Eco7: Launching of New motor oil Case Solution
Avellinâ€™s market share has been declining since year 2000 until 2012 by 3%. But if we analyze that why it has lost the market share over the time, then we will come know that company has been less aggressive in opening its own service stations as compared to other competitors in the market.
Whereas it has only 436 own service stations, quick oil change service stations. On other the Baud Company has 2,000 service stations, and Moto line Company has more than 1,200 stores. Moreover the decline in share is result of less company owned service stations.
However the company has to ensure proper distribution channel to regain its market share in the market. Furthermore the Avellinâ€™s private label sales may also have impacted on its market share as well. Because if all competitorsâ€™ market share is increasing then and private labels sale is increasing, beyond this the market share of the Avellin has been decreasing, so can we not predict that the declining market share of Avellin is being absorbed by the private label sales. When, no other competitor is losing its market share, besides Avellin.
Strategic role of Eco7
Eco7 has a very important and strategic role on the portfolio of the Avellin product line, because eco7 is the only green product. It is environmental friendly that has been produced by recycling the used oil through effective processes. Because, used oil is harmful to the environment. If it is not disposed of properly.
However the product has been priced high due to its cost of production. On other hand the product has competitive advantage over the performance of the other green product in the market. Due to its consistency in performance will attract the consumers, but they had to try first time.
During the market research, about 31% consumer from the DIY segment were interested into green motor oil, however the 55% from the DIFM segment consumers were interested into green motor oil. On other hand 69% and 45% from the both groups were unsure or uninterested about the green motor oil respectively.
Furthermore, 45% consumer from DIY segment agreed to purchase green product on the full price, and 31% said that they will purchase the green oil product even on 50 more prices, and about 14% responded to purchase green motor oil on even 100% more prices.
Overall the 67% consumers said they seek professional advice in selecting motor oil.
The green product line in PCMO market is on its infant days, whereas the market already has the one other green product called SevoGreen from a competitor. But if we compare eco7 with sevogreen, then it could be concluded that eco7 has competitive advantage over the sevogreen in terms of consistence performance with quality as well.
However this time is suitable for the company to launch the product based on market research, as discussed above, furthermore the company needs to review its pricing method to come up with competitive price, neither full price, nor discounted.
The Eco7 is second green product in the market, and it has advantage over the other product in the market. On other hand the sevo greenâ€™s performance is on par with other conventional oils. However the eco7 is more effective and competent as compared to the conventional oil.
In addition, eco7 has better performance as compared to other conventional oil, and it is comparable with the companyâ€™s own synthetic oil which has a mileage of 7,500 miles, even it would perform better, because during the test, oil was not broken until.
Furthermore the eco7 has preferred characteristic that market is willing to adopt, but the pricing strategy would be more important, along with the distribution, and service channels as well.
Eco7 is a green product based on its nature of environmental friendly; furthermore the eco7 has better performance and consistency over the other product in the market. it will require the consumer to change oil after 7,500 miles, which is more than the conventional oil. Which means consumer will not need to change oil frequently as compared to other oils. No doubt consumer will pay premium on the green product. But against the premium, he will get the better and quality, and consistent performance, which also environmental friendly as well. It will better serve the target population of DIFM segment.
Eco7 has been priced at the $6.75 per quart; however it is less than the sevogreen price of $7.50. Similarly the eco7 price has also been given the discounted price of $5.25, but on other hand price factor is more important in the market. I addition, 45% consumers are willing to purchase green oil from DIY segment. On other hand about 31% performance consumers are willing to make purchases of the green oil even on the 50% more prices.
Furthermore, about 30% of the DIFM consumers are quality focused and 45% are price focused, so this indicates that company has to come up with new price of eco7 that has to be very attractive to both segment customer i.e. quality focused, and cost focused as well. The price should be between the lines of consumerâ€™s preferences………..
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