In the age of Uber and Lyft, car rental companies have had to reinvent themselves to remain relevant and valuable to their usual customer base.
Most car rental companies target business travelers as well as leisure travelers. Some companies rent vehicles mainly for functional purposes – like a truck or a van for moving. Others rent them for special occasions, such as weddings or funerals.
In this article, we will study the different segments of the target market for car rental companies. We will also analyze the different factors that they take into consideration while selecting a company for their next rental car.
Buckle up and let’s get started!
Who is the Target Market for Car Rental Companies?
The target market for car rental companies can be classified into the following customer segments:
- Business traveler
- Leisure traveler
- Renter for functional purposes
- Renter for special occasions
- Large families with children
- Families with no car or a single car
1. Business Traveler
The business traveler is the target market that most car rental companies have in mind. These are customers who are renting a car for work-related purposes.
Business travelers often need to rent cars for short periods of time when they are in a new city or town. This could be anywhere from one day to a few weeks.
They usually need a car to get around town for meetings and other work events. Often, they will be reimbursed by their company for the cost of the rental car.
Car rental companies target business travelers because they are a reliable source of income. Business travelers often have good credit and can afford to pay the higher prices that car rental companies prefer to charge.
2. Leisure Traveler
The leisure traveler is the second target market for car rental companies. These are customers who are renting a car for personal use usually during vacations.
Leisure travelers often need a car for a longer period of time than business travelers. This could be anywhere from one week to a few months. They usually need a car to get around town and explore the area.
Because they are on vacation and often in a new place, leisure travelers prefer hassle-free and headache-free car rentals. This makes them excellent candidates for upselling insurance, especially full insurance packages. This way they never have to worry about scratches or dents on the rental car.
3. Renter for Functional Purposes
Functional renters often need a car or a vehicle for a very short duration and for a very specific function. This could be anything from a few hours to a few days.
They usually need a vehicle for a one-time job or task, such as moving furniture or equipment.
Functional renters are often looking for the cheapest option possible and are not concerned with luxury or extras. This makes them excellent candidates for discounts and promotions.
4. Renter for Special Occasions
Customers who rent for special occasions often need a car or vehicle for a specific event or a function such as a wedding, funeral, bachelor party, or a special date.
They will often want a vehicle that they wouldn’t normally rent. This could be a classic car, a sports car, or even a luxury vehicle.
Renters for special occasions are often looking to make a statement and impress others. They are willing to pay higher prices for the privilege of showing off a luxurious or exotic car.
5. Large families with children
Most family cars are made to seat five to seven people comfortably. But what if someone has a larger family, especially with young children?
That’s where car rentals come in.
Large families, therefore, are a target market for car rental companies and they often need to rent cars when they are going on vacation or taking a trip. They may have a car in the family but when everyone’s traveling together, they may need a second car.
The same goes if a family is traveling with extended family members like grandparents or cousins.
6. Families with no car or a single car
Many families choose not to own a car and rent one when they need it. So whenever they need to go on a vacation or make a trip, their first trip is to the local car rental company.
For many families, this turns out to be economical. They don’t have the monthly cost of a car payment, insurance, and other associated costs. And when they need a car, they can simply rent one that’s the right size for their needs.
The same economics works for families with a single car. If they need a second car or a larger one, they can simply rent it when they need it.
How Do People Select a Car Rental Company?
Different segments of the target market for car rental companies make rental decisions following a different combination of factors. But the top factors remain the same.
These top factors that affect someone’s selection of a car rental company are:
- Availability of a specific vehicle
- Location of car rental company
- Price
- Insurance policy
- Add-on services
Let’s look at each of these factors closely.
1. Availability of a specific vehicle
When people are looking to rent a car, they often have a specific type or model of car in mind.
This could be anything from a compact car to an SUV. Or sometimes, people may look for a specific brand.
Some people may want to rent just a pure-electric car like a Tesla. Or others may want to keep their gas bills down and so prefer a hybrid, like a Toyota Prius.
If the rental company does not have the specific type of car that the customer is looking for, they will likely go elsewhere.
2. Location of car rental company
People prefer to rent cars from companies that are conveniently located. This is especially true for people who need a car on short notice.
This is why when people go on holiday they prefer to rent a car at the airport. This is more convenient than going into town by taxi first and then finding a car rental afterward.
3. Price
Of course, price is always a factor when people are looking to rent a car. People want to find the best deal possible. But most people will balance price with the other factors on this list.
When renting for longer durations, they will expect the price to be lower than the daily rate.
4. Insurance policy
People want to be sure that they are fully covered in case of an accident. So they will often look at the insurance policy offered by the rental company before making a decision.
Customers are wary of car rental companies who charge very low amounts for the rental and then charge exorbitant fees for the insurance.
Customers also prefer deals where the insurance with full coverage is included in the price of the rental.
5. Add-on services
Some rental companies offer additional services such as a GPS, child seats, and even satellite radio.
While these services are not essential, they can be a deciding factor for some customers.
Summary
The target market for car rental companies includes both business travelers and leisure travelers.
It also includes those who rent a vehicle for a functional purpose (eg. moving) and those who rent for special occasions (eg. weddings, parties).
And finally, the market includes large families and/or those with no car or not enough cars.
The factors that customers take into account while selecting a rental car are the availability of the car that they have in mind, its price, the car rental company’s location, the insurance policy, and any add-ons that the rental company offers.
If you’re considering starting a car rental company, now you know whom to target and what they look for before renting a car from a certain company.