MBA (2017) Northern University of Malaysia Subject : Marketing Management Result : A

1. BPMM6013
Marketing Management
Eco7 : Launching a New Motor Oil
Hafizullah Mohd Amin 822481
See Pei Hiam 822112
Zuhadi Shamsuddin 822416

2. Content
• Executive Summary
• Introduction
• Situational Analysis
– STP Analysis
– SWOT Analysis
– BCG Analysis
• Financial Forecast
• Controls
• Conclusion
• References
• Proposed Marketing Objective
• Proposed Marketing Mix Strategy &
Tactics
– Product
– Price
– Place
– Promotion

3. Executive Summary
• Consumer interest in “green” automobile technology, such as
hybrids or electric vehicles, had increased steadily.
• Most research and development focused on improving fuel
efficiency, alternative energy sources, or reducing emissions.
• It had generated significant buzz within the industry and initial
sales penetration of channel partners had shown promise, but
the green motor oil market was clearly in its infancy.

4. Introduction
1936
Founded in
United States
1980s
Focused on becoming the
preferred brand in the
DIFM channel
1995
Divested its petroleum division,
exiting the lower margin business of
refining and marketing fuels
2014
Operated 10 lubricant
blending and packaging
plants; 7 regional distribution
centers
2005
Sluggish growth and
Avellin start losing it’s
market share
2012
Start developing a new motor oil
manufactured from recycle
materials
7

5. Initiators
DECISION MAKING UNIT
Consumer Behavior
A complex buying behavior backed
by extensive research
Dissonance reducing buying
behavior with inclination towards
brands with high awareness
HIGH
INVOLVEMENT
Less
likely
More
likely
Planned
Purchase
Urgent
Replacement
Information
Gatherers
Influencers
Decision
Makers
Purchasers
Users
Need to change motor oil by the driver of
the vehicles
• Sudden requirement
• Planned – Self
• Planned – Schedule
Service provider / friends / family / research
by self / service engineer / firms owners
Driver with/without advice from technical
consultant
Owner of vehicle / owner of firms
Need to replace perceive by the driver of
vehicle
1
2
3
4
5
6

6. • Older
• Higher income
• Had more education
• Live in metropolitan area
Demographic
STP Analysis
Passenger Car Motor Oil
do-it-yourself (DIY) do-it-for-me (DIFM)Segmentation base
Behavioral
• Younger
• Less affluent
• Live in smaller towns or
rural areas
Psychographic • Favored trucks & sports
utility vehicles
• Know more about their
vehicles
• Traditionalist
• Prefer foreign cars and
luxury vehicles
• Don’t worry much about the
details
• Professionals
• Cost-conscious
• Customer-loyalty
• Quality-conscious
• Rely on professionals advice

7. STP Analysis
PCMO Consumers
Price
Focused
45%
Quality
Focused
30%
PCMO Service Providers
32% Fast Lube
29% Car Dealer
12% Oil Change-plus
10% Mass merchandisers and clubs
9% Repair shop
8% Others
?

8. STP Analysis PCMO Service Providers
Car Dealer
Oil Change-plus
Mass merchandisers
and clubs
Repair shopFast Lube
The value proposition was the speed
with which the oil change service could
be completed—often in just thirty
minutes.
Car dealers focused on the sale or lease
of vehicles and usually provided after-
sales service, particularly as part of the
vehicle warranty.
The outlets were usually specialty stores
focused primarily on a specific product
or service, such as tires, mufflers, or
brakes, rather than on motor oil.
Mass merchandisers and clubs were
large-format retail chains that sold
clothing, household goods, food, and
electronics.
These were typically small, independent
outlets offering auto mechanic services
and sometimes tire changes or gasoline
sales.
Others

9. Strengths Weaknesses
Opportunities Threats
W
T
S
O
SWOT Analysis
• Preferred brand in DIFM
channel since 1980s
• Well established 1936
• Sluggish growth since 2005
• Poor financial management
• Lack of product innovation
• Competitors offer lower price
• Baud & Motoline expanded
their fast-lube chain
• Sevoline introduced
SevoGreen
• Ranked third among PCMO
manufacturers
• Green motor oil market in its
infancy and expected to grow

