The Strategy Interview

Sandra DiemVice-president of marketing,Tilden Rent-a-car SystemSandra Diem joined Tilden Rent-a-car System in 1991 and became its vice-president of marketing the next year. Before joining Tilden, Diem was executive director of the National Ski Industries Association, and, before that, director of marketing...

Sandra Diem

Vice-president of marketing,

Tilden Rent-a-car System

Sandra Diem joined Tilden Rent-a-car System in 1991 and became its vice-president of marketing the next year. Before joining Tilden, Diem was executive director of the National Ski Industries Association, and, before that, director of marketing at CN Hotels. Diem has a masters of business administration from the University of Western Ontario in London. Tilden has more than 400 Canadian locations. Its revenue last year was about $150 million.

Q. The Canadian car rental market is saturated. First, where does Tilden’s growth come from, and, second, where does the sector’s growth come from? Is a share war shaping up?

A. There is some growth in the industry in Canada. Generally speaking, the business travel market, which is the prime market for most car rental, is stagnant because the size of the business travel market is greatly a reflection of the economy.

However, within the business travel segment, even though it is stagnant, there seems to be some indication that some growth is coming from business travellers who are switching from taxis and limos to rental cars at the airport.

There is some indication there is an increase in the number of cars that business travellers are renting, but, at the same time, the number of trips that they are taking is going down.

We also see some growth in the non-car owner market. With the cost of cars and insurance going up, we see a greater number in the inner city who are not buying cars or who are not replacing their older cars; they’re simply renting cars when they need to get around for something.

The third area of growth is what we call the insurance replacement business. There are more insurance policies that are being sold with vehicle replacement as part of the policy. That is stimulating more car rentals for the insurance replacement market than in the past.

The last area of growth that we see is that, most recently, the large car manufacturers have started to offer as part of their service warranty program a service vehicle or a rental vehicle if the [owner's ] car is in for overnight warranty repairs.

Q. With these areas of growth, do you break them down demographically? For example, in certain areas, do younger or older renters come to Tilden?

A. Within the business travel market, the big lump of age category is 35 to 54, and I think everybody is attracting the same share of this 35 to 54 group. The leisure traveller [is in] a broader age group, especially [in] the downtown core in Montreal, Toronto, Vancouver. [It] doesn’t own cars. It’s a little bit of a younger skew.

Q. Any prime rental location has three or four or more companies open for business. How does Tilden differentiate itself from the competition? Is it even possible to set yourself apart from the other companies?

A. Historically, there has been very little differentiation between car rental companies. One of the main reasons is that, in essence, we are selling a product that is not ours. We are selling a car manufacturer’s product for a day.

There are really three different points the consumers are concerned with. One is price, obviously; the second is service; and the third is the type of car that they get.

Research that has been done in the industry indicates that there is some variation between the car rental companies on these three points, but very little. The reality is there is very little differentiation, but Tilden has begun a strategy just in the past four months to begin to differentiate ourselves.

Tilden is unique in the car rental industry in Canada in that it’s the only car rental company among the top five that’s not owned all or in part by an automobile manufacturer.

So, because of that, it gives us a competitive advantage in the sense that we are flexible to purchase whatever vehicles we think are the best vehicles for that time, whereas other [rental companies] are pretty much tied to [a] manufacturer. Very few people know this is the case in the industry.

We know that having better cars is one of the top three things for customers, so we have begun to differentiate ourselves by having better and different cars.

For example, we’re the only car rental company in Canada that offers Nissans across the country. We have Maximas, Pathfinders and Altimas. We’re about to get Toyota Camrys and Corollas, and, even in a few cities, we have some Mazdas. This is really our strategy to differentiate ourselves from our competition.

Q. There’s remarkably little difference in car rental prices. One of the things you mentioned earlier is that customers are sensitive to price. Has Tilden considered price an option for differentiating itself some more?

A. No. Our strategy on price is to remain competitive. We will set our prices at exactly what everybody else is setting their prices at. We do not want to take a leadership position on price.

Part of the reason is that we have three competitors whose name implies price: Budget, Thrifty, Discount. Because of that, we want to distinguish ourselves with another positioning. The reality is that even those competitors whose names imply they offer better prices, [their] prices are extremely competitive.

Q. Does adding value to the basic rental package make any appreciable difference?

A. We have two programs for the leisure market that add value, actually, three, that have been quite successful; a hotel program, a ski program and a golf program.

If you rent a car at Tilden, you get 50% off at 150 different hotels across the country. That’s an added value.

We have a ski program where if you’re renting a car at Tilden you get a free ski lift ticket at 24 ski areas across the country, and [there's] a similar program for golfers in the summertime. We know that added value works. However, many of the [car rental] companies have the same added value.

Tilden’s most important added value is called the Privilege Program. It’s not so much an added value program but an enhanced service program. It eliminates all of the waiting that takes place.

You don’t have to wait in line; you don’t have to wait while the contract is being processed; you don’t have to sign an agreement. You show up at the counter in the special Privilege line-up; you show us your credit card, we hand you your keys and your contract wallet and tell you where your car is and you’re on your way in literally 30 seconds.

That’s where we believe Tilden’s success is going to be in the future. We feel that we can bring people to Tilden for the better cars we have, but we need to keep them there by getting them into this Privilege Program so that they stay.