Discuss About The Marketing Activities For Auto Repair Shop.
The mission of the company is to provide its customers valuable services at a cost-effective rate. The company aims to provide convenient, high quality and comprehensive auto repair at low cost. The company also aims to build a harmonious relationship with its clients by building trust and finishing the task on time and by providing services in an innovative management. Cars & Bikes Auto Repair is looking to increase its sales revenue in next three years. The company also aims to build a program of providing superior customer services to its clients.
The company aims at providing a one-stop facility for all kinds of needs and requirements related to service needs, like, transmission, brakes, wheel alignment etc. Thus, in this manner, the company can provide and offer its customers services of greater perceived value as compared to other shops in the vicinity. The auto repair industry is quite competitive in nature and suppliers have a great deal of power in negotiating and setting the products prices and services prices. Also, the customers think that the commodity and services as undifferentiated and with little value separation between competitors, this increases the power of the buyers as well. The entry barriers are also moderately low in this industry and due to the presence of too many competitors, the pricing becomes competitive (Sena, 2018). But by applying low-cost leadership principle in this industry, it can prove an advantage to the company and can create switching cost at a higher rate by building a strong business with customer ties.
The company will offer a fully stocked parts and hassle-free repair services to the customers. This will help in service to a wide range of customers for parts and services. Also, service department will be supported by parts department, where in this way the service department will be able to turnaround jobs faster than other service providers. The company is also thinking to open few more bays at a strategic location, this will help the customers in getting their cars fixed right away. The company will offer timely services and delivery of products unlimited services will be offered to the customers who are looking for repair of the automobiles (Kenney, 2014).
The company has hired, trained and knowledgeable employees who will provide superior quality services to the customers and will establish a long-lasting trust bond with them. It is an important element because mostly in repair facilities, honesty and trust are not assigned due importance by many auto repair companies
The company want to focus on meeting the local demand of the residents living in nearby vicinity as well as towed vehicle drop-ins from the freeway and local traffic. A tie-up has been done with few major tow truck companies at the local level, who can refer the company to its customers, who are looking for the services provided by the company. 20% of the revenue can be generated from local and freeway traffic tow-ins and rest 80% will be from the established local customer base. Any person who owns one or more vehicle is a potential clientele of the company (Elite, 2015).
The Automotive repair industry is not affected by the seasonality factor. Also, the market for automotive repair and maintenance service was estimated to be more than 27% of the market share in 2017 in the global automotive repair and maintenance service. This is due to the fact that the number of new cars on the roads is increasing day by day and old cars require extra care. On an approx basis, the repair or replacement value of a vehicle which is between 0-4 years old is 21 Billion $, but the value of the old car aftermarket is nearly 77 Billion $. The automotive industry is a diverse and a huge set of manufacturing and service businesses, where trucks and cars are brought in the desired market. They are put in working order, cleaned, fixed, paint or discarded when required (AAMCO International, 2018).
The industry is highly competitive and suppliers have a great deal of power in the process of fixing and negotiating prices for the repair shops products and services. Also, buyer power is very high, as the customers see the services offered as undifferentiated and a commodity with little value separation between competitors. The barrier to entry is also moderately low and prices are quite competitive due to the presence of competitors (Fortier, 2014).
Though we don’t want to segment our market as we are ready to service any vehicle on the road, ranging from motorcycles to campers. The potential customer of the company includes every household in their vicinity which has more than one vehicle. Every automotive repair company has a high capital cost, low margins and high intensity of competition. Suppliers have huge power in the negotiation process. It is due to the fact that these suppliers are mainly large auto part companies who absorb a great amount of cash from repair shops. Labor and salary of the individual also not flexible in the industry. The costs of the company services are not quite cheap and buyers try to look for those services which have a combination of price and acceptable service. Due to the presence of a large number of competitors in this field, including substitutes leads to competitive pricing for such services (Spectrio, 2017).
Our main competitors are high-quality dealers and licensed service representatives. Within the immediate vicinity, the competitors have a service facility and they dominate the marketplace by hiring specially trained personnel, easy access to parts and tools at a lower price and large market share. Also, other competitors for the company are mostly “mom & pop” style outfits who operate at low-cost leadership strategy (AMRA, 2014).
