Eco7:

LAUNCHING A NEW MOTOR OIL

MM II || Group 10
ROADMAP
01 Introduction

02 Purchasing of Motor Oil

Avellin's Position and Distribution

03 Strategy
Eco7 Strategic Role, Importance &
04 Consumer Interest

05 Launch Strategy and Pricing

Distribution strategy and

06 Recommendation
 INTRODUCTION
ECO7 IS A LEADING OIL REFINING COMPANY
ESTABLISHED IN 1936 BY ANELLINE AS AN OIL REFINER DIVERSIFIED INTO INDUSTRIAL
& CHEMICALS MANUFACTURING
US BASED COMPANY
SPECIALIZES IN CHEMICAL MANUFACTURING
OPERATIONS DIVERSIFIED TO PETROLEUM DIVISION
1980 - FOCUSED ON BECOMING THE PREFERRED BRAND IN DIFM CHANNEL
2005 - STARTED LOSING MARKET SHARE
2012 - DEVELOPED NEW MOTOR OIL
OPERATED 10 LUBRICANT BLENDING AND PACKAGING PLANTS
7 REGIONAL DISTRIBUTION CENTERS
 01
How do consumer’s purchase
motor oil?
PCMO consumer viewed oil change as a nuisance that cost the time and money
Car owner were advised to change oil every 3000 miles or 3 months
Due to improvement in motor oil and engine design, oil change required less
frequently. In 2013, average consumer drove nearly 4500 miles before oil
change

DIY –Do it yourself DIFM-Do it for me

Consumer changes their own
motor oil
Purchase PCMO in bottles from
mass merchandisers or online
like Walmart, or an automotive
store such as AutoZone or
Advance Auto Parts
Young segment, cost conscious
They tend to know more about
their vehicles
Better understanding of
different motor oil
They use professional service
providers
Older and higher income
segments
They prefer foreign cars,
luxury vehicle and hybrid
car
Less concerned about
maintenance on their vehicle
than DIY consumers
 02
Assess Avellin’s position in
PCMO industry in terms of
consumer perceptions. Describe
its distribution strategy.
Avellin’s Position is PCMO Industry
A well-respected, innovative company with high credibility among customers Ranks third
among PCMO manufacturers (After Baud and Motoline)
Avellino's market share in 2012 was reported to be 11%.
Importance of Avellino lies in fast-lube outlets, oil change plus stores, and repair shops.
They did regular surveys to know about customer preferences.

Avellin’s Distribution Energy

3 Key sources of Avellin’s Revenue:
1. Independent DIFM
Key features in Avellin’s distribution channels and accounted for 68% of its’ sales 4400 out of 6000
customers (more than 70%) joined the Aventage Program

2.National Retailers
Accounted for 9% of Avellin’s PCMO sales
To build loyalty among its’ base of DIFM customers, Avellin put products for the DIY segment

3.Avellin Auto
With 436 stores as of 2014, Avellin Auto Chain generated approx. 7% of PCMO sales erviced
directly through the company’s regional distribution centers rather than wholesalers
 03
What is the importance of Eco7? How
should Avellin weight consumer interest
in, and willingness to pay for green
motor oil? Is it the right product at the
right time?
Motor oil is prepared from recycled oils
(Environment Friendly) with high quality and an
affordable price.
Eco7 might be a game-changer for the
corporation, which is displaying an increased
interest in environmentally friendly solutions
and hopes for a comeback in its market position.
The sales of motor oil are based on the
performance and reliability factor.The benefit of
used motor oil is that it can be refined and reused
if managed properly.
Strategic Role
People are becoming very much environmental
conscious and it is imperative that they will buy
eco-friendly motor oil.
The refining process and the additives gave Eco7
a longevity and a higher performance compared
to the synthetic blend. This oil performed better
at higher temperatures without breaking down.
If we compare Eco7 price with the other
environmentally friendly products in the
market, then this was much cheaper motor oil in
the market.
As per survey conducted by Avellin, the results stated pricing
would be a key factor for this product.

- survey states $6.75 is considered much higher among

synthetic oils.

-green factor, price and performance were all important for

the consumers to pay for Eco7.

