Chapter Preview keting mix tool—distribution. ter explores the nature of marketing channels and the marketer’s chan-

12 Chapter Preview keting mix tool—distribution. ter explores the nature of marketing channels and the marketer’s chan-

Marketing Channels

Delivering Customer Value

We now arrive at the third mar-

be good at partner relationship management. The first part of this chap-

Firms rarely work alone in creating value for customers and building nel design and management decisions. We then examine physical profitable customer relationships. Instead, most are only a single link in

distribution—or logistics—an area that is growing dramatically in impor-

a larger supply chain and marketing channel. As such, an individual tance and sophistication. In the next chapter, we’ll look more closely at firm’s success depends not only on how well it performs but also on how

two major channel intermediaries: retailers and wholesalers. well its entire marketing channel competes with competitors’ channels.

We start by looking at a company whose groundbreaking, customer- To be good at customer relationship management, a company must also

centered distribution strategy took it to the top of its industry.

Enterprise: Leaving Car Rental Competitors in the Rear View Mirror

Q try harder!” But if you said Hertz or Avis, you’re was working at a St. Louis auto dealership, and customers often

uick, which rental car company is number one? who simply wanted a different car for a short trip or a special Chances are good that you said Hertz. Okay, who’s

occasion.

number two? That must be Avis, you say. After all, It all started more than half a century ago when Enterprise for years Avis’s advertising said, “We’re #2, so we

founder Jack Taylor discovered an unmet customer need. He

about to be surprised. By any measure—most revenues, employ- asked him where they could get a replacement car when theirs ees, transactions, or number of vehicles—the number-one rental-

was in the shop for repairs or body work. To meet this need, car company in the world is Enterprise Holdings, which owns

Taylor opened a car-leasing business. But rather than compete and operates the Enterprise Rent-A-Car, Alamo Rent A Car, and

head-on with the likes of Hertz and Avis serving travelers at air- National Car Rental brands. Even more, this is no recent devel-

ports, Taylor located his rental offices in center-city and neigh- opment. Enterprise left number-two Hertz in its rearview mirror

borhood areas, closer to his target customers. These locations in the late 1990s and has never looked back.

also gave Taylor a cost advantage: Property rents were lower, and What may have fooled you is that the Hertz brand was for

he didn’t have to pay airport taxes and fees.

a long time number one in airport car rentals. However, with all This groundbreaking distribution strategy worked, and the of its combined brands and markets, Enterprise Holdings now

business grew quickly. As the Taylor family opened multiple captures 53 percent of the total rental car market with Hertz a

locations in St. Louis and other cities, they renamed the business

Enterprise Rent-A-Car after the U.S. Navy aircraft carrier on privately owned Enterprise is much more profitable as well.

distant second at 16 percent. 1 What’s more, by all estimates, the

which Jack Taylor had served as a naval aviator. Enterprise con- How did Enterprise become such a powerful industry

tinued to focus stead-

leader? The company might argue that it was through better

fastly on what it called

Thanks to an industry-

prices or better marketing. But what contributed most to Enter-

the “home city” market,

prise taking the lead was an industry-changing, customer-

primarily serving cus-

changing, customer-driven

driven distribution strategy. While competitors such as Hertz

tomers who’d been in

distribution strategy,

and Avis focused on serving travelers at airports, Enterprise

wrecks or whose cars

Enterprise left number-two

developed a new distribution doorway to a large and un-

were being serviced. En-

Hertz in its rearview mirror

tapped segment. It opened off-airport, neighborhood locations

terprise branch man-

more than a decade ago

that provided short-term car-replacement rentals for people

agers developed strong

and has never looked back.

whose cars were wrecked, stolen, or being serviced or for people

relationships with local