You’ve been hired as the manager of an A+ Rental

You’ve been hired as the manager of an A+ Rental Cars franchise that serves a small southern city. A+ is located at a regional airport, and 40% of their customers are travelers, with the remaining coming from the town (which has a small college and a solar panel production facility). The airport is a good location for the business, as it is located very close to the college campus, and about a 10-minute drive into the center of town (which can also be reached by taxi or bus).

You have a fleet of 72 cars on site (47 ‘economy’ cars and 25 ‘luxury’ cars). Additional cars can be delivered from A+ Rental Cars’ corporate hub, approximately 70 miles away, if demand for a particular vehicle type exceeds the number of cars you have available. Alternatively, a customer renting an economy car can be upgraded at no charge to a luxury car, if demand exceeds availability for economy cars.

There is one local competitor, Discovery Rent-a-Car, also located at the airport. They have a slightly different system of car categories: Sub-Compact, Compact, Mid-Sized, and Large

The owners would like to have a better understanding of the market environment in which the franchise operates and want you to estimate a demand equation that accounts for various factors that affect your customer traffic. You will use regression analysis to estimate the equation, and you will use the estimated equation for other analyses.

What data do you need/want for your empirical study? Specifically, 

(1) What are you planning to use as the dependent variable in your regression? (and what are the units of measurement for that variable?) 

(2) What other data (independent variables) would you need and can be realistically obtained? You may request information about up to five independent variables.

For each variable you request, provide reasons why you expect it to be important for your analysis and explain the expected sign of the relationship between the proposed independent variable and the dependent one.

Create a memo to the franchise owners requesting permission to hire a market research firm to gather the information you need, justifying the need by answering the questions above.


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