Case Analysis Submission - Avellin Eco7 PDF

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Download Case Analysis Submission - Avellin Eco7 PDF

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Summary Avellin Corporations, the third biggest motor oil brand, is to release a new environmentally friendly motor oil Eco7. This product is made of 65% recycled oil and manufactured using 45% less energy, however, still provides premium quality and with a premium price tag. Thus, consumers who have vehicles and hold an interest in green automotive technology provide an ideal target market for the product. Although brands such as Baud and Motoline are PCMO market leaders, they focus on fastlube chains towards DIFM consumers. The only competitor in the environmental forefront area is Sevoline with SevoGreen; however, Eco7 maintains performance and cost advantages. The core issue at hand is the shift away from DIY motor oil to DIFM with an emphasis on ease and lower-costs. This commodity view of motor oil products has raised concern for the release of Eco7 and its ability to build momentum and result in profitable growth. Analysis The core issue at hand is which method of distribution, positioning, discounting and promotion of the Eco7 product would be the best to gain momentum. Avellin has been in the Passenger-Car Motor Oil (PCMO) market for over 80 years and thus is DIY and DIFM market has inevitably shifted over time. Consequently, motor oil has been deemed as a commodity by the majority of consumers as 75% are within the DIFM category, and only 56% of those seeking a specific PCMO product. Conversely, 83% of DIFM consumers were willing to accept a professional installer’s recommended PCMO brand. Consequently, Avellin is less inclined to market directly to consumers and more inclined to create momentum through selling to professional installers. Exhibit 4 furthers this by demonstrating that 67% of consumers are most influenced by professional service providers when purchasing green motor oil. This is due to their ability to communicate with consumers regarding the environmental and performance benefits which the brand cannot achieve as efficiently. Additionally, the Aventage program provides a 95% market penetration in comparison to the Eco7’s 75% full-price and 90% discounted, however, the 4400 individuals within the program limit the momentum and sales potential dramatically. With relation to positioning, Avellin’s non-green synthetic blend holds the potential to provide confusion with the Eco7 similar motor oil prima facie. However, the distancing of Eco7 from the Avellin brand allows the premium Eco7 status to not be diluted by its standard status. Thus, the regular synthetic blend provides a baseline for the Eco7 product, creating a benchmark for comparison and highlights the benefits of the premium more costly motor oil. When marketing such a product, exhibit 5 and 6 highlights the discounting potential outcomes. Although vas stated above a

discounted Eco7 product would allow a better market penetration in Aventage stores, other fast-lube stores and other independent stores, it reduces the Wholesalers profit from 12.5% to 10%.

Remedies The solution is to distribute to professional service providers as it would allow the best market penetration and permit the consumers and service provides to be informed about the environmental benefits of the product and imply a guilt-driven incline to use the product in ignoring the environmental benefits as opposed to choosing another motor oil. Furthermore, the product should be released at full price as it allows wholesalers the ability to gain more of an income on the gross margin, thus making Eco7 more enticing. Furthermore, to promote the benefits to consumers, promotions should be displayed in stores – especially in liberal states where environmental benefits are a priority. Additionally, as Eco7 is distanced from the Avellin brand, it should be filled into the brand rather than replacing the regular synthetic blend....