DIY DIFM
Interested : 41% 55%
Unsure : 25% 15%
If the marketing went right and it is able to establish the
features of the product a significant proportion can be shifted
to interested from unsure
 Eco7 is the right product at the
right time

Market Trend Less competition

A trend towards more fuel There is only one competitor
efficient, environmentally friendly (Sevoline) who produced
vehicles in the market was there. recycled oil. Huge uncovered
market was present of Eco7

Change in price perception Offers growth

Survey indicates consumers are Avellin was facing sluggish
willing to pay premium price for growth. Launch of Eco7 would
green oil provided their quality result in profitable growth for the

company
 04
What is the right launch strategy
for Eco7? How should Eco7 be
priced? What are the profit
implications for wholesalers and
DIFM stores?
 Interest in green motor oil 100

75
Very interested
13%
Not interested DIY Customers 50
34%

Interested
28% 25

Unsure 0
25% Same price 50% more 100% more

Very interested
Likely to purchase green motor oil
Not interested 23%
30%
DIFM Customers Friends or Family 8%
Public sources 18%

Scientific study 7%
Professional service provider 67%
Unsure Interested
15% 32% Influential source for descision to buy
green motor oil
 LAUNCH STRATEGY

✔ Eco7 should be launched through the Avelin Auto stores and

independent DIFM customers in the Aventage programme.

The launch program will reach the DIFM customer base and
✔
since independent DIFM generate a large percentage of
revenue, they are key to
reach a large part of the market.

✔ This segment of customer would be more

receptive to the new product as they already trust the brand.

✔ Diy customers can be neglected for the time being as they are
too price sensitive and launch the product towards high

Advertisementcan be done in store display and hire more

✔
professionals to advise and guide the customers.
✔ Highlight it as environmentally friendly and better driving
performance.
 Pricing

✔ Market is sensitive to price and 17% of Avellin consumers are sensitive to it.
Therefore , sales and penetration would largely depend on price.

✔ By keeping the price of Eco7 at $6.75 per quart the company would have a fewer
number of oil changes and lower level of penetration, than at price $5.25

✔ The difference in Avellin’s revenue selling Eco7 instead of Avellin Conventional

would be higher for $6.75 despite lower number of changes and penetration
Full price Discounted price
Profit Implication

When Eco7 was put at full price on the market, DIFM installers who knew
how to pitch the product had no trouble selling it.

More emphasis on the green component would be beneficial, while not

sacrificing quality.

The pricing issue was solved by comparing the lifetime of the alternative
oil to that of traditional oil.
 05
How should Eco7 be distribute?What
is your recommendation regarding
exclusivity for Aventage stores?
 Distribution Strategies
Excluding national mass
merchandisers, clubs, and a
significant portion of the auto-parts
chain, independent DIFM and
Avellin shops
Independent DIFM : 68% of revenue
Fast lube, Oil change-plus, Repair
shop generate 53% of DIFM sales
436 Avellin stores in 2014
generated 7% of PCMO sales
Penetration of Eco7 will be 95%
through these stores
Avellin stores has higher gross
profit than Independent DIFM ($
0.75 per 5 quarts)
Avellin stores and
Independent DIFM under
Aventage program
Building higher customer
loyalty
Selling through 4400
aventage program stores will
increase the adoption of Eco7
With higher profit in
AvillinAuto stores than DIFM,
incorporating Eco7 gives
opportunity to growth
Stores are located in places
where other DIFM have no
presence
Recommendation for distribution
channel
1. We recommend that Avellin distribute the new environmentally friendly motor oil, Eco7, through
AvellinAuto stores and independent DIFM customers in the Aventage programme, rather than
national mass merchandisers, clubs, and major auto-parts chains.

2. Customer loyalty will be increased and strengthened by distributing through the Aventage
Program.Working with fewer, but more engaged, Aventage stores will increase the likelihood that
the Eco7 launch will be successful.

3. Because AvellinAuto stores generate a higher gross profit than DIFM stores, implementing Eco7
in AvellinAuto stores will allow Avellin to maximise profits in the future, as other manufacturers
have done.

4. To ensure that there is little competition between Independent DIFM and AvellinAuto, we must
prioritise distribution through independent DIFM customers first and AvellinAuto stores second.

5. Overall, the disadvantages of targeting DIY customers outweigh the benefits, and we believe
Avellin's focus for Eco7 should be on Aventage program customers and their own AvellinAuto store.
THANK
YOU Anjali (M010-21)
Arun Kumar (M013-21)
Ayush Kumar(M017-21)
Gurnaaj Kaur Gill(M031-21)
Manisha Duggal (M052-21)
Rupanshi Jaiswal (M073-21)
Siddharth Singh(M094-21)
Subrata Kumar Behera(M097-21)
Violet Lakra(M104-21)