ZIPCAR: INFLUENCING CUSTOMER BEHAVIOUR

Kavisha Mittal (P39136), Mukul Verma(P39144), Neeraj Lodhi (P39146), Nishant Mehta
(P39148), Pragya Agarwal (P39152), Prakash Pachar (P39153)

1. EXECUTIVE SUMMARY
The company highlighted in the case is Zipcar, a car-sharing and car club service
provider. They market themselves as an alternative to traditional car rental services by
claiming to provide better services than those provided by other car rental services.
Zipcar was started in Boston in 1999.
The case is about the protagonist, Anita Karr, who lives in Cambridge. Karr was a
musician and she got a debut as a drummer after many years of struggle through her
sister. Karr doesn’t require a car on a frequent basis and so to travel for her debut
performance, she booked VW Jetta Jericho on Zipcar. She planned to pick the car at 4
PM, her sister at 4:30 PM and reach Rhode Island at 6 PM.
Sal Fishman, the second protagonist in the case also booked the same VW Jetta Jericho
for his interview. He took the car at 1 PM and was supposed to return the car by 3:30 PM
i.e. half an hour before Karr was to pick up the car. Fishman’s meeting got extended and
he’s not able to return the car on scheduled time. The dilemma here arises because of the
unavailability of the car on time to Karr. Though Karr kept some buffer time but that time
is getting consumed and she’s running late because of these circumstances. Fishman, on
the other side, is to make a decision as to whether he should continue with the meeting or
schedule it later and return the car first.

2. EXISTING SERVICE DESIGN OF ZIP CAR

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 b. The company is compromising by asking for membership before using the
service. This membership will lead to long term benefits for the customers which
will lead to more customer satisfaction.
c. The customer can book the car by online booking or using call service.
ii) Funding Mechanism: The funding mechanism of car includes self-service, customer
retention by membership, variable rates based on the travel distance, deposit money
of $100 for damages, booking demand prediction by advance booking and luxury cars
on which premium can be charged.
iii) Employee management System: the support of customer care is provided to book car
or in case of any issue.
iv) Customer management System:
Customer is also contributing to the value of service. For example, Self service should be
done with operational efficiency. The delays in car delivery or car management during
drive is dependent on the customer which will help to create value to the business.
Customer Segmentation of Zip car has following parameters
 Booking type : online or call
 Car type : low end cars or luxury cars
 Customer membership period : new customers or old customers
 Frequency of booking : less or high
 Membership plan.
v) The whole service model :
The service model is specific for specific customers. The discounts are given
based on various plans. The different type of vehicle also caters to the need of
various customers. The overall model will provide low cost service with the
experience of ownership. Although due to customer behavior, service needs to be
improved. The case has mentioned an event where one customer behavior leads to
affect service for other customer.

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2) PROBLEM STATEMENT
What operational improvements can Zipcar make in order to influence customer behavior
and provide better service to its customers.

3) OBJECTIVE
The customers should get the booked car as per the scheduled time.

4) EVALUATION CRITERIA
Company should not face exorbitant cost in order to resolve the dilemma.
The alternative should be able to provide customerconvenience.
The alternative should provide a quick and on time solution to the customer.
The long-term sustainability of the company should be taken care of.

5) ALTERNATIVES
1) GPS return time notification system
 All Zip cars have GPS so from central operations the car can be tracked in real time.
 Take proactive approach to determine whether the car can be returned in time or not
can be checked from the location.
 Send the message to the customer for return.
 If it seems that the car cannot be returned on time then alternate car will be arranged.
 For now, arrange a car for Anita
2) Special plan for uncertain time
 Among many schemes of Zip car there can be one for this type of uncertain scheduled
plans.
 Here the customers can be charged premium for this type of premium service.
 No penalty will be levied.
3) Penalty for late return
 Penalty should be levied on the customer returning the car late.
 The buffer time should be made 1 hr.
 The next customer should be given alternate car at compensation and that
compensation can be funded by penalty.

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6) EVALUATING ALTERNATIVES
Alternative I: Notification system in sync with GPS will be a pro- active approach to
implement but at the same time it will spam customer’s phone that he/ she might or might not
check while busy with work. This will negatively affect Zipcar’s relationship with customers
in long term. Also, cost of infrastructure for this system will be very high with less benefits
in return.
Alternative II: This plan will burden customers to pay more which will cause an unpleasant
impact on customers using Zipcar. The scheme will directly affect the repeat purchase of
service due to high cost to customers.
Alternative III: Customers not returning the car by stipulated time can be charged extra by
the company. Fear of penalty can help in changing the customer’s behaviour of late
returning. Customers may switch to other competitors due to the penalty but providing buffer
time is an attraction for this alternative.

7) SOLUTION
Choosing one of the alternatives will not serve the purpose of providing better service
experience to the company therefore, along with Alternative 3 i.e. charging penalty from the
customers making late return, company needs to arrange other car for customers like Anita or
provide reimbursements depending upon the situation of the customers.