Quarter #3 (April - June)

As mentioned earlier in this blog Universal has market share advantage in both Tampa and Miami. Although Orlando had equal market share as the competitor, Universal still managed to set competitive prices by predicting changes in supply and demand. In April, Universal increased both weekday and weekend costs in Tampa by $2 per share while keeping costs in Orlando and Miami neutral. In May and June Universal aggressively increased both weekday and weekend costs across all three rental car regions given the increase in rental car demand. We were sensitive to Orlando’s pricing and only increased cost by a $1 or less. This pricing strategy allowed Universal to hit 100% capacity utilization in both weekday and weekend rentals (June).

Another part of the business we began to take notice in is the differences between weekday and weekend demand.

Here is how our Quarter #3 financials looked:

Capacity Utilization:

------------Weekday------------------Weekend-----------
April ---------97%----------------------100%--------------
May----------98%----------------------100%--------------
June---------100%---------------------100%--------------

Monthly Net Income:

Accumulated Profit:

-----April -------------May -------------------June-----

$57,736,030 -------$71,520,922 ------------$86,449,950

Again, we are seeing big monthly increases in profit. This quarter our average monthly profit was $14.5 million (almost $5 million more per month than Q2). Universal successfully made these gains by increasing capacity utilization and setting competitive costs. Also the increase market demand has benefited the company exponentially. Universal will now need to focus on increasing fleet sizes to ensure they are filling the maximum rental orders (unfortunately I do not have the option of increasing fleet sizes - different simulation set-up). The strategic implementation of adding fleet vehicles must be done by careful consideration of current market demand and unfilled orders. By having a clear understanding of these two variables Universal can begin implementing fleet vehicles on a monthly basis. If Universal can effectively manage the addition of fleet vehicle they can easily maximize market share, exceed the competition and gain a new level of status quo.

At this point I would like to take a few moments and discuss some of the differences Universal has noticed between weekday vs weekend demand. As previously mentioned the demand for rentals has steadily increased since June. This increase has affected both weekday and weekend demand. Taking a closer look at the number or orders for rental cars on weekday vs weekends we can see that weekend orders are in much higher demand than weekday orders. We calculated this simply by dividing the number of days (weekday (5) weekend (2)) by the total number of daily orders. This information is important to Universal because it allows us to think and make decisions regarding marketing strategy. One of the items to consider is excess fleet on weekends. What special promotions could Universal offer clients during weekend travel? Perhaps, Universal could offer lower prices, extend mileage travel or offer no empty tank fuel charges upon rental car return. These options are all plausible choices that consumers my find appealing.