Essay: Eco7 Motor Oil Launch Analysis for Avellin's Market Position

Eco7: Launching a New Motor Oil Questions for Analysis Total Points: 100 [20 points]

1. Characterize and assess the behavior of consumers in their purchase of motor oil i.e. assess, among any other considerations, the nature of the purchase, the benefits and risks associated with the purchase of the product, the price sensitivity, where it is bought, etc. [15 points]

2. Assess Avellin’s position in the passenger car motor oil (PCMO) market, including consumer perceptions and distribution strategy. Why has it lost market share over time? [15 points]

3. What is the strategic role of Eco7 in Avellin’s product portfolio? How should Avellin weigh consumer interest in, and willingness to pay for green motor oil? Is it the right product for the firm at the right time? Explain. [50 points]

4. Develop a suitable launch strategy for Eco7? That is, whom should it target and how should it position the product? Propose a marketing mix (product, price, place, and promotion) to implement your proposed targeting and positioning decisions. Justify fully your recommendations. Note: Your analysis should be based on both qualitative and quantitative considerations, given the data in the case. In order to assist you with the quantitative analysis, you may download from the case download site an Excel spreadsheet that contain the data in some of the case exhibits, as well as partially filled-in tables that should provide some guidance to do the quantitative analysis.

Behaviors of Consumers in Purchase of Motor Oil and risk associated with it

Motor Oil is a kind of lubricant used in the internal combustion engines of cars and other vehicles. The focus should be on understanding the components that are being taken into consideration by the consumers while making decisions on purchase. The present scenario depicts a picture where brand awareness is very important enabling the consumer to recognize a brand under any given situation and condition (Kardes, Cronley and Cline 2014). At the point of purchase, when the consumer is making a purchase decision, brand awareness plays a huge part. At the time of repeated exposure of the brand, people’s familiarity with the brand increases and awareness associated with it enhances. The consumers purchase motor oil of a certain kind, the synthetic one nowadays, to help prolong the engine’s life of their vehicles. Though it might cost one a few bucks, but it will not let the engine suffer a major damage which might cost even more then. It works as a maintenance factor and consumers need to understand that. Customers should purchase motor oil from authenticated dealers or shops in order to avoid any risk or damage to the engine.

When consumers decide on procurement of engine lubricants, the major factor that affects their purchase is pricing. The pricing of a product is associated with the standard of reliability. If the price does not include the marginal cost and if it does not reveal the real production cost also, the consumers will not be influenced to buy the optimal magnitude of such products (Uçar, Özkan and Karagöz 2016). When violations of price-marginal-cost equality are desecrated, people inclined towards the second best options. Determining optimal prices with cost-efficient procedure is different altogether. It is up to the producers of lubricants to reconsider their methods of pricing because of the ongoing trend in the market regarding growth in the required capital for brand products. Consumers have the habit of choosing products on the reliability factor.

Motor oil is often considered the support of a vehicle’s engine. Many leading industry brands have initiated an education program for consumers that include a website www.motoroilmatters.org as part of the project to educate consumers about motor oil’s required quality and the important role it plays in helping extending the life of an engine and its total competence. The website assists consumers why paying extra few dollars for motor oil is so viable considering the things that are in stake. In a way it helps in preventing the damage which can be very costly.

The motor oil consumer can be classified into two broad divisions: Do-it-Yourself (DIY) and Do-it-for-me (DIFM). The DIY section consists of people who purchase passenger car motor oil (PCMO) from the automotive stores, convenience stores and merchandisers whereas the DIFM section uses the assistance of professional service providers (Baker and Parkinson 2016). The DIFM consumers lack the ability in understanding the different classification associated with the product, which is a problem. It suggests that they are only happy with the oil change on time. If they do not understand or know what is going inside their vehicle’s engine, they will probably miss out on important facts required at the time when problem occurs. However, the DIY consumers boasting of younger people have certain knowledge about the differences between motor oils.