10. BCG Analysis
High
High
Low
Low
IndustryGrowthRate
Relative Market Share
? star
dog cash cow
7

11. Proposed Marketing Objective
• To start capturing market for environmentally
friendly motor oil
• To become the preferred brand in DIFM channel *
• To increase the overall market share by 2% *

12. Marketing Mix Product
• Environmental friendly motor oil
• Eco7 is packaged part of
PCMO services
• Manufactured from
recycled materials
• 65% of recycled oil
• 45% less
energy
• Recycling the used oil
potentially multiple times
• Better driving
performance

13. Marketing Mix Price
Conventional
$3.25
Full Synthetic
$7.00
Synthetic
Blend
$4.75
Price @ $5.25
• Too tight and would squeeze margins
• Devalue the innovation
• Undermine efforts to market Eco7 as
premium product
• Easy to sell
• 4.5 sales per day
Price @ $6.75
• Nearly as expensive as full synthetic
• Hard to sell independently
• Require installer to understand the
product well enough to explain to
customer
• Competitor is selling at $7.50
• 3.5 sales per day

14. Marketing Mix Place
Car Dealer AvellinAutoIndependent DIFM
• Included fast lubes, oil change–
plus stores, and repair shops.
• To build loyalty, the company
promoted its Aventage program.
• 6,000 independent fast-lube
• 6,500 oil change-plus store and
repair shop.
• 4,400 were in Aventage program.
• Car dealer that sells hybrid and
electric cars.
• They provided predetermined
maintenance check.
• One-stop shop for all maintenance
• The oil change would be done in
strict accordance with the
manufacturer recommendation.
• Avellin also sold via its own
AvellinAuto stores.
• AvellinAuto usually located near
the distribution centre and away
from independent DIFM
• Margin is slightly higher
• 436 stores open as of 2014
• Generated 7% of PCMO sales

15. Marketing Mix Promotion
Aventage AveGreen
Market
Mission
Message
Measure
Money
Media
Independent DIFM Car dealer
To strengthen their brand awareness and
improvement of perception
To create new market segment and support
green product
Main focus is on communicating their vision
of providing best value to customers in
terms of quality, durability and value for
money
Main focus is emphasizing the significant
green factor with no sacrifice in quality and
value for money
A mix of advertising, public relations, direct marketing and relationship marketing
About 2-3% of net profit is used for promotion purposes
Metrics used are response rate from firm owner/customer, loyalty rate, monthly sales report
and customer satisfaction index

16. Eco7 : Test Marketing
Cost
Evo 7 : $2.01
Synthetic : $1.95
Conventional : $1.20
Campaign Slogan
You have the green light
Eye-catching green bottle
and come with
accompanying in-store
display materials.
Advertise on local
television and news paper
Price
$5.25 and $6.75
Survey 1
What is your interest in a green motor oil?
Survey 2
Assuming similar quality and performance, how
likely are you to purchase a green motor oil if it is ….
Survey 3
What information source will be most influential in
your decision to purchase green motor oils?
3 months trails
Outcome
Concerns on pricing
Installer advice
influence purchaser
Ignore the DIY segment
Limit the encroachment
of private label
Starting to
promote due
to higher
margin
Alternative approach : available
only in AvellinAuto and DIFM
(Aventage program)

17. Financial Forecast – Price & Cost per unit
Conventional Synthetic Private Label Eco7 : Full Eco7 : Dis
DIFM Retail
Average retail price, per quart $3.25 $7.00 $4.75 $6.75 $5.25
Average revenue, per oil change (5 quarts)
Gross margin %
$16.25
50%
$35.00
60%
$23.75
65%
$33.75
55%
$26.25
50%
Wholesaler
Average revenue, per oil change (5 quarts)
Gross margin %,
$8.13
12.5%
$14.00
12.5%
$8.31
15.0%
$15.19
12.5%
$13.13
10.0%
Avellin
Average revenue, per oil change (5 quarts)
Gross margin %
$7.11
15.6%
$12.25
20.4%
NA $13.29
24.4%
$11.81
14.9%
Cost, per oil change (5 quarts) $6.00 $9.75 NA $10.05 $10.05
Cost, per quart $1.20 $1.95 NA $2.01 $2.01

