A new term starts today at Northwestern and I will be teaching a couple of sections of the core ops class. That means I will almost certainly be leading a discussion about Zipcar.
One of the first points that we make in the core class is that operations must be linked to strategy. How a firm chooses to carry out its quotidian obligations needs to be aligned with what it is trying to do in the marketplace. If that alignment is missing, it is going to be very hard for the firm to meets its obligations to customers. Or, it is going to be very easy for a competitor to come in to take its lunch money.
Comparing Zipcar with take your pick of standard rental car companies is a nice way of illustrating this point. Zipcar and, say, Avis are in the same business: They rent cars. However, Zipcar is set up for replacing car ownership in densely populated areas while Avis is set up for accommodating travelers far from home who need to get to a meeting. Zipcar is not set up to handle people getting off an airplane and Avis is not set up to help yuppies get out to the Target in the burbs. It’s not that Zipcar or Avis wouldn’t want to make those sales, it’s that their operational choices make it somewhere between difficult and impossible to fulfill those customer needs. (For more, see here.)
Great example. Works well in class. But what does it say about Avis’ proposed acquisition of Zipcar? (more…)
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A common complaint about the travel industry is that pricing is unfair. The guy in the seat next to you on the plane may have paid a hundred dollars less or a two hundred dollars more than you did. Airlines are well known to monkey with prices on a given route — and even on a given flight — very aggressively forcing travelers (particularly leisure travelers) to diligently watch prices. Indeed, this blog’s most popular post over the past year has been Gady’s post on why airfares are cheaper on Tuesdays.
These pricing mechanisms are broadly lumped together as revenue management systems. Airlines are not alone in this racket. Hotels and car rental firms have also long been practitioners of revenue management. See, for example, the well-known Interfaces article on how revenue management “saved” National Car Rental (Jan/Feb 1997). But it is hard to get around the fact that customers don’t particularly like them. Sure, a traveler may occasionally score a great bargain on an itinerary when the stars align but more often than not, they have to spend a lot of time and effort trying to find the best deal.
This obviously creates a business opportunity for firms that simplify the process of finding a good price. Travel websites like Kayak would be an example but these sites offer just a snap shot. That is, they can tell you the best current price but they cannot guarantee a better price in the future. Bing Travel’s Price Predictor feature can estimate whether prices will go up or down but you would still have to come back at the right moment to get the better price.
That gets us to AutoSlash, a service featured in a recent New York Times article (A Rate Sleuth Making Rental Car Companies Squirm, Feb 18). Here’s how it works:
A little online booking engine called AutoSlash, however, offers the following promise: Book free on its site, and a couple of times a day until your travel date it will search for coupons or lower rates. If it succeeds, it rebooks you automatically. AutoSlash claims success 85 percent of the time, a statistic born out by my own experience using it for all of my own rentals.
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