Universal Rental Car Pricing Simulation Report Case Solution & Answer

Universal Rental Car Pricing Simulation Report

The Market Structure

The type of competition that we faced in this case is Oligopoly, where few of the big firms dominate the overall industry. In this case, we have observed that in each region the company could capture most of the market share in each region. The market shares of the company in each of the regions could be analyzed from the following diagram

Weekday VS Weekend Demands:

There is a difference between weekday needs and weekend needs. Weekend demand has nothing to do with demand during working hours, but it has always been observed to be lower than demand on working days. The reason for this difference is impeachment, which can lead to poor car rental services. This reduction also lowers weekend rates compared to weekday rates.

The markets of Orlando, Miami, and Tampa

As is known, the Orlando segment is a huge segment compared to the Miami segment, but Orlando’s fleet size exceeds market demand and ultimately under capacity and the company’s overall cost. Will lead to an increase in. To address this, I moved Orlando’s surplus capacity to another company’s segment to balance the utilization rates of Orlando and that company’s other segments.

It was also observed that the occupancy rates on weekdays and weekends were about the same in Orlando, but there is a big difference in car demand on weekends and weekdays in Miami. Declining car utilization on weekend’s causes irreversible downturns as weekday demand is 100% used and met.

Regional Focus

Although during the initial duration we were equally focused on each region because then we had no statistical data regarding any demand, sales or profitability of any region. But eventually we get to know the mention dynamics and focused on a particular region based on its profitability and demand. During the simulation process, we observed that out of all three regions, Orlando has the highest demand for the product and it has enabled us to generate the highest income as compared to the other two regions. Hence, we shifted our focus particularly on that region.

Target Customers

Our cars come under the list of luxury items, as with our product we intend to provide brand quality and advanced possible features. We could only achieve this aim by investing a lot of capital over the designing, interior and features of our cars. This would ultimately lead us to use the premium pricing strategy. By using this pricing strategy, we have targeted the customers from elite classes as if we had been focused on targeting the middle-class customers they could not afford for the premium prices of our luxury product, I.e. car. Given all the mentioned considerations, we have used the premium pricing strategy to target the elite customer group.

Price sensitivity (price elasticity)

Talking about the price sensitivity, we have kept higher prices for the weekdays in every region whereas, as compared to them to weekend prices, w3e have kept them low. The reason behind this price sensitivity was that, if we were keeping the prices that way, we were having more profits. Also, we have used the higher prices than the default prices because that leads us to higher profits. Therefore, premium pricing strategy is being used in this case because it would enable the company to show quality from its brand name, generate higher revenue for less of units and produce high profitability.

Demand Curve

These demand curves show us that the demand of the cars is decreasing, that means we would require to decrease our prices because the company needs to increase the demand in the industry. But in this case our product is a luxury product, decreasing the prices of our product would lead to decreased profitability of the company. So we could only decrease the prices of our product to a very little extent.

We have analyzed the pattern of the demand curve for both weekdays and the weekend near Tampa. We could see a very significant difference in both of the demand curves, it could be analyzed that the demand on the weekdays is lower than compared to the demand in weekend…..

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