18. Financial Forecast – Incremental Revenue & Gross Profit
for Independent DIFM
Eco7 : Full Eco7 : Dis
Eco7 vs Conventional per unit Monthly
105 unit
Annual
1260 unit
per change Monthly
135 unit
Annual
1620 unit
Revenue, Eco 7
Revenue, conventional
Incremental revenue
$33.75
$16.25
$17.50 $1,838.00 $22,050.00
$26.25
$16.25
$10.00 $1,350.00 $16.200.00
Gross profit, Eco7
Gross profit, conventional
Incremental gross profit
$18.56
$8.13
$10.44 $1,096.00 $13,151.00
$13.13
$8.13
$5.00 $675.00 $8,100.00
Eco7 vs Private Label Synthetic
Revenue, Eco 7
Revenue, PL synthetic
Incremental revenue
$33.75
$23.75
$10.00 $1,050.00 $12,600.00
$26.25
$23.75
$2.50 $338.00 $4,050.00
Gross profit, Eco7
Gross profit, PL synthetic
Incremental gross profit
$18.56
$15.44
$3.03 $328.00 $3,938.00
$13.13
$15.44
($2.31) ($312.00) ($3,746.00)
Eco7 vs Full Synthetic
Revenue, Eco 7
Revenue, Full synthetic
Incremental revenue
$33.75
$35.00
($1.25)
$26.25
$35.00
($8.75)
Gross profit per change, Eco7
Gross profit per change, Full synthetic
Incremental gross profit
$18.56
$21.00
($2.44)
$13.13
$21.00
($7.88)

19. Financial Forecast – Incremental Revenue & Gross Profit
for AvellinAuto
Eco7 : Full Eco7 : Dis
Eco7 vs Conventional per unit Monthly
150 unit
Annual
1800 unit
per change Monthly
180 unit
Annual
2160 unit
Revenue, Eco 7
Revenue, conventional
Incremental revenue
$33.75
$16.25
$17.50 $2,625.00 $31,500.00
$26.25
$16.25
$10.00 $1,800.00 $21,600.00
Gross profit, Eco7
Gross profit, conventional
Incremental gross profit
$18.56
$8.13
$10.44 $1,566.00 $18,788.00
$13.13
$8.13
$5.00 $900.00 $10,800.00
Eco7 vs Private Label Synthetic
Revenue, Eco 7
Revenue, PL synthetic
Incremental revenue
$33.75
$23.75
$10.00 $1,500.00 $18,000.00
$26.25
$23.75
$2.50 $450.00 $5,400.00
Gross profit, Eco7
Gross profit, PL synthetic
Incremental gross profit
$18.56
$15.44
$3.03 $469.00 $5,625.00
$13.13
$15.44
($2.31) ($416.00) ($4,995.00)
Eco7 vs Full Synthetic
Revenue, Eco 7
Revenue, Full synthetic
Incremental revenue
$33.75
$35.00
($1.25)
$26.25
$35.00
($8.75)
Gross profit per change, Eco7
Gross profit per change, Full synthetic
Incremental gross profit
$18.56
$21.00
($2.44)
$13.13
$21.00
($7.88)

20. Financial Forecast – Incremental Revenue & Gross Profit
for Avellin (Annual) average retail price @ $6.75 (Exclusive)
Aventage Non - Aventage Others AvellinAuto
Total Stores
Penetration
4,400
95%
NA NA 436
100%
Eco7 penetration, total stores
Eco7 upgrades per store, annual
4,180
1,260
436
1,800
Total Eco7 upgrades 5,266,800 784,800
Revenue per change, Eco 7
Revenue per change, conventional
Incremental revenue per change
$13.29
$7.11
$6.18
$13.29
$7.11
$6.18
Gross profit per change, Eco7
Gross profit per change, conventional
Incremental gross profit per change
$3.24
$1.11
$2.13
$3.24
$1.11
$2.13
Incremental revenue $32,547,178 $4,849,819 $37,396,997
Incremental gross profit $11,216,638 $1,671,379 $12,888,017

