Department of Management Studies

MARKETING MANAGEMENT

CASE STUDY REPORT:

Eco7: Launching a New Motor Oil

Submitted To:
Dr. Achint Nigam

Submitted By:
Aishwarya Shukla [2019H1490800P]
Advait Doshi [2019H1490829P]
Akanksha Panwar [2019H1490855P]
Abhishek S [2019H1490812P]

Soujanya Patil [2019H1490865P]

Abhinav Myadam [2019H1490864P]

Submitted on: 14-04-2020

 EXECUTIVE SUMMARY

This case talks about a buzz that has been generated within the automobile
industry due to a new market opportunity which is, enhanced customer
interest in green automobile technology such as electric vehicles and hybrid
technology. Due to its infancy stage, green motor oil initiative has become a
promising yet challenging task for all channel partners. Through the research
and development sector is focused on improving the quality of the existing oil,
green oil is still a far-fetched idea.
 INTRODUCTION

Avellin, an automobile company, was founded in the United States in 1936. In

1980s Avellin focused on becoming a top-notch brand in the DIFM channel. In
1995 it exited the lower margin businesses such as refining and marketing fuels
by getting rid of its petroleum division. Further, in 2005 Avellin started losing
its market share with an almost inactive growth. But in 2012 the company
started manufacturing a new motor oil based out of recycling materials. And in
2014 the company operated 10 lubricant blending and packaging plants and 7
regional distributional centers.

Eco-7, the case, named after Eco-7(a new environment-friendly motor oil) talks
about the urgency of decision making over the marketing mix of the new
product by the vice president of marketing( Aaron Jonnerson) at the
automotive division of Avellin. In the past, the company’s performance has
been mediocre, with the increased pressure from shareholders, the
expectations are too high for Eco-7.

However, Aaron faces few difficulties in ensuring a successful launch and

designing the best pricing strategy for the Eco- 7 oil. Passenger car motor oil
(PCMO) market is mature and consumers are price-sensitive. Moreover, the oil
change outlets which are independent that are Avellin's core customers have
declined relative to other channels. The Eco7 case asks us to analyze consumer
behavior and channel conflict and includes them in the product launch. The
launch arrives at a time when the company is required to adapt to changes in
the increasing commoditized market and in which the importance of various
distribution channels is changing. We are asked to make recommendations
and judgments on pricing and distribution and to suggest the best trade-off,
the company should take.
Below are the few working objectives from the case:

1. In this report we will show how channel conflict can arise as markets evolve;

2. We will be examining the challenges of maintaining and changing

relationships with different channels;

3. We will explore how support from the channel partners plays a crucial role
in the new product launch success.

4. We will be demonstrating the relationship between pricing decisions in a

marketing plan and channels.

5. We will be evaluating how changing market priorities and new product

attributes affect channel decisions.
CHALLENGE:
To capture the commoditized market for ‘green’ motor oil and to increase the
overall market share by 2%.

ANALYSIS:
A buying behavior can be studied with extensive research with ‘planned
purchase’ less likely to occur and discordance in the buying behavior with a
focus more on the brands with high awareness can result in ‘sudden
replacement’ which is more likely to occur.

Decision-making unit

1. Initiators: To bring the change in the motor oil

2. Information seeker: Sudden requirements: planned –self & planned-
scheduled
3. Influencers: Service provider / firm owners/friends
4. Decision-makers: Technical consultants/drivers
5. Purchasers: Vehicle/firm owner
6. Users: need to replace

We will be using various analysis tools to study the case, they are:
SWOT analysis
STP analysis
BCG analysis
 SWOT ANALYSIS

Strengths:
1.) Company has been well established since 1936
2.) Got hold on DIFM since the 1980’s.
3.) Ranked Third among PCMO manufacturers

Weaknesses:
1.) Poor innovation in product development
2.) Very slow growth since 2005
3.) Improper financial management

Opportunities:
1.) Green motor oil expected to grow in the market from its infancy stage

Threats:
1.) Lower price being offered by the competitors
2.) SevoGreen a big competitor of Eco-7
3.) Expansion of Fast lube chain by Baud & Motoline
 STP ANALYSIS

PASSENGER CAR MOTOR OIL

Segment DIY( Do it yourself) DIFM (Do it for me)

Psychographic 1.) Traditionalism 1.) Professionalism

2.) Like to remain 2.) Not worry much
informed about their about the vehicle
vehicles 3.) Prefer luxury
3.) Prefer trucks and vehicles and foreign
sports utility vehicles cars

Demographic 1.) Less affluent 1.) High income

2.) younger 2.) Older
3.) Live in towns and 3.) Live in metropolitan
rural areas cities
4.) Not so learned 4) learned

Behavioral 1.) Cost seeker 1.) Quality seeker

2.) Customer loyalty 2.) Trust in professional
advice

PCMO service providers:

Fast lube(32%)
Car dealer(29%)
Oil-change plus(12%)
Mass merchandisers and clubs(10%)
Repair shop(9%)
Others(8%)
PCMO Consumers
DIY – 25%
DIFM –Price focused (45%)
Quality focused (30%)

PCMO Service providers:

Fast lubes: Time in which the oil change service can take place approx. 30
minutes.

