ECO7: LAUNCHING A NEW MOTOR OIL Harvard Case Solution & Analysis

Eco7: Launching a New Motor Oil Case Study Solution

Question # 1

Assess Avellin’s market position in the PCMO industry.  What is the main marketing issue/marketing opportunity facing Avellin?  What evidence (indicators and data from the case) supports your response, and that would impact an Avellin marketing decision?  (Hint: Do not spend time here on solutions or recommendations.)

Answer # 1

Market Position

Avellin holds 11% of market share in 2011, ranking third in purchasing cars motor oil in the United States. However, the market share has declined since 2000, as in 2001 company’s market share was 14%. On the other hand, Avellin had the strongest position for DIFM (Do-It-For-Me) consumers.

Avellin has always focused on being the preferred brand in DIFM since its initiation, as it’s easy for independent customers to switch their brands. Therefore, Avellin has always worked hard to facilitate its customers with best services and pricing strategy. As a result, Avellin generated most of its revenue that is 68% of its sales from independent DIFM consumers.

ECO7 LAUNCHING A NEW MOTOR OIL Harvard Case Solution & Analysis

Marketing issues/opportunities

Marketing Issues:

• High cost
• Ignorance of DIY segment
• Market penetration based on price, which is relatively higher.

Marketing Opportunities:

• Less energy requirement
• Longer and higher performance of recycled items
• Product Combination of environmental freely and supreme performance
• Effectiveness of slogan
• Competitive advantage over SevoGreen of Sevoline.

Avellin’s marketing decision

The test marketing of new product eco7 has left the company with a decision of projecting their penetration on a pricing basis. The customers were demanding lesser price, but due to high cost, the high price needs to be charged. Therefore, the company decided to offer selling rights exclusively. In doing so, the company planned to sell either to independent DIFM stores or at Avellin Auto Store.

Question # 2:

The PMCO market consists of two broad consumer segments, five types of service providers, and a network of channel partners.  About 84% of Avellin’s current revenue comes from three customer types.  What is Avellin’svalue proposition for each of these three customer types (1-2 sentences each)?

Answer # 2:

The value proposition for each of the three customer types on which Avellin had been gaining revenues are from:

• Independent DIFM: Avellin was one of the leading firmsamong the independent DIFM customers due to its Aventage The Aventage Program consists of dedicated sales manager, providing customers with the information on the oil changes, discounts and also providing Avellin on customer buying behavior and trends.
• National Retailers: Avellin used the DIY strategy by placing its oil on thebottle and sold it to customers through national retailers such as warehouse clubs, auto parts, merchandisers and supermarkets such as Wal-Mart. The new product Eco7 was packed in a green bottle to show it as eco-friendly and were placed in attractive shelves to catch the attention of customers.
• AvellinAuto:AvellinAuto are the auto shops owned by Avellinwhere it provides fast lube, oil changes, and repairs. The reasons that Avellin decided to open its auto shops is to target and gain more customers and create brand awareness in the PCMO market.

ECO7 LAUNCHING A NEW MOTOR OIL Harvard Case Solution & Analysis

Question # 3:

Is motor oil a high or low involvement purchase?  How do you know? (Provide evidence.)

Answer # 3:

The motor oil is a low involvement purchase for the consumers as a survey was conducted regarding the buying behavior of the customer towards the purchase of motor oil. It was found in that survey that most of the customers are not even aware of oil classifications which are conventional, full synthetic and synthetic blend and most of the customers cannot even recall of which brand oil they had purchased the last time they had changed their vehicle’s oil. The customers are only told that the oil needs to be changed after driving 3000 miles or three months after its last oil change.

The only thing which the customer is mostly conscious about before doing an oil change is the price. Since the conventional oil is the least costly than the other two, most of the consumers use the conventional oil for their vehicle. Due to advanced technology, new eco-friendly oils are being introduced in the market.Also, it was surveyed that the customers who valued environmental options are significantly increasing nowadays.

Question # 4:

Given the results and concerns of the Eco7 test marketing, which customer type(s) represent the best target for an Eco7 brand?  Why? .......................

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