Thinking differently about markets – why we are reducing our prices at Zimbabwe Car Hire in 2016
When I was a student, I remember reading case studies about Coca Cola, which made it clear that their competitor was not Pepsi but water. Their CEO at the time, said that their strategy was to make sure that anywhere people can drink water, they should be able to get coke. The result? Different thinking on what a market is. And the results speak for themselves…
- The red and white Coca-Cola logo is recognised by 94% of the world’s population
- Around the world, the average person consumes a Coke product every four days
- Coca-Cola spends more money on advertising than Microsoft and Apple combined1
This case study has remained with me for years, and as we have been thinking about 2016 as the Zimbabwe Car Hire company, I realised we were thinking incorrectly about our market.
As Zimbabwe Car Hire our competitors are not the big global car hire brands. Our competitors are not even other car hire companies or taxi’s and kombis that people could use instead. Our competitor is anyone who can borrow a car from a friend or relative rather than hire one.
When I started Zimbabwe Car Hire, it was not to make money, although of course that would be nice! But the core reason was that I was struggling to find cars for friends to borrow whenever they came to see us in Zim! The reason we are doing this crazy and fun thing called car hire, is because I wanted people to have an affordable and easy way to see Zimbabwe, and do business from city to city.
This reasoning all came back to me as we debated the pricing strategy for ZCH in 2016. Zimbabwe is suffering from an incredibly bloated and inconsistent understanding of pricing. We have a mind-set that says “how much can I charge for this service or product and get away with it?” If you go to stores around the country you will find dusty products which have sat on the shelf for years, with price tags for more than 10 times their worth, hoping that one day a short-sighted person with wads of cash stumbles upon it and buys it.
Surely we need to change this mind-set. It is not how “much” we can get away with charging, but how “little” we can charge while running an incredibly efficient service, serving the real needs of our clients, counting the opportunity cost properly AND making a profit. Now this mind-set is slowly changing and that is good, prices on some things are falling, and change is in the air, but there is more to come.
At Zimbabwe Car Hire, we are so excited, because despite the high cost of importing cars, and the many barriers to making car hire work, we are reducing our prices in Feb 2016. We will be releasing this new strategy soon.
We want local businesses and tourists alike to think, “…wait, it would be more efficient and easier for me to get a car from Zimbabwe Car Hire, than to borrow one from a friend…”