Brand Relevance: Making Competitors Irrelevant - always yours

MARKET DYNAMICS IN THE AUTOMOBILE INDUSTRY 121
Recognizing that insurance companies, which generate one -
third of their sales, and repair shops are important customers,
Enterprise developed the Automated Rental Management
System (ARMS) to provide an electronic interface for handling
bookings, billings, payments, and more, making dealing with
them painless and effi cient. Its patents on the process provide
potential diffi culty for others encroaching on its turf. There is
also a friendly Web site that puts the products and services at
the fi ngertips of the insurance company as well as the end - user.
Finally, Enterprise offers fl eet management to larger companies,
whereby they will manage the vehicle fl eet, including deciding
on the fl eet profi le, buying the vehicles, and managing the
servicing that may be needed. The resulting infrastructure that
Enterprise has developed generates a stickiness among the customer
base that is diffi cult to overcome.
Enterprise has also created two additional barriers. First,
its pervasive presence creates a signifi cant value proposition
around convenience, for customers and also for insurance companies
who can deal with one fi rm for their rental car programs.
It would be expensive for others to duplicate this level of coverage.
Second, it has a cost advantage over its main competitors.
Its profi tability and balance sheet generate a credit rating of
A, versus the B rating of Hertz, which means that the extensive
fi nancing of the car inventory can be done at a lower interest
rate. Further, without the concession fees and staff expense of
airport facilities, Enterprise has historically been at a cost advantage,
although that advantage will be reduced as its program to
enter airports grows.
Why did Hertz, Avis, and the rest allow Enterprise to
become such a large, successful competitor? Could they not see
the same opportunity? In part, the answer is no. The opportunity
was for many years small relative to the total rental market,
which was centered on airports, and Enterprise was thus just a
minor curiosity. Hertz was virtually unaware of Enterprise as late