Autobytel Case Study
Problem Statement
How should Autobytel adjust its product and marketing mix to achieve profitability?
Alternatives
Alt-1: Increase efforts on new car sales
Alt-2: Increase efforts on Service & Parts
Alt-3: Increase efforts on used cars
Alt-4: Increase financing and insurance services
Alt-5: Expend wholesale business
Alt-6: Explore rural market
Alt-7: Go global
Alt-8: M & A
Alt-9: Reposition marketing mix Critical issues
Autobytel’s primary source of revenue was dealer
…show more content…
Mass advertising would not be effective.
Alt-7: Go global
Autobytel should go global to increase its customer basis. It could use Europe as a test ground then expend to other part of the world. Autobytel should start market research, build alliance with partners and dealerships.
Alt-8: Reposition marketing efforts
Current spending was excessive and not sustainable. Autobytel should tie its marketing budget with revenue. All Autobytel’s customers were internet users, therefore internet advertising should be most effective. As to dealers, Autobytel should use field reps to sign them up and provide services. In either case, mass marketing should not be used.
Alt-9: M & A activities
Another way to expend customer base was through M & A. An ideal target would be another online service with strong presence in used car sales, or in a different geographic area.
Analyses of Recommendations
According to 5-force analysis (Exhibit 1), the industry of online automotive buying service was not attractive, but opportunities existed in certain segments. The automobile retaining industry derived revenue sources from new car sale, used cars sale, services and parts. There was striking disparity between revenue generation and profit generation among these activities. New cars generated 60% of revenue, but only 13% of the profit; used cars generated 29% revenue, but 27% of the profit;
Our recommendation would be to continue their strategic focus on growing their market share, geographical expansion and utilizing marketing integration opportunities via various social media and
Autoliv is a world class example of lean manufacturing. This Fortune 500 Company makes automotive safety components such as seat belt, airbags, and steering wheels, and has over 80 plants in more than 32 countries. Revenue in 2007 topped $6.7 billion. Autoliv’s lean manufacturing environment is called the Autoliv Production System (APS), and is based on the world’s largest automobile manufacturers, and embodied in its Toyota Production System (TPS). At the heart of Autoliv is a system that focuses on continuous improvement. Based on the “House of Toyota”, Autoliv Ogden, Utah, air bag plants put the concepts embodied in the house to work every day. The only difference between the Toyota house and the one at Autoliv is that the company has
Tesla Motors to maintain its profitability through strategic measures to solve the problems of automotive business analysis outlined in the five armies. Michael Porter 's five-power analysis model is designed as an instrument to understand the impact of external factors on the conditions of doing business and the environment of their industry. Analysis of Tesla 's five armies of external factors in the automotive industry, and how these factors affect the company. As one of the largest participants in the electric vehicle market, Tesla must effectively address these external factors in order to ensure that in the face of domestic and international competitors in the market of long-term power and flexibility.
There are many products and services available in the market today. The automobile market is no different. There are many brands, styles, and price ranges when it comes to vehicles. One specific area of the automobile market are trucks, more specifically is the Ram truck. Dodge Ram has been around since 1981. Truck sales have hit an all time high since 2007 proving that fuel prices are not affecting sales as much (Ross, J. 2013). The big three, Ford, Chevy, and Ram continue to fight each other in the truck selling business and have cut-throat marketing to try to be the best and on top of truck sales. Ram has gotten rid
Another advertising & promotion technique they could use is Groupon, which was an appealing option because it involves zero start up cost and a wide customer reach.
Used car market was a huge market with attractive growth opportunities during 1980s. It was estimated worth $ 375 billion market. Competition was so deeply fragmented that no single dealership could claim more than a few percentage points share of the used car market in any locale. New car dealerships were the largest sellers of used cars. 65 % of late model, used vehicles were sold by 21,800 new car dealers through out United States. However most of these new car dealers considered used cars a secondary business. The remaining 35 % was a mix of independent used car dealers and private sales. Between 1985 and 2001, the year over year change in used units sold averaged less than two percent up or down.
