Rentall Trucks Case Study
Introduction
This paper will provide an analysis of the case study of Rentall Trucks using Markov
Analysis. The problem statement of the case is about legal issues that surrounded the operation
of two main competitors in the truck renting industry Rentall and Rentran. The scope of a
problem is the extent of perception, action or inquiry of a concept. In our case study, the scope is
an omission in the contracts leading to the sale of Rentall Trucks that could cost the firm millions
of dollars according to Jim Fox (Render et al, 2015). The critical decision issues to be addressed
by Rentall Trucks include how to increase the competitive edge and maintain a large market
share in the industry.
Analysis
One of the critical elements of the Rentall Trucks case is the fact that during its sale, the
contracted law firm omitted a clause that would prove costly in the long-run. Folley, Smith and
Christensen failed to include a clause that would prevent Bob Renton from competing directly
with the firm. This led to the creation of Rentran. The case provides another critical element in
which Rentall faces stiff competition from Rentran, despite the fact that it is only a few months
into its operations. In six months, Bob has succeeded in convincing and poaching a number of
key executives from Rentall into his company, Rentran. The firm managed to acquire a market
share of approximately 5% in the first few months of its operation while Rentall had 80% and
National rentals, another competitor, had 15% (Render et al, 2015). The Market share determines
2
the portion of a market controlled by a particular firm (Rego, Morgan, & Fornell, 2013). It is the
percentage of total sales in a given market earned by a company (Gale, 2014).
Pete Rosen, the president of Rentall Trucks, got concerned about the situation and
decided to conduct research to determine future projections of the firm and the market. His
concerns were that his firm would be incapable of maintaining 50% of the market in the future.
The case has provided a clear set of facts on the current scenario facing the firms. These facts
were established after a research company hired by Pete Rosen conducted an analysis on truck
rental customers. The sample size was 1000 potential and existing customers. Of these, 800 were
Rentall customers, while 60 and 140 were Rentran and National customers respectively. After
one month, the sample was analyzed again. It was found that 200 Rentall customers switched to
Rentran, 80 switched to National, 3 Rentran customers switched to rental, six switched to
National, and finally, 14 National customers switched to Rentall and 35 to Rentran (Render et al,
2015). An in-depth review of the essential issues is offered by these facts.
Solution
In addressing the main points outlined in the case, various recommendations are needed
to solve the problem statement. According to Jim Fox, Rentall Trucks could do nothing to
correct the problem of the costly contract omission by the law firm Folley, Smith, and
Christensen. The only applicable solution would be to formulate and implement effective
business strategies. These strategies would provide a framework through which counter measures
would be adopted to prevent Rentran’s activities and market advancements. The policies adopted
would be to curb Rentran’s ability to lure away both customers and investors from Rentall. Three
areas would require to be reviewed and appropriate changes made. These areas are advertising,
3
rental policy, and product line. The issue of rental policies would require that truck rental
business is made easier and faster. This would necessitate the implementation of some of the
policies used by car rental agencies like Hertz. To attract more customers, changes in the product
line would have to include comfortable and easy to drive trucks, trucks fitted with automatic
transmission, air conditioners, quality radio and stereo tape systems, comfortable bucket seats
and cruise control (Render et al, 2015). Zenetti and Klapper (2016), state that advertising
promotes sales by influencing the behavior of potential customers. This showed that additional
advertising was required to be aggressive and immediate. A good company had to be contracted
and advertising in journals and the television increased. Implementation of these strategies would
give Rentall Trucks a chance of maintaining their close to 80% market share. Changes in the
advertising strategy would ensure that a bigger target audience is reached and their market
behavior influenced to opt for Rentall Truck products and services. This would increase the
number of new customers. On the other hand, changes in the product line and rental policies
would help maintain a loyal customer base for the firm.
Justification
The recommended course of action is justifiable since policy makers and scholars alike
agree to the effectiveness of the stated strategies. The above recommendations have been applied
elsewhere and hence, are tried and tested. The justification for the recommendations is that:
1.) Advertising is a proven strategy to help convince more customers to trust the products
and services being offered by a company as explained by Buil, Chernatony, & Martínez, (2013).
Rentall Trucks is justified in increasing advertising, especially in television and journals.
4
2.) Changing a product line constitutes to rebranding. The strategy of rebranding helps a
company in that it proves to doubtful customers that the brand has reinvented itself and will,
therefore, be in a position to satisfy their tastes and preferences more that before (Gale, 2014).
To Rentall Trucks, changes in the product line will ensure that those customers who had
switched to their rivals are more convinced about its service and product quality and will be
motivated to switch back.
3.) Reviewing of rental policies will revolutionize the whole industry. This is due to the fact
that if Rentall are successful in simplifying the processes involved in renting trucks, they will set
a standard to be followed by all competitors. Setting standards will make them stand out as
market leaders and will therefore have that largest market share.
Summary
This case study provided a case scenario of Rentall Truck Company seeking to gain a
competitive advantage over its competitors, Rentran and National. The companies were
competing for the market share in the truck renting industry. Rentall faced stiff competition from
Rentran, a company owned by its former founder. They found themselves in this situation due to
a blunder of omission of an important clause in its contacts. To retain its customers, Rentall
recommended changes in its advertising strategies, product line and rental policies. The
strategies were justifiable through since they were tried and tested. The justification was further
improved by the market research conducted by Meyers Marketing Research firm.
Calculations
5
- What will the market shares be in one month if these changes are made? If no changes are
made
Rentall – π 1 = 0.8
Rentran – π 2 = 0.06
National Rentals – π 1 = 0.14
Tree diagram (Month 1 with no change)
After Change (Excel calculation)
Probabilities Current Market share
0.85 0.15 0.2 0.8
0.125 0.75 0.25 0.06
0.025 0.1 0.55 0.14
Market Share
Month 1 Month 2 Month 3 Month 4 Month 5
Rentall 0.72 0.66 0.61 0.58 0.56
Rentran 0.18 0.25 0.29 0.32 0.34
6
National 0.10 0.09 0.09 0.10 0.10
Before Change (Excel calculation)
Probabilities Current Market share
0.65 0.05 0.65 0.8
0.25 0.85 0.25 0.06
0.1 0.1 0.1 0.14
Market share
Month 1 Month 2 Month 3 Month 4 Month 5
Rentall 0.61 0.48 0.40 0.35 0.32
Rentran 0.29 0.42 0.50 0.55 0.58
National 0.10 0.10 0.10 0.10 0.10
7
Reference
Buil, I., De Chernatony, L., & Martínez, E. (2013). Examining the role of advertising and sales
promotions in brand equity creation. Journal of Business Research, 66(1), 115-122.
Gale, (2014). Market share reporter. Place of publication not identified: Gale, Cengage
Learning. management. (12 th Ed.). Upper Saddle River, NJ: Pearson.
Rego, L. L., Morgan, N. A., & Fornell, C. (2013). Reexamining the market share–customer
satisfaction relationship. Journal of Marketing, 77(5), 1-20.
Render, B., Stair, R. M., Hanna, M. E. & Hale T. S. (2015). Quantitative analysis for Todor, R.
D. (2014). The importance of branding and rebranding for strategic marketing. Bulletin of
the Transilvania University of Brasov. Economic Sciences. Series V, 7(2), 59.
Zenetti, G., & Klapper, D. (2016). Advertising Effects Under Consumer Heterogeneity–The
Moderating Role of Brand Experience, Advertising Recall and Attitude. Journal of
Retailing, 92(3), 352-372.
