RACV Business Strategy and Sources of Competitive Advantage

In the current business scenario, there are number of sources and strategies being used by the business organizations in order to gain competitive advantages. This is much important in the current time due to the reason that the current business state of affairs is much more competitive in nature with the presence of number of players in different business sectors. This is also leading some of the business organizations in entering in innovative business sectors to attract the customers (Pisano, Pironti and Rieple 2015). One of these distinctive business sectors is roadside assistance provided to the customers. There are number of instances of breaking down of vehicles in middle of roads and travelers face the issue of towing their vehicles. In this case, roadside assistance companies can helps them in providing the instant towing service along with other services.

However, this sector is also witnessing growth in terms of demand and competition and it is leading the organizations operating in this sector to come up with new approaches and strategies to gain competitive advantages. In the recent time, RACV and Allianz came up with unique activities and strategies that helped them to gain competitive advantages (Wrigley and Straker 2016). This report will discuss about the sources through which these two companies gained competitive advantages. In addition, the information of them will be gathered from the news articles selected.

Royal Automobile Club of Victoria is the leading roadside assistance company in the Victorian region of Australia. They offer diverse services to the customers but they operate on community and membership basis. According to their business strategy, membership should be taken in order to avail their services. These services are much diverse and ranges from insurance services, home security systems to financial services and tours and tourism (www.racv.com.au 2018). Thus, members of RACV are having the opportunity to have the access this wide range of services.

According to the selected journal article, RACV is initiating newer strategies and approaches in taking their business to next level. According to Jordan (2014), RACV initiated global approach in creating awareness among the customers regarding the safety features in the cars. The authors have also stated that in the recent time, there are numbers of new safety technologies are being added in the cars but only a minority of the customers is having the real understanding about the utility of these safety features. On the other hand, customers are also largely unaware about the car models that will have less impact on the users in case of the accidents (Kadas and Chatzimisios 2013). According to the author, RACV initiated the scheme of educating their members about these factors and aim to make the roads more safe and accessible. Though, these activities are not related to their core business offerings but it will enhance the engagement level of their members. In addition, this will also generate positive word of mouth from their existing customers.

Allianz Business Strategy and Sources of Competitive Advantage

Allianz is another major player in roadside assistance industry. They are also operating in Australia. However, the business strategy is different from that of the RACV in terms of customers. Allianz provides services to their customers for charges rather than following the membership strategy of RACV (Allianz.com.au 2018). Thus, their services can be availed by anyone at any point of time. In addition, while the services of RACV are more diverse covering different areas, services of Allianz are more focused on the core roadside assistance by means of towing facility and car maintenance and service.

According to Datta and Bonnet (2017), in the recent time there are number of roadside assistances are available in the market. However, the major differentiating factor among all these is the intelligent roadside assistances. This refers to the process of integrating all the elements of the roadside assistances that will further enhance the utility of the customers. The authors have also stated the examples that can be included in the intelligent road assistance system such as mobile app (Gong et al. 2013). This will help the users to have the access to the facilities at any point of time. In regards to this concept, Allianz is also developing their business operation in this sector. They are already having offers such as providing towing facility to the remote areas.

The major source of competitive advantages for RACV is the word of mouth from their existing customers. It is reported that the intensive marketing strategy of RACV is much more effective and efficient compared to the extensive marketing activities of some other organizations such as 7 eleven (www.afr.com 2018). In terms of the Porter’s generic strategy, RACV follows the market focus strategy over the cost leadership and product differentiation. This is due to the reason that RACV operates and offer products on to their members and thus they offer services according to the taste and preference pattern of their limited number of members. On the other hand, there is no point of them to initiate differentiation strategy due to the reason that RACV do not attracts new customers rather they offer standardized services and customers subscribing their services will be provided the same services. Thus, it can be concluded that with the help of the market focus strategy, RACV is focusing only on their existing customers and this is helping them to have enhanced level of customer loyalty and retention. This can also be considered as their competitive advantage due to the reason that they are having lower probability of losing their existing customer base to their competitors.

Market Focus vs Extensive Market Coverage Strategy

It is also being reported that the generation of positive word of mouth from their existing customers is another source of competitive advantage for RACV. This is due to the reason positive word of mouth cannot be imitated or cloned by their competitors and it is to be earned. The effectiveness of positive word of mouth of the existing customers is more in attracting new customers compared to other mediums (Alexandrov and Babakus 2013). In accordance to this objective, RACV initiates the strategy of customer engagement in order to extensively engage with their customers. One of the major examples of their customer engagement strategy is offering diverse services. The services offered by RACV ranges from the insurances to towing facility to lifestyle advocacy. They are having town resorts that can be availed by the members. This is increasing the level of engagement and satisfaction of their members, which is leading to generation of positive word of mouth in the market. Hence, effective implementation of market focus strategy and customer engagement programs is acting as the major source of gaining competitive advantages for RACV.