While car manufacturing is a global industry, automotive companies such as JLR operate in broader regions such as Europe and Asia. Three major trends were identified affecting car production in mature markets, the first was the fragmentation of mature markets, customers were demanding more choice, and this has made it difficult for manufacturers to obtain economies of scale, so cost had to be reduced and with the general
With the introduction to new technology in the automotive industry, consumers are struggling to maintain and repair their own vehicles. They are relying on professionals in order to complete even minor repairs on their vehicles which forces them to find businesses which not only provides the needed parts but also assist with instruction on how to replace it. The demand for automobile parts is driven by the age and mileage of vehicles in use and generally increases when fewer new cars are sold and older cares are kept on the road, causing the profitability of individuals companies such as AutoZone to depend on inventory management and marketing (Tippie, 2015). For AutoZone, they were able to expand their brand very quickly with a robust financial performance over the years but with competition like The Pep Boys, O’Reilly Automotive and Advance Auto Parts, Inc. they must continue to analyze their strengths against the market in order to stay
The automotive industry designs, develops, manufactures, markets and sells motor vehicles, and is one of the world’s most important economic divisions by profits. This analysis focuses on the industry, specifically, manufacturers of automobiles. There are five competitors in the StratSim environment: Firm A, B, C, D, and E. Industry sales in the most recent year were 4.3 million units, with expected growth in the next year. Within this industry, there are seven-vehicle classes: Economy, Family, Luxury, Sports, Minivan, Truck, and Utility. There are two new classes with potential – if properly marketed.
It is mentioned earlier that there are no locations in Saskatchewan, Manitoba and much of their target market in the United States. Fix Auto needs to focus on their primary objective of becoming the North American auto body repair chain. Fix Auto is experiencing overexpansion. “Overexpansion often occurs when business owners confuse success with how fast they can expand their business” (Schaefer, 2006, Overexpansion.). In a 2005 study done by the Law School at the University of Chicago, It was found that of the chapter 11 small business Bankruptcies issued in the United States, overexpansion contributed to a “non-trivial” (Baird & Morrison, 2005, Pg. 7, Para. 1) number of cases. The best method for expansion is steadily and to move to new countries one at a time. (Schaefer, 2006, Overexpansion). Fix Auto should capitalize on their existing regions such as the United States, Canada, and the United Kingdom before moving into new markets such as Australia, South Africa and Turkey.
Auto Zone has responded positively to the changes in its microenvironment. The company has managed to keep up with the many changes in the economy. Changes in the economy can cause an increase or decrease in gross domestic products. Gross domestic products can affect some industry more than others, especially those in global markets. (Parnell, 2013). “Over the past 15 years the auto industry has shifted from a regional industry to a global industry, as a result of this shift the original equipment supplier base has been pulled in the same direction” (Santucci,1997, p.1) Auto Zone has keep up with changes and shifted into the global industry as well. The company has stores in all 50 states and now has expanded globally into Mexico and Brazil."Expanding
Therefore, if people are buying new vehicles they are likely disposing of their old vehicles. Whether it is selling the car for a fraction of the original cost or selling the car for scraps, the consumer wants to make some sort of profit. Enter AutoTrader, one of Canada’s first online websites that allows consumers to swap, sell and buy used vehicles. AutoTrader is the only large multinational company that satisfies this niche market. SHOP.CA has already built a strong brand name and the development of an automotive department should be very successful. Used vehicles can generate massive profits with the sale of few units so it would only take a few sales for the automotive department to be considered a success and make a lasting impact on the company. SHOP.CA is slowly but surely expanding their departments to attract new consumers so developing an automotive department can be expected in the near
Focus more on large growing markets and exceed the sales up to 10 million cars per year.
They had to expand their market reach intelligently, and therefore moved from a low-end segment to higher-margin ones, while making the best use of marketing. As a result, by the early 1990s, most of the auto firms had offerings not only in the mid- range, but also at the very top of the luxury market.
Ford Motor Company preserves its place as one of the largest makers of vehicles globally by making changes to its strategies. Ford needs to create a plan of action and ideas that react to the most substantial effects from outside divisors in the motor vehicle industry globally. The Five Forces analysis of Ford Motor Company recognizes the most significant outside elements and how they affect the company, rendering data that helps in management’s decision-making process.