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GROUP 2: Sullivan Ford Auto World

College of Business Business Management Department MBA Degree Program A CASE REPORT ON

SERVICE MARKETING (MKT609M) 1st Term of AY 2011 2012 Prof. Regina C. Dy

SULLIVAN FORD AUTO WORLD

Group No.2 Castillo Ronald Panopio, Rolalie Reyes, Heinz Zhangpeng, Allen

1. Case Background
Events take place from the viewpoint of Carol Sullivan-Diaz, the 28-year old general manager of Sullivan Ford Auto World.

In 1983, Walter Sullivan purchased a small Ford dealership, which will eventually grow to become Sullivan Ford Auto World (Auto World). Auto World offers both sales (front end) and service (back end) of vehicles.
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1. Case Background (Continued)

y Walter recently died of a heart attack. y Carol needs to analyze which of two options was the right move to make:


To quickly sell Auto World and move on with her life? or To work on a turnaround and make the company financially viable?

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1. Case Background (Continued)

Auto World Car sales of 1,100 cars per year Total annual revenues of around US$ 29.5 million from both sales and services But Still... Auto World ranked at the lower end of medium sized dealerships Margins were low and gross figures were insufficient to cover the companys fixed expenses
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1. Case Background (Continued)

Auto Worlds financial situation had been deteriorating for the past 18 months; y New car sales had declined; y Margins had been squeezed by promotions and other efforts to sell; y Due to rising fuel prices, industry and in-house forecasts for future sales were discouraging; and y Service revenues were below average.

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1. Case Background (Continued)

Customer satisfaction surveys showed a problem with the companys delivery of services, to