The source of gaining competitive advantages for Allianz is different to that of the RACV. Allianz initiates extensive market coverage strategy in order to gain competitive advantages. According to the reports, they are not having any membership terms like RACV and thus they target the entire market. This helps them to cover the larger market and generate more revenue. In addition, the also initiated the strategy of market penetration to enhance their presence in the existing market. According to the Ansoff’s matrix, market penetration refers to the introduction of more product or service variants in order to cater to the customers across different levels. In accordance to this strategy, Allianz offers different facilities in relation to the roadside assistance (Medarac, Vignali and Vignali 2016). These facilities include emergency fuel supply, towing facility to the remote area, taxi service and most importantly entire Australia wide services (www.whichcar.com.au 2018). All these services related but are offered differently in order to cater to different needs of the customers. This is helping them to have favorable penetration in the market with having larger revenue and sales volume.

Another major source of gaining competitive advantages for Allianz is product differentiation strategy. Allianz initiates this strategy due to the reason that majority of the roadside assistance providers are offering same services and it is important to differentiate in order to create the distinctive image in the image. In this case, Allianz offers entire Australia wide services including towing facility to the farthest area. This service is not provided by any other players in this sector including RACV (Zehir, Can and Karaoga 2015). Hence, it can be concluded that offering the same services with having different approaches is helping Allianz to have distinctive brand identity in the market and helping them in gaining competitive advantages in the market.

Customer Engagement Programs

Conclusion 

Thus, it can be concluded that both RACV and Allianz are having different sources of competitive advantages. In this report, the major sources of gaining competitive advantages of these two companies are being discussed and evaluated. In addition, the evaluation of these sources is being done using journal articles reported about these companies. This report concludes that RACV gain competitive advantages from their market focus strategy while Allianz gain their competitive advantages from their extensive market coverage strategy and market penetration strategy. However, it can also be concluded that both the companies are doing good job in terms of their business regardless of having different business approach.

Reference 

Jordan, C., 2014. RACV takes a global approach to road safety. Journal of the Australasian College of Road Safety, 25(3), p.56.

www.whichcar.com.au (2018). Advice: Roadside Assistance In The Bush. [online] WhichCar. Available at: https://www.whichcar.com.au/gear/advice-roadside-assistance-in-the-bush [Accessed 5 Aug. 2018].

www.afr.com (2018). How RACV showed doing the right thing can be the best business model of all. [online] Financial Review. Available at: https://www.afr.com/business/how-racv-showed-doing-the-right-thing-can-be-the-best-business-model-of-all-20150901-k9zc7 [Accessed 5 Aug. 2018].

www.racv.com.au (2018). RACV | Roadside Assist, Car Loans, Insurance & Travel. [online] @RACV. Available at: https://www.racv.com.au/ [Accessed 5 Aug. 2018].

Pisano, P., Pironti, M. and Rieple, A., 2015. Identify innovative business models: can innovative business models enable players to react to ongoing or unpredictable trends?. Entrepreneurship Research Journal, 5(3), pp.181-199.

Wrigley, C. and Straker, K., 2016. Designing innovative business models with a framework that promotes experimentation. Strategy & Leadership, 44(1), pp.11-19.

Kadas, G. and Chatzimisios, P., 2013. The Role of Roadside Assistance in Vehicular Communication Networks: Security, Quality of Service, and Routing Issues. In Roadside Networks for Vehicular Communications: Architectures, Applications, and Test Fields (pp. 1-37). IGI Global.

Gong, H., Liu, N., Yu, L. and Song, C., 2013. An efficient data dissemination protocol with roadside parked vehicles’ assistance in vehicular networks. International Journal of Distributed Sensor Networks, 9(11), p.317560.

Zehir, C., Can, E. and Karaboga, T., 2015. Linking entrepreneurial orientation to firm performance: the role of differentiation strategy and innovation performance. Procedia-Social and Behavioral Sciences, 210, pp.358-367.

Alexandrov, A., Lilly, B. and Babakus, E., 2013. The effects of social-and self-motives on the intentions to share positive and negative word of mouth. Journal of the Academy of Marketing Science, 41(5), pp.531-546.

Medarac, H., Vignali, G. and Vignali, C., 2016. Improving relations between business strategy and marketing tactics. International Journal of Business and Globalisation, 16(1), pp.50-65.

Datta, S.K. and Bonnet, C., 2017, June. An IoT framework for intelligent roadside assistance system. In Consumer Electronics-Taiwan (ICCE-TW), 2017 IEEE International Conference on (pp. 353-354). IEEE.

Allianz.com.au (2018). Allianz Roadside Assistance – 24/7 Help Australia Wide From $99/Year. [online] Allianz.com.au. Available at: https://www.allianz.com.au/roadside-assistance/ [Accessed 5 Aug. 2018].