Eco7: launching a new motor oil Case Solution
Introduction And summary of problem
Eco7 is one of the leading oil refining companies worldwide, which was established by Avelline in 1936. They are US-based company that specializes in chemical manufacturing. They have also diversified their operations to petroleum division. The Key drivers of PCMO (passenger car motor oil) include frequency of maintenance, car sales, and mileage. The experts also expect that the company will achieve an annual growth of more than 2% through 2020. The company gains lower profit margin from its oil refining and marketing fuel business. The main reason behind this is that the company was facing intense competition in the market as well as required skill in order to compete with its integrated competitors. Moreover, after analyzing the market performance of the company it is evaluated that the company generates its 60% of its revenue and 40% of its profits from its automobile business. On the other hand, the company operates approximately ten packaging and lubricant plants in United States as well as seven regional distribution centers. The company has operated its operation from its own fast-lube chain called Avellin Auto. Furthermore, the company within its automobile division generates approximately 65% revenue, along with the gross margin of 20% to 22%. The rest of the revenue company generates from its motor oil sales and automotive chemicals which include coolants and brake fluid.
This case discusses the actions and challenges that company faced in order to maintain its effective position in the automobile industry. Aaron Jonnerson has taken further decisions that will help the company in launching the new Eco7 environmental-friendly motor oil in the market. Due to intense competition, shareholder’s pressure is increasing and expectations are high for Eco7. However, the company has faced several challenges in the market in order to successfully launch the new eco7 motor oil. In PCMO market, the consumers are very price sensitive. As per the analysis of the company’s performance, it is further evaluated that as compared to other channels the interdependent oil change outlet have decreased at a rapid speed which is not a good sign for the company. In addition, it is also necessary for the company to maintain its best pricing strategy for its newly launched product that would help the company to maintain its position in the market. One of the major problems the company faced is the price competition between channels that has been a reason of pressure for long. Another challenge for the company is to make sure that the customers would pay premium price for Eco7, that is an environment friendly product as well as a better driving performer. Moreover, the promotion comes at a phase where the firm may need to adapt to alterations in a marketplace that is progressively commoditized and in which the comparative position of diverse distribution channels is varying. In this case, we need to highlight alternatives and recommendations that will help them in maintaining its pricing and distribution channels as well as provide them guidelines about the tradeoffs through which the company can successfully launch its eco7 product in the market.
swot analysis
ANALYSIS
There are two types of consumers vehicle lubricants which include DIY (do it yourself) and DIFM (do it for me) both of these segments have their own referrers on how to and where to purchase the oil..................
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