Primary Target Market: Our primary target market will be the area in and around the vicinity, local and freeway traffic, local customers etc. Primarily the upper and middle-level income market will be the main primary target for the company. Customers of such market seek for rapid services, high quality, and convenience. The majority of them are willing to pay an extra premium for avoiding any kind of inconvenience in their computation. A significantly large regular customer base can be developed which will help in ensuring stability to the business and earning the sufficient amount of revenue. Also, freeway and local traffic will be part of the primary target market (Rachel, 2014).
Marketing Mix comprised of product, place, price, and promotion. By focusing on these basics will help the company to develop a firm foundation to grow. The company can definitely succeed if it is offering unique products or services, sound pricing strategy, easy access to services and effective promotional strategies. Marketing Mix of any company can be defined as offering the right product at the right price in the right place using right promotion. Every component of marketing mix must be given utmost importance. The marketing mix, in other words, is also known as the 4Ps of marketing:
Product: We are providing automotive repair parts and afterward services to its clients. The product or service offered to the customers must be different and innovative. Every product of the company has a life cycle and it is must for the marketers to understand this and be ready and prepare a plan for its various stages and any kind of challenges. It is important for the company to understand the benefits which its products and services are offering and what is the unique selling proposition. Also, for the products and services, the potential buyers must be identified and research should be done on their buying pattern and behavior (López-Arquillos & Rubio-Romero, 2016). The company will be offering its services like scheduled maintenance, brake repair, auto parts, engine repair, transmission etc.
Price: The Company is operating in a competitive environment where every company is a price taker. The company is in no position to affect the price in the market for its products and services, regardless of the number of vehicles it has repaired. In such case, the marginal revenue is equal to price charge and the company can service automobiles at total capacity without causing any kind of effect on its price. The company will be charging at the market price. The company has to carefully select the price range for its services, as if there is a positive customer value, then the company can charge a higher price. The prices of the company can also get affected by supply chain and distribution plans (Henderson, 2014).
Place/Distribution: The Company has to choose the place or the target market carefully. In placement, distribution plays as a key element. This will help the company in assessing the channels which will be most suited for its products and services. The company has chosen the local market for its products and services and the areas nearby its vicinity. Also, the secondary market can be tapped with the help of internet and other sources (Gaille, 2017).
Promotion: For the promotion of Company we are is relying on flyers, direct mailers, newspaper ads, yellow pages, discounts and referrals through other local business. All of these marketing approaches are low in cost and helps in creating awareness about the business operations. Later for long-term use, the company will be using local radio and TV ads. The company is also looking for a ground opening program to attract customers. We have a good database of pre-existing clients, who can be a switch to the company’s new clients. The company is not ready to invest a large amount of sum on marketing as it will be required for investing in new facilities or hiring more employees (IBISWorld, 2017)
Both of us have invested equally in the business which is $100,000 and is seeking to take a loan of $100,000 to add to the existing fund. This will be used for various purposes in the company, but primarily for expansion and hiring more trained personnel in the company. The company financial plan includes:
Break-even Analysis: The break-even analysis of the company will be based on the averages of the first year figures for total sales by units and for expenses of operations. It will include, per unit revenue, per unit cost, variable costs, utilities, payrolls and fixed costs, etc. The analysis will be based on the running costs of the company within the industry (Association, 2017).
Profit & Loss statement: The Company is also looking to grow at a steady rate in terms of profit and growth.
Expenses: The Company is expected to spend a certain amount of fund for hiring more trained personnel and purchasing few upgraded machinery and equipment. The company also has to buy 2 vans for reaching to the customers who are in need of services and stuck somewhere (Eddington, 2017).
Business Ratios: This presents the overall idea of how profitable or at what risk level the company is operating and it is very essential for any financial plan evaluation and analysis. It includes industry average ratios, where the company’s own ratios and industry standards are compared and analyzed. There can be variance in its assets, liabilities, financing and net income due to the huge difference in the size of the company.
