20110608.Service Marketing.grp2.Sullivan

10 June 2011 GROUP 2: Sullivan Ford Auto World

1

College of BusinessBusiness Management DepartmentMBA Degree Program A CASE REPORT ON

SULLIVAN FORD AUTO WORLD

Group No.2

Castillo Ronald

Panopio, Rolalie

Reyes, Heinz

Zhangpeng, Allen

SERVICE MARKETING (MKT609M)1st Term of AY 2011 – 2012

1. Case Background

• Events take place from the viewpoint of Carol Sullivan-Diaz, the 28-year old general manager of Sullivan Ford Auto World.

10 June 2011 3GROUP 2: Sullivan Ford Auto World

• In 1983, Walter Sullivan purchased a small Ford dealership, which will eventually grow to become Sullivan Ford Auto World (Auto World).

• Auto World offers both sales (front end) and service (back end) of vehicles.

1. Case Background (Continued)

Walter recently died of a heart attack.

Carol needs to analyze which of two options was the right move to make:

To quickly sell Auto World and move on

with her life? or To work on a turnaround and make the

company financially viable?




Auto World•Car sales of 1,100 cars per year•Total annual revenues of around US$ 29.5 million from both sales and services

But Still...•Auto World ranked at the lower end of medium sized dealerships•Margins were low and gross figures were insufficient to cover the company’s fixed expenses



•Auto World’s financial situation had been deteriorating for the past 18 months;

New car sales had declined; Margins had been squeezed by

promotions and other efforts to sell; Due to rising fuel prices, industry and

in-house forecasts for future sales were discouraging; and

Service revenues were below average.



Customer satisfaction surveys showed a problem with the company’s delivery of services, to wit:

Less than 33% of the respondents said that they had been introduced to someone in Auto World’s service department

Over-all level of satisfaction with Auto World’s service was consistently ranked “Low” placing it in the bottom 25% of all Ford dealerships



For interpersonal variables such as attitude of service department personnel, Auto World’s ratings were relatively poor

More than 50% of respondents indicated that they would use another Ford dealer or “some other place” for maintenance service.

The rating for overall satisfaction was “below average”.

2. Statement of the Problem



•To determine what other potentials might exist for Auto World to improve its sales volume and selling gross.

•To determine how marketing cars is different from marketing service for the same vehicles.

•To know the differences between the sales and service departments at Auto World.

•To identify, from a consumer perspective, useful parallels between running a car sales and service dealership and operating health care services?

•To give Carol Sullivan-Diaz good advice on how to improve service quality in Auto World.

4. Areas of Consideration & Major Assumptions


Carol has a Masters degree in business administration.

Carol is quite familiar with the operations of Auto World.

Similarities between health care services and auto sales and maintenance services.

Selling Auto World now would also mean selling it at a loss.

Auto World’s service work order process was still done manually and had not been computerized.




Service Encounter Stage

Moments of Truth

High / Low Contact Service Model

Servuction Model



I.Internal analysisStrengthsCarol’s experience, knowledge and expertiseTechnically skilled and competent staffAttractive showroomFavourable locationWell known dealershipHuge amount of insurance policy on Sullivan’s life

I.Internal analysisStrengthsCarol’s experience, knowledge and expertiseTechnically skilled and competent staffAttractive showroomFavourable locationWell known dealershipHuge amount of insurance policy on Sullivan’s life


Weaknesses•Inappropriate attitude of service staff •Lack of interpersonal skills of service manager•Problems with service writers •High turnover of service staff •Revenues are falling•Poor appearance of service department and waiting area•Service procedures not customer oriented•Inefficient recording and bookkeeping•Carol has only six-weeks to resolve the dealership problems


External Analysis

OpportunitiesDevelop new marketsChange of management by introducing a service culture and providing training programs Use of advanced technology

ThreatsPoor industry forecastCompetition


6. Alternative Courses of Action

Advantage Disadvantage

Carol is an owner and therefore is expected to have a high level of loyalty to Auto World

Carol has personal knowledge of Auto World’s operations and she knows how to provide good service to their clients and co-employees

Carol can apply her experience in the health care industry which revolves around designing new services, handling complaints, & market research

Carol is only 28 years old. She brings with her innovative and fresh ideas

Carol will have a chance to personally save the business that her father worked so hard to build

Extended hours are required from Carol’s Carol’s heart is not in auto service industry Carol may lack the necessary experience and

influence to handle the disagreements between the service and sales departments


Advantage Disadvantage Will not require Carol to

lose her present job The new service

marketing expert will be able to view things objectively without being affected by existing relationships and biases

Since the new service marketing expert is also good in sales, he or she will be able to formulate strategies to increase profits

Will entail additional cost The new service

marketing expert may not be aware of the existing culture in Auto World since he is an outsider

The level of loyalty may not be as high as that of Carol’s

2. To Engage a Service Marketing Expert With a Background in Sales to Run Auto World

6. Alternative Courses of Action (continued)


6. Alternative Courses of Action (continued)

Advantage Disadvantage If Auto World is no longer viable,

then selling it now will cut further losses

Carol will be able to continue in her chosen career – heath care services

There might be a connection between Walter’s sudden heart attack at a relatively young age and the pressures he was experiencing with his business – Carol will be able to avoid this

If Auto World is still viable, then Carol would be missing out on an opportunity to increase profits

The act of giving up and selling what her father worked so hard to build might not look good in Carol’s resume

3. To Accept Bill’s Offer to Buy Auto World on an As-Is Basis at a Low Price


7. Recommendation

Option No.1 is recommended because of the following reasons:•Because of her long exposure to her father’s business, Carol is in the best position to pinpoint the areas that need to be improved.•Carol’s MBA degree gives her valuable advantage in terms of scientific methodology and discipline.•Carol’s background as a marketing strategist in the health care industry will be very useful as the auto sales and service industry is similar in many ways.

8. Action Plan


• Computerise all service operations to cut on turn-around time and avoid clients long waiting hours.

• Hire service marketing expert to run the service department with a keen sense of salesmanship.

• Engage services of training consultant to provide customer care programs for the entire service department staff. Service personnel will thereafter be encouraged to meet with clients and to discuss the clients’ concerns.

• Design and implement an audit program to check on after-sales services provided to clients. Reward employees with high evaluations and impose sanctions on those who fail.

• Hire attractive and well trained receptionists for the service department, which should be renovated to have a warm and friendly ambience.

• Maintain the promotions and discounts to continuously improve the volume of sales.

• Hire one or more mechanics to maximize the use of equipment and facilities.

• Monitor if the protocols and process are organized and being followed.


THE END

20110608.Service Marketing.grp2.Sullivan

Documents

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operations of auto world

auto world car sales

auto worlds ratings

service dealership

marketing service

y service revenues

walter sullivan