Avis: Still Trying Harder!|Business Strategy|Case Study|Case Studies

Avis: Still Trying Harder!

            
 
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Case Details:

Case Code : BSTR048
Case Length : 15 Pages
Period : 1999 - 2003
Organization : Avis
Pub Date : 2003
Teaching Note :Not Available
Countries : USA
Industry : Car rental

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"Energy, enthusiasm, innovative industry leadership and an ethos of continuous improvement have characterized the company for many years."1

- Quoted by an industry observer in www.avis.com.ua, January 2003.

Not The Second Best Anymore

The story of Avis, the second largest car rental company in the world, and its legendary 'We Try Harder' advertisement slogan had become a part of marketing folklore by the beginning of the 21st century. Through this campaign, launched in 1963, Avis humbly acknowledged its 'Number Two' status and said that it tried harder to compete with arch-rival, Hertz, the world's largest car rental company.

The campaign had become an integral part of the corporate culture at Avis. By 2003, almost four decades later, Avis was still 'trying harder' to beat its rival in the US car rental market. In 2003, the company had a 25% market share as compared to Hertz's 30%. Hertz, the leader in the industry since its inception in 1918, not only had a larger market share it also was bigger than Avis in terms of company size (Refer Exhibit I for a note on Hertz). Hertz's reach and size and its significant investments in advertisements over the decades rendered it almost impossible for Avis to become the number one player (in 2001, Hertz spent $ 53 million on advertising while Avis spent only $ 9 million). However, in the European car rental market, Avis had managed to beat not only Hertz, but every other player.

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In 2000, it was the market leader in the European market with an 18% market share while Hertz and other competitors lagged behind (Refer Table I). Both the US and European operations of Avis posted profits ($ 2 billion and € 1.255 billion respectively) in 2001, while many of its rivals performed badly, with Alamo and National even filing for bankruptcy. Industry observers felt that the company had been able to perform well only because of its conscious decision to stick to 'basics'. Its focus on factors that its customers cared about the most-convenience, safety, consumer service and price - earned it leadership status in Europe and an extremely loyal client base in the US.

The company's steadfast devotion to becoming the preferred car rental company was evident in its financial performance (Refer Exhibit II and III for financials). Avis' journey from being a small, number two player in the US to a global company operating from 4700 locations in 160 countries had not been an 'easy ride.' Commenting on its credibility, Robert Passikoff, President of Brand Keys,2 said, "The Avis brand not only has a tremendous legacy, but its strength lies in its ability to follow evolving customer values. Avis management pays attention to what customers expect - from safety to affordability - and continues to move the brand toward those expectations. That leads to loyalty, which of course is the leading indicator of profitability."

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1] May 2003 exchange rate, $ 1.1712 = 1 €.

2] A US based customer loyalty research and strategic planning consultancy firm.

 

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