21. Financial Forecast – Incremental Revenue & Gross Profit
for Avellin (Annual) average retail price @ $6.75
Aventage Non - Aventage Others AvellinAuto
Total Stores
Penetration
4,400
75%
1,600
45%
6,500
30%
436
100%
Eco7 penetration, total stores
Eco7 upgrades per store, annual
3,300
1,260
720
1,260
1,950
1,260
436
1,800
Total Eco7 upgrades 4,158,000 907,200 2,457,000 784,800
Revenue per change, Eco 7
Revenue per change, conventional
Incremental revenue per change
$13.29
$7.11
$6.18
$13.29
$7.11
$6.18
$13.29
$7.11
$6.18
$13.29
$7.11
$6.18
Gross profit per change, Eco7
Gross profit per change, conventional
Incremental gross profit per change
$3.24
$1.11
$2.13
$3.24
$1.11
$2.13
$3.24
$1.11
$2.13
$3.24
$1.11
$2.13
Incremental revenue $25,695,141 $5,606,213 $15,183,492 $4,849,819 $51,334,664
Incremental gross profit $8,855,241 $1,932,053 $5,232,642 $1,671,379 $17,691,314

22. Financial Forecast – Incremental Revenue & Gross Profit
for Avellin (Annual) average retail price @ $5.25
Aventage Non - Aventage Others AvellinAuto
Total Stores
Penetration
4,400
90%
1,600
60%
6,500
40%
436
100%
Eco7 penetration, total stores
Eco7 upgrades per store, annual
3,960
1,620
960
1,620
2,600
1,620
436
2,160
Total Eco7 upgrades 6,415,200 1,555,200 4,212,000 941,760
Revenue per change, Eco 7
Revenue per change, conventional
Incremental revenue per change
$11.81
$7.11
$4.70
$11.81
$7.11
$4.70
$11.81
$7.11
$4.70
$11.81
$7.11
$4.70
Gross profit per change, Eco7
Gross profit per change, conventional
Incremental gross profit per change
$1.76
$1.11
$0.65
$1.76
$1.11
$0.65
$1.76
$1.11
$0.65
$1.76
$1.11
$0.65
Incremental revenue $30,171,488 $7,314,300 $19,809,563 $4,429,215 $61,724,565
Incremental gross profit $4,189,928 $1,015,740 $2,750,963 $615,087 $8,571,717

23. Marketing Controls
Type of Control Prime Responsibility Purpose of Control Approaches
i. Annual-plan Top management
Middle management
To examine whether the planned
results
are being achieved
• Sales analysis
• Market share analysis
• Sales-to-expense ratios
• Financial analysis
• Market-based scorecard analysis
ii. Profitability Marketing controller To examine where the company is
making and losing money
• product
• territory
• customer
• segment
• trade channel
• order size
iii. Efficiency Line and staff
management
Marketing controller
To evaluate and improve the spending
efficiency and impact of marketing
expenditures
• sales force
• advertising
• sales promotion
• distribution
iii. Strategic Top management
Marketing auditor
To examine whether the company is
pursuing its best opportunities with
respect to markets, products, and
channels
• Marketing effectiveness rating
instrument
• Marketing audit
• Marketing excellence review
• Company ethical and social
responsibility review

24. Conclusions
• Eco7 is a good environmentally friendly product.
• The price between $5.25 - $6.75 should be further explored in
order to identify the right price point.
• Test marketing is a good approach to understand the customer
needs and demand
• Upgrades from conventional to Eco7 will have impact towards
demand on conventional market, to some extend customer may
choose product from competitor.
• The penetration percentage provided is too high to achieve.
• Avellin should consider collaboration with car dealer to capture
new customer rather than relying on existing customer

25. References
• http://www.valvoline.com
• https://www.slideshare.net/jainprakhar1/apollo-v2
• https://www.epa.gov/greenvehicles/alternative-vehicle-fuels
• http://www.pennzoil.com
• https://www.essays24.com/Business/Eco-7-Launching-a-New-Motor-Oil/66837.html
• Kotler, P. & Keller, K. (2012). Marketing Management. London, England: Pearson.

26. Thank you
-June 2017-