MARKET SEGMENT OF ECO7 Harvard Case Solution & Analysis


Over the past few years, the market segment for the motor oil change had reduced mainly in the category of “Do-it-yourself (DIY).In the US, there aretwo categories of services provided by the service stations;one is Do-it-yourself, in which customers can come and pick the oil for their car and change the oil themselves. Whereas,the other one isDo-it-For-me (DIFM), in which professional service providers change the oil for the customers in fast-lube stations.

With the changing time, the preferences of the market in the US are changing as well, therefore there is a concept of using more eco-friendly products that can lower the emission of harmful gases in the environment.Moreover, the market of passenger car motor oil is maturing, the oil change lubricants are becoming more of a commodity in the US market and there is a shift of customers from DIY to DIFM service.The dilemma is whenever any product becomes a commodity in a mature market, the pricing of the product gets affected negatively because the customers have a lot of substitutes on the bases of prices and features therefore, the company has to look for different ways to be the leader in the industry.

By considering the above discussed circumstances, the company,Avellin, has to focus on its core competencies, which are great quality and premium brand image to target people for its new launch.The company has to target people who have income more than $50,000 a month, and whose spending is done on luxuries.Avellin has to launch eco7 as a premium brand again having the same features of fast-lube oil however,it has an additional factor, which makes it unique, and that is the environmental factor. The company also has to price eco7 as not economical, but as a product that is more environmental friendly and comprises all the features of best engine oil and for that,it may set the price greater than the competitors.

The reason people will try the new eco7 is that the company already has goodwill in the market for its quality products, and customers buy these oils due to their durability and performance.Therefore,launching a new product that will make people think themselves as a responsible citizen by using greener products and asking an additional price for oil will not affect the sales of eco7.

In this case, the company has to portray the idea of “responsible citizen” for the customers who use eco7, by exploiting the new market which requires greener products to save the environment and themselves.This factor can be helpful in justifying the premium pricing.Moreover, the target market, which is mainly the upper-middle class, focuses on more satisfying service than the price therefore,the company should cater them by considering the income,interest and delight points of its customers.

Furthermore, in order to segment the market for Eco7, the company should put emphasis on the outcomes of the products and not just the features of the product to differentiate itself from other competitors. The company also has the advantage of having prior knowledge regarding the new emerging markets for greener product as one of the players from oil industry has already tasted the sea water, and the results were positive.. In addition to the launch, the company has to invest moderate amount in its marketing campaigns to build an image in the mind of the customers, which the company is planning to target.

Creating Presence in Product Category:

In the following case, the company operates in a mature market where it is difficult to keep the produce image unique and distinctive, however there are few phases in which Avellin can operate to withstand the maturing market while keeping the product image alive and distinctive................

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