One of the most successful companies in the truck rental industry, Rentall Trucks specializes in renting trucks to both commercial clients and private citizens alike. When Rentall executives and other outside investors offered Bob’s company an enticing price, he decided to sell it. Immediately following the sale, Bob decided to launch his own company, Rentran, to take on Rentall Trucks. According to Bob’s projections, Rentran had just approximately 5% of the national truck rental market, Rentall had about 80%, and National Rentals only had 15%. The management of Rentall Trucks is extremely anxious that Rentran will take over the market in a few years. Meyers Marketing Research, a market research agency, was engaged by Rentall Trucks to conduct a study of the market. Marketing campaigns, branding initiatives, and customer relationship management (CRM) systems all use market share as an important indicator to gauge their success (Bhattacharya, Morgan, & Rego,2022). Rentall Trucks, Rentran, and National Rentals are the three companies analyzed in this study.
Analysis
Rentall Trucks employed a marketing research firm that examined a random sample of truck rental customers. The sample involved 1,000 existing and potential truck rental clients. It comprised 800 customers of Rentall, 60 of Rentran, and 140 National Rental. The purpose of the study is to determine the likelihood of customers changing companies. Two hundred original Rentall clients switched to Rentran, while 80 transferred to National. Rentran managed to maintain 51 of its initial customers; however, three customers switched to Rentall, and 6 customers switched to National. Finally, 14 consumers transferred from National to Rentall, while 35 customers switched from National to Rentran.
Commercials are crucial because they expand the market and improve sales while combating competition, fostering goodwill, educating customers, removing intermediaries, and bolstering salesmanship (Cuevas-Vargas, 2019). A Rentran analysis found that Rentall Trucks must adjust its rental policies, advertising, and product offerings rapidly. Customers will become more loyal if the leasing process is simplified and made more convenient for them. Rentall Trucks’ advertising is essential since it helps customers become aware of the company. Rentall Trucks’ customers will remain loyal if the company’s product portfolio is upgraded. In expanding the product range, it is vital to introduce new items tailored to customers’ changing needs (Bhattacharya, Morgan, & Rego,2022). Therefore, Rentall Trucks will benefit from strategic changes in the market.
Rentall Trucks has a good chance of retaining its 80 % market share because of the new policies. Meyers Marketing Research used the same sample of 1,000 customers to forecast the success of the changes. One hundred of Rentall Trucks’ initial clients would be lost to Rentran and twenty to National if the new policies were implemented. Unfortunately, Rentran and National will lose 9 and 28 customers to Rentall Trucks.
Solution
The case’s primary goal is to devise a solution to the problem statement. As Jim Fox explains, the corporation cannot remedy the problem and resolve the contract omission. Truck rental company Rentall must design a business strategy to fight the pricey contract error. Several issues must be addressed while also optimizing profits in the tactics. Rentall needs a strategy to keep Rentran’s share of the rental truck market at 80% if it wants to remain competitive. Rentran should not be able to steal consumers and investors from Rentall because of this policy. Business models should be adjusted while adding needed services to address the areas that need attention. In boosting profits, the most focus should be placed on advertising, rental policies, and product line areas of the website. In drawing in more clients, features like protection plans, air conditioners, and comfortable chairs are ideal inclusions. Using comparative advertising, corporations can claim “unique features” that their competitors do not have, rather than emphasizing similar characteristics (Hsu, 2020). It is possible that aligning differences may help Rentall contact customers interested in its product line. Product differentiation and brand building can be accomplished through distinguishing traits. Sales strategies are promoted in advertising to influence consumer behavior.
Rentall’s purpose is to make its rental policies understandable and digestible without imposing extra expenses. Rentran’s ability to persuade people to do business with Bob reduces customer loyalty to the organization. A larger audience must be reached if quick action needs to be taken. In addition, research on other rental businesses must be conducted to establish a loyal customer base. If Rentall Truck wants to remain at the top, its products and services must outweigh the advantages of Rentran. It is possible for the business to offer lower insurance premiums and to promote special offers to both existing and potential consumers. Through well-designed processes, countermeasures can be created to improve business operations.
Justification
According to Belyavsky, Danilova, and Ougolnitsky (2018), marketing research utilizes the Markov process. In this case, the analysis was based on the Markovian theory, a stochastic model that depicts a sequence of possible events in which the likelihood of each event occurring depends on the state obtained in the preceding event. The Markovian process seeks to anticipate future events based on previous experiences. Therefore, the case study is also an illustration of its marketing research applications.
If the market condition continues the same, the market share for Rentall, in the long run, would keep dropping, though at a smaller magnitude, as if Rentall did not make the changes. The new market shares are displayed in the tables below. The market shares move from 80% to 71.7% in month 1 to 66 % in month 2, 61.8 % in month 3, 58.9% in month 4, and 56.9% in month 5. On the other side, if the changes were not made, Rentall’s market share would have decreased fast, dropping from 80% to 53.8% in month 1, 38.2% in month 2, 28.9% in month 3, 23.4 % in month 4 and 20.1 % in month 5. This would be a loss to Rentran, which would have 58% of the market by the fifth month.
Summary
To maintain its dominant position in the market, Rentall Trucks needs to make quick adjustments to its rental policy, promotion, and product line. When the former CEO of Rentall Trucks started a competing business, it put Rentall Trucks under a lot of pressure. Rentall Trucks must modify its rental policy, advertising, and product line to maintain a competitive advantage. Rentall Trucks would gain 71.7% of the market share, followed by Rentran with 18.0% and National Rental with 10.3%, according to an analysis done in just one month. In the absence of any action from Rentall Trucks, the market share will be split between Rentall Trucks (53.8 %), Rentran (28.0 %), and National (18.3 %).
References
Belyavsky, G., Danilova, N., & Ougolnitsky, G. (2018). A markovian mechanism of proportional resource allocation in the incentive model as a dynamic stochastic inverse stackelberg game. Mathematics, 6(8), 131. Web.
Bhattacharya, A., Morgan, N. A., & Rego, L. L. (2022). Examining why and when market share drives firm profit. Journal of Marketing, 86(4), 73-94. Web.
Cuevas-Vargas, H., Parga-Montoya, N., & Fernández-Escobedo, R. (2019). Effects of entrepreneurial orientation on business performance: The mediating role of customer satisfaction—A formative–Reflective model analysis. SAGE Open, 9(2), 2158244019859088. Web.
Hossain, M. (2021). The effect of the Covid-19 on sharing economy activities. Journal of Cleaner Production, 280, 124782. Web.
Hsu, T. (2020). Investigating the Effectiveness of Comparative Advertising: The Roles of Structural Alignability and Message Informativeness. Journal of Marketing Development & Competitiveness, 14(5), 20–27. Web.