Eco 7: Launching A New Motor Oil Harvard Case Solution & Analysis

Eco 7: Launching A New Motor Oil Case Solution

Q 1. Characterize and assess the behavior of consumers in their purchase of motor oil i.e. assess, among any other considerations, the nature of the purchase, the benefits and risks associated with the purchase of the product, the price sensitivity, where it is bought, etc.

Consumer Behavior

Consumers are divided into two segments; one do-it-yourself (D I Y), and second is Do-it-for-me (DI FM). In D I Y segment, the consumers purchase motor oil from a wholesale or retail store, and change the oil themselves. These consumers are likely from rural areas, or from small towns, however they are more aware of the products’ specifications, and they have better understanding of difference between oils. Indeed they are cost-conscious regarding the automotive maintenance, and possibly less affluent.

On the other hand, the DI FM segment consumers prefer to go to the station to change oil, as well as they seek professional expertise in changing the motor oil, because they are more educated, and have higher income, and are likely from large cities. Due to their segment preference, they more likely to prefer foreign cars, and luxury vehicles, that require more care than the later segment consumers. Furthermore, survey has indicated that most DI FM segment consumers could not explain the products specifications, even they did not know the name of oil that they had purchased recently to change oil.

Benefits and Risks

Eco 7 has been created from recycled material to become more environment friendly, due to the used oil, harmed soil, and water, if the oil is not disposed of properly. Furthermore, it could be refined, and reused, thus it performs better, as well it is more fuel-efficient and environmentally friendly, and comparable to synthetic blend; this makes it more superior to the conventional oil. Furthermore, it performs better at both extreme and light temperatures without breaking down, and has longevity and performance. In addition to the superiority, the oil will require replacement after 7,500 miles, which is equal to the synthetic blend mileage.

Price & Location

Eco 7 has $6.75 retail price and $5.25 a discounted price, whereas both prices are almost equal to the two other products of the company, and Javelin Synthetic oil is sold from $5.50 to $9. Therefore, it is more important to let the customers know about the new Eco 7 oil classifications, however educating the customers about this is the main issue.

In the survey presented in the case, 47% respondents showed interest into green motor oil, which is more environment friendly than the conventional oil. Moreover, there are few hybrid or electric vehicles, as most people have standard cars that require regular oil change, therefore environmentally friendly oil is needed with competitive performance, and price, so as to make it compelling.

However, proximity to customer is an important, in terms of commodity business, which is required frequently, similarly many DI FM consumers are attracted by the location of the oil change station, and time of the oil change, and professionalism of the installer.

Furthermore, DI FM consumers use various options to change oil depending upon the requirements such as from last lube, or “quick lube” service, oil change-plus, repair shops, car dealers, mass merchandisers and warehouse clubs. On the other hand, oil change-plus is more attractive to the consumers, because these outlets provide services other than oil changes like tires, mufflers, or brakes. Even 36% oil changes are done by the fast lube “quick oil change service”.

Question 2. Assess Javelin's position in the passenger car motor oil (PC MO) market, including consumer perceptions and distribution strategy. Why has it lost market share over time?

Javelin's position in passenger car motor oil (PC MO) has been declining. Since 2000, its market share in PC MO market has reduced from 14% to 11%, around -3%. On the other hand, no other company’s share has reduced during this period, but in contrast, the sales of brand share have declined by 13%, and private label sale has increased by same percentage.

Eco 7 Launching A New Motor Oil Harvard Case Solution & Analysis

 

Through hard work, Javelin provided the best services and promotional programs to wholesale distributors and DI FM customers. It has three basic channels. Through independent DI FM, Javelin was the leading passenger car motor oil brand among independent DI FM customers, which included fast lubes, oil change plus stores, and repair shops.

Similarly, the company also promoted its avenge program to build loyalty. This included dedicated team of sales managers, management of in store display, customer support and education. Therefore, the company’s 68% sales were from independent DI FM customers.

Moreover, the company’s national retailer includes large mass merchandisers, warehouse club as well as it had been satisfied by the retailers to put the products on the shelf for D I Y segment. Sale through this channel accounted for 9% only. Furthermore, the company also sold its PC MO products through its Travelling stores, either the company owned or franchised...............

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