Critical Risks: The Company will initially follow a low-cost strategy and at the same moment, it will offer best services to the customers and providing them satisfaction. In nature, the auto repair industry is highly fragmented. Other than this, the company also faces risk from fire, theft, accidents at workstation etc. The company has to incur extra expense for keeping the vehicles and other things at the facilities safe and insured. The cost of buying new tools for repairing luxury cars and the latest model vehicle is too much (Walsworth, 2015). The company is also facing a financial crunch, due to a shortage of investment. Due to this, it is becoming impossible for the company to expand its business operations and hire more trained personnel. Also, there is cut-throat completion existing in the industry and the company will have to face such competitors who are following rigorous strategies. Creating differentiation, strategy or niche in this kind of environment is quite difficult until the company has not established a good reputation and brand image in the market. This can only be achieved by providing quality services and products, on-time delivery, superior customer service and cost-effective pricing. Once this will be done and achieved, the company can implement differentiation strategy and can change the pricing.
References
AAMCO International, 2018. How Big Is the Auto Repair Industry?, Available at: https://aamcofranchises.com/research/how-big-is-the-auto-repair-industry/
AMRA, 2014. The Future Of Car Repair Shops, Available at: https://motorist.org/articles/the-future-of-car-repair-shops
Association, N., 2017. Automotive Repair and Maintenance Services Market: Automobile Dealerships Service Provider Segment Projected to Remain Dominant Through 2026: Global Industry Analysis and Opportunity Assessment, 2016-2026, Available at: https://www.prnewswire.com/news-releases/automotive-repair-and-maintenance-services-market-automobile-dealerships-service-provider-segment-projected-to-remain-dominant-through-2026-global-industry-analysis-and-opportunity-assessment-2016-2026-300390430.ht
Bilbruck, D., 2016. 4 Must-Have Marketing Strategies for Auto Repair Shops, Available at: https://www.akavit.com/2016/02/4-must-have-marketing-strategies-for-auto-repair-shops/
Eddington, J., 2017. The Future of the Auto Mechanic is… Clean, Available at: https://www.thezebra.com/insurance-news/3829/future-of-the-auto-mechanic/
Elite, 2015. Trends in the Auto Repair Industry – The Future of Your Auto Repair Shop, Available at: https://www.eliteworldwide.com/future-of-the-auto-repair-industry.html
Fortier, M., 2014. An “Outside the Box” Auto Repair Marketing Strategy Helps You Stand Out, Available at: https://www.businessactualization.com/blog/an-%E2%80%9Coutside-the-box%E2%80%9D-auto-repair-marketing-strategy-helps-you-stand-out
Gaille, B., 2017. 31 Auto Repair Industry Statistics and Trends, Available at: https://brandongaille.com/29-auto-repair-industry-statistics-and-trends/
Henderson, G., 2014. How technology is disrupting the auto repair business, Available at: https://brandongaille.com/29-auto-repair-industry-statistics-and-trends/
IBISWorld, 2017. Auto Mechanics – US Market Research Report, Available at: https://www.ibisworld.com/industry-trends/market-research-reports/other-services-except-public-administration/repair-maintenance/auto-mechanics.html
Kenney, W., 2014. Must do marketing activities for your auto repair shop, Available at: https://www.23kazoos.com/must-marketing-activities-auto-repair-shop/
López-Arquillos, A. & Rubio-Romero, J., 2016. Analysis of Workplace Accidents in Automotive Repair Workshops in Spain. Safety and Health at Work journal, 7(3), pp. 231-236, Available at: https://www.sciencedirect.com/science/article/pii/S2093791116000056
Rachel, 2014. The 5 Biggest Risks That Auto Shop Owners Face and How to Mitigate Them, Available at: https://www.owendunn.com/enterprise-risk-management-blog/5-biggest-risks-auto-shop-owners-face/
Sena, M., 2018. Automotive Industry Analysis 2018 – Cost & Trends, Available at: https://www.franchisehelp.com/industry-reports/automotive-industry-analysis-2018-cost-trends/
Spectrio, 2017. 15 Auto Repair Marketing Strategies You Need to Try Right Now, Available at: https://blogs.spectrio.com/15-auto-repair-marketing-strategies-you-need-to-try-right-now
Walsworth, J., 2015. Study: Independent shop owners ready to bail: Owners blame time off, tight financing, Available at: https://www.autonews.com/article/20151102/RETAIL05/311029986/study:-independent-shop-owners-ready-to-bail
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