market value and the prices of their competitors. This pricing strategy should be set for all kind of customers form middle level to high level (Gummesson, Kuusela and Närvänen 2014). On the other hand, the company should also use value based pricing, in which it will set the price based on the perceived value and actual value of the service. This pricing strategy will be set for high-end customers, as they always want to hire high quality cars.

Figure 4: Marketing Mix

(Source: Grönroos and Voima 2013)

Conclusion

While concluding the study, it can be said that Abacas Van Hire is a poplar car rental company in UK who provides cars to the customers in rent. The company has 300 varieties of cars. The most popular cars that this company provides in rent are MWB Hi-Top, LWB Hi-Cube, Ton Tipper, Maxi Mover and Crewbus LWB. Free Trade Agreement of Government helps the company in easily entering in new market. Changing trends of the customers to travel by luxury car help the company expanding their business. Integrated software systems of this company helps in easily connecting with various car-booking centres. However, increasing theft of rented car seems to be a threat to the company. The competitors of this company are Alamo Rent a Car and apex car rental. The company provide huge rate of discount to the customers on online booking and pre-booking of car. Thus, this company gains higher market share than their competitors. Abacas Van Hire Company specially will target the tourist group as their customers, as they do not bring car with them while come to another country. Therefore, they will definitely rent car from this company. It is recommended for the company that they will launch different service like providing spares part and machine for the cars. The company should also use Market-oriented pricing and values-based pricing for their service.

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