Avis Pricing Strategy
INTRODUCTION
AVIS
Avis is the Australian largest car rental company, with 33% market share across the nation’s airports, employing 1000 staffs in 240 locations (Super brands 2009). The company entered Australian market in 1955, initially only had a market share of just 10-
11% of the car rental market. In 1962 Robert Townsend joined as President of Avis and introduced a bold advertising campaign focusing on the company’s customer service:
“We’re No.2. We try harder!”. The message, together with its actual implementation of excellent customer service, were big factors contributing to Avis’s success in gaining more market power (Bob Ansett 2008)
Avis is part of the Avis Budget Group which operates two of the most recognized brands
Avis and Budget, targeting the travel industry premium commercial and leisure segments and price conscious segment respectively. Both brands benefit from sharing the same fleet, maintenance facilities, systems, technology and administrative infrastructure. Avis and Budget both enjoy complementary demand patterns with weekday commercial demand balanced by weekend leisure demand. (Avis Budget
Group 2009)
CAR RENTAL INDUSTRY
Car rental operates in an environment that is related and complementary to other sectors such as casinos, car rental agencies, hotels and tour operators. The majority of car rental companies are small businesses and the five largest companies are Avis,
Hertz, Budget, Europcar and Thrifty. With 55,000 rental vehicles were registered across
Australia, the motor vehicle hiring industry is highly competitive market, but is also highly concentrated with The Big 5 account for 75 percent of business turnover in the sector (ACCC 2005).
In 2004 there was a case of price fixing in the car rental industry. Considerable fines handed out to companies involved in the cartel that fixed prices for one way car rentals between Alice Springs and Ayres Rock. The fines and costs in that case totaled $1.5 million (ACCC 2004), which indeed sent
AVIS
Avis is the Australian largest car rental company, with 33% market share across the nation’s airports, employing 1000 staffs in 240 locations (Super brands 2009). The company entered Australian market in 1955, initially only had a market share of just 10-
11% of the car rental market. In 1962 Robert Townsend joined as President of Avis and introduced a bold advertising campaign focusing on the company’s customer service:
“We’re No.2. We try harder!”. The message, together with its actual implementation of excellent customer service, were big factors contributing to Avis’s success in gaining more market power (Bob Ansett 2008)
Avis is part of the Avis Budget Group which operates two of the most recognized brands
Avis and Budget, targeting the travel industry premium commercial and leisure segments and price conscious segment respectively. Both brands benefit from sharing the same fleet, maintenance facilities, systems, technology and administrative infrastructure. Avis and Budget both enjoy complementary demand patterns with weekday commercial demand balanced by weekend leisure demand. (Avis Budget
Group 2009)
CAR RENTAL INDUSTRY
Car rental operates in an environment that is related and complementary to other sectors such as casinos, car rental agencies, hotels and tour operators. The majority of car rental companies are small businesses and the five largest companies are Avis,
Hertz, Budget, Europcar and Thrifty. With 55,000 rental vehicles were registered across
Australia, the motor vehicle hiring industry is highly competitive market, but is also highly concentrated with The Big 5 account for 75 percent of business turnover in the sector (ACCC 2005).
In 2004 there was a case of price fixing in the car rental industry. Considerable fines handed out to companies involved in the cartel that fixed prices for one way car rentals between Alice Springs and Ayres Rock. The fines and costs in that case totaled $1.5 million (ACCC 2004), which indeed sent