Oil change plus: The outlets were more of specialty stores focused mainly
on specific products and services i.e. tires, breaks, etc.
Repair shop: They offered auto mechanic services/tire changes/ gasoline sales.
These are small independent outlets.

Car dealer: They focused on the sale or lease of a vehicle. They also provided
after-sales service, as a part of the vehicle warranty.

Mass merchandisers and clubs: These are large retail chains that sold
household goods, food and electronics.
Others:
 BCG ANALYSIS

Industry Growth rate @ (y) axis vs Relative Market share @ x axis

Question Sta
High mark r

Full
Synthetic

I.G.R

Dog Cash Cow

Conventional + synthetic
blend

low

Low R.M.S High

 MARKETING MIX for Eco-7
Product:
Environment-friendly motor oil
65% of recycled oil
Manufactured from recycled materials
45% energy saving
Better driving performance

Recycling the used oil potentially multiple times

Eco-7 is the packaged part of PCMO services

Price:
Conventional oil: $3.25
Synthetic blend: $4.75
Full synthetic: $7.00
Pros and cons of keeping Eco-7 in the range of $5.25 to $6.25
Price@ $5.25
Easy to sell
4.5 sales per day
Would squeeze margins

Won’t be able to prove Eco-7 as a premium product

Devaluying the product
Price @$6.25
3.5 sales per day
The Competitor is selling it at $7.50
Not easy to sell independently
As expensive as full synthetic
Place:
Independent DIFM:

6000 fast lube; 6,500 oil change-plus stores

The company promoted its aventage program

Car dealer:
Sells hybrid and electric cars
Predetermined maintenance check

One-stop-shop for all the tasks

Avellin Auto:

436 stores generated 7% of PCMO sales which were opened in 2014

Very close to the distribution center but very away from independent DIFM

Promotion:
Aventage AveGreen
Market Independent DIFM Car dealer
Mission To strengthen its brand To create a new market
awareness segment and support
green oil
message Aim of providing the Focusing on green
best value to customers factor with no sacrifice
i.e. quality, durability in quality
and value of money
Media Advertising, P.R., Direct marketing
Money Approx. 2% of net profit is used for promotion
purposes
Measure Customer satisfaction index, loyalty rate, monthly
sales report
 Financial Analysis/Calculation

Below, are the data given in the case,

ECO7Full vs ECO7 Dis. (DIFM Incremental)

Calculation @avg. retail price( $6.75)

Calculation @avg. retail price ($5.25)

 Test Marketing

1.) It can be done by releasing the new product in the market for a trial run,
with a price of 1 unit put between the range $5.25 to
$6.25.
2.) The cost of 1 unit of Eco 7 would be $2.01 and $1.95 as well as $1.20 for
synthetic and conventional respectively.
3.) Campus slogan and the design of the bottle can be worked upon.
4.) Surveys can be conducted.

@$5.25
DFIM would be $4.5
Avellin Auto would be $6.00

@$6.75
DFIM would be $4.5
Avellin Auto would be $6.00

5.) The result is that the installers advise influences the purchaser and we
can start to promote due to the higher margin.
 Marketing controls

Type of control Foremost Need of control Approaches

responsibility
Strategy Top management to check if the Marketing
company is
marketing auditor grabbing effectiveness
opportunities
w.r.t Marketing audit,
market, products etc.
and channels
profitability Market controller to check whether Product
the company is in customer
profit or loss The segment, etc.
Efficiency Line and staff To check the Salesforce
management efficiency of the Sales promotion,
expenditures etc.
Annual plan Top management To check whether Sales analysis
Middle- the results have Market Share
management been achieved analysis
Financial analysis,
etc.
 Recommendations/Conclusion

1.) We have realized that in order to achieve the penetration percentage, it

must be lowered.

2.) In order to capture a new customer base, Allevin must collaborate with the
car dealer.

3.) In order to understand the customers’ needs and demands a mock drill
marketing can be done.
4.) The price should lie between the range $5.25 and $6.25.

5.) Eco-7 has the potential to change the conventional market and can bring
out the urge in the customers to buy products from the competitors.