Eco7: Launching a New Motor Oil Harvard Case Solution & Analysis

Eco7: Launching a New Motor Oil Case Solution 

Section 1: What are the primary of determinants of consumers’ motor oil purchases?  What are the implications of consumer behavior on the distribution strategy for Eco7? 

 

There are some important factors that are required to analyze the consumers’ awareness over motor oil purchases. One of these is the price factor, which plays an important role to develop or negatively affect the company’s profit margins. The other factor includes consistency over quality performance and its usage. In this case, the motor oil’s market is very competitive over these two factors and every competitor is trying to overcome all the obstacles associated with price as well as quality in order to satisfy their customers.

 

The distribution strategy of Eco7 was somehow not in favor of some consumers because the product could only be distributed in independent DIFM (Do in for me) and a particular auto storesowned by Avellin instead of offering to mass merchandisers. Therefore, the strategy clearly illustrates that Eco7 was not focusing to offer with different private labels (which would benefit the consumers with high gross margins) and it would supply the product in limited channels other than mass distribution.

 

 Section 2: Evaluate the PCMO market and Avellin’s position in that market. 

It is expected that now the trend has shifted towards DIFM which is connected to the wealthy people.The distribution channels of motor oil industry are mainly focusing on the marketing of the products where fast-lubes are the major players for the services of DIFM and mass merchandiser are relying on DIY. Baud is the only one having 30% of fast-lube channels and is the largest PCMO manufacturer.

 

Avellin is one of the major manufacturers in PCMO and it ranks third position. It has a steady growth since 2005 due to its successful products with low prices as compared to other competitors.

 

Section 3: How can Eco7 help revitalize the PCMO business at Avellin?

Since 2005, Avellin is still growing steadily and has not been successful in the marketing channels of DIFM. However, introducing the Eco7 can be considered as the key decision for Avellin as it is a new innovative product with extra features and offering in low prices. This product will be similar to synthetic blend and as well as it will be ideal for DIFM consumers. The company has the option to offer in different prices according to the demand of different channels. This can allow to increase the profit margins of Avellin and to take competitive advantage over it.

 

 Section 4: Who are Avellin’s core customers? What impact will Avellin’s current customer base have on the launch of Evo7?

 

Avellin’s main revenues come from DIFM customers as they are not price conscious and only look for the product’s quality instead of brand awareness. In order to follow this chain, Avellin is now trying to distribute its products into different channels which are associated with DIFM. With modest level of earrings, the company is now looking for theprice factorwhere it will distribute the products under different prices to the channels according to their demand and also provide incentives in order to maintain its existing consumers.

The impact of launching Eco7 can be unfavorable to some customers as the product will only be distributed by the selected channels of the company and not allowing to offer into mass distribution channels where the customers want to manage in private label in order to increase their profit margins. The price of the new product is not according to the demand of different distribution channels but it will be beneficial for DIFM channels who want the quality of product instead of its price.

 

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