Target Market Segment Southwest has recently expanded the target market segments to Minneapolis/St. Paul, New York La Guardia, Boston Logan, and Milwaukee, which brings the total to approximately 70 cities. Southwest’s rental car and shuttle service will be made available to all current cities where the company flies, but will only be offered at airports within that city. Southwest will enter the global car rental market because the organization only fly’s domestically. Marketing and advertising will begin in major cities such as New York, Washington D.
C. , and Dallas, TX. Market Research The global car industry is undergoing a radical transformation (Perot Systems, 2010). In the past, virtually all of the major US car rental companies were owned and operated by automobile manufacturers, Currently, Hertz (80% owned by Ford) remains in auto manufacturer control (Perot Systems, 2010). Entrepreneurs now own the other car rental companies; these new owners have brought additional standards to the management of leading car rental companies.
Perot Systems (2010) has identified three key drivers which are common to most industry leaders, and could be a helpful guide for Southwest to use: 1). Profitability- Car rental companies should focus on containing costs and increasing revenue. Fleet costs will typically be an organizations largest cost category. Revenue management systems can help increase revenue by optimizing revenue per rental (Perot systems, 2010). 2).
Customer Service- Southwest Airlines is already known for their excellent customer service, and a move into the car rental industry would give them the platform needed to better serve their customers and enhance their traveling experience. In-car amenities such as GPS devices and complimentary child booster seats are just a couple of examples of how Southwest would better serve their customers. 3). Branding- The top 7 US brands- Alamo, Avis, Budget, Dollar, Enterprise, Hertz, and National- generate 80% of the revenue in the US car rental market (Perot Systems, 2010).
A well-defined brand is very valuable in the car rental industry. These three key industry drivers can all be impacted by information technology. Southwest Airlines will be able to handle many of the challenges posed as they enter the car rental industry by adopting systems such as: fleet management, revenue management, reservations, front counter operations, and customer information management. References Perot Systems Corporation (2010). Car rental industry “point of view”. Retrieved January 31, 2010 from http://www. tacsnet. com/scripts/car_rental. cfm
