Sullivan Ford Auto World Case on Services Marketing.docx

ba 235 services marketinggroup 7: case solution sullivan ford auto world 21 feb. 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case backgroundwalter sullivan the founder of sullivan ford auto world died and his eldest daughter carol sullivan-diaz, a health care manager by profession took over the business and found out that the family business is in financial trouble based on current financial performance and market outlook. in addition, csat results from car buyers show that the company has problems with their service quality. sullivan ford auto world facts:- average sales of 1,100 cars per year- posted revenues: $26.6 m car sales (from last years $30.5 m)$ 2.8 m service & parts sales (from last years $ 3.6 m)- margins on car sales are low (5.5% of sales revenue & 25% for service). - auto worlds financial situation had been deteriorating for the past 18 months and running at a loss for the past 6 months. - past 12 months financials show that gross sales figures are not enough to cover fixed expenses- margins had been squeezed by promotions and other marketing efforts. market:- due to rising fuel prices, industry and in-house forecasts for future sales were discouraging. - trend is shifting towards vehicle service transactions. 30-day purchasers csat survey results- auto world achieved better than average ratings - 90% of customers said that auto world informed them of what to do if they needed service - less than 33% of respondents said that they have been introduced to someone in the service department (which is a sales protocol) 90-day purchasers csat survey results- overall satisfaction with auto world service department was consistently low placing it in the bottom 25% of all ford dealers- more than 50% of respondents said they would rather use another ford dealer for future service - major concerns: promptness of writing up orders convenience of service hours appearance of the service department interpersonal variables such as attitude of personnel, politeness, understanding of customer problems and explanation of work performed problem statementshould carol sullivan-diaz sell sullivan ford auto world to prevent future losses or try to turn it around? if she chose the latter, what changes & improvements should she implement to improve service quality in auto world?case analysisflower of servicecore service: car dealershipsupplementary service: vehicle servicingfacilitating elements informationalong wilson avenue, the sullivan ford auto world rotating signage can be easily seen. a vast display of cars and trucks fronts the showroom. it also has banners saying “lets make a deal. the service facility is at the back and is not visibly seen along the highway. order-taking the front end of the dealership employs salespeople who are tasked to transact with possible customers. the dealership offers brand new and pre-owned vehicles. some customers who are initially looking at buying brand new vehicles sometimes realize that they cannot afford one and just settles for refurbished cars. similarly, there are customers looking at pre-owned cars and are sometimes convinced to buy brand new cars. at the back end, service writers schedule appointments for repairs and maintenance. for repairs, estimates are given to the client after the vehicle is diagnosed by a mechanic. billingfor car sales, it is not specified in the case but this usually differs per customer transaction.for vehicle servicing, customers are usually billed after the service is done. paymentfor car sales, it is not specified in the case but this usually differs per customer transaction. it can be paid with outright cash, in-house loan or thru an auto loan from a bank. sullivan ford auto world also allows trading in of the purchasers existing vehicle for the new one.for vehicle servicing, customers pay after the service is done.enhancing elements consultationat the front end, car salespersons are there to assist and answer queries of possible customers that are looking for brand new or pre-owned vehicles.for the back end, service writers and mechanics assist customers by coming up with estimates or quotations for services that need to be done on the vehicles. hospitalitythe front end is a high-ceilinged showroom where four new models of cars, polished to a high sheen, are displayed for customers to check out.the back end is quite the opposite with its cramped room and walls with peeling paint. there was no mention of chairs or waiting lounge, customers stood while waiting for their work orders. security (none mentioned in the case) exceptions (none mentioned in the case)7 ps analysis product sullivan ford auto world product mix frontend: car sales sullivan ford auto world sells brand new ford vehicles and pre-owned or traded vehicles that they refurbish in the service department. ford is a known brand for its quality. refurbished vehicles are also of good quality given the expertise of auto world mechanics and service personnel. backend: service deptthe service department offers servicing for cars that broke-down and/or need parts replacement (possession processing). place & time sullivan ford auto world has a very good location in a suburban highway intersection, in an area of the city where housing developments are constructed. this location gives auto world visibility and accessibility to two major markets: the motorists and the residents. service department is located at the back of the sales area which gives opportunity for salespeople to refer the companys service area to buyers. sales operation hours are assumed to take place on normal office hours, same goes with the servicing of the vehicle. it can be inconvenient for customers to follow the window period of checking in vehicles for repair before 8:30am and pick-up by 6:00pm when service is completed. in addition, the service writing process is not efficient and has lot of bottlenecks and is not convenient for customers. price no detail on pricing was mentioned in the case but it was implied that sullivan ford auto world has low margins for selling brand new vehicles. walter sullivan was even aggressive on giving discounts and deals to attract high volume of buyers. the companys pricing strategy is to offer lower the price to stimulate demand or attract buyers. on the contrary, aggressive discounts and low prices may convey poor quality of service to customers. promotion the company invests heavily on promotions and giving deals to induce buyers. no promos were mentioned in the case regarding its service center. promotions and generous deals helped the company maintain desired sales volume in the past but records show that revenues have declined in the past few years and forecasts indicate that this decline may continue because of high interest rates. there are minimal promotion activities for the service department. it seems that management has overlooked the shift of sales contribution from car sales to service. they should also launch promotional activities for the service department to help drive service sales up since the service department is not operating at capacity. process we have identified processes that carol sullivan-diaz should look into:writing of service ordersprocess for service writing is out of date and is inconvenient to customers. bottlenecks and disturbances are not properly managed. customers relay the problems on their vehicles to the service writers. this gives high probability of incorrect diagnostics, solutions offered and estimates when customers have low technical know-how. this may be the reason why rework is a common occurrence which frustrates customers even more. sales processsalespeople do not adhere to the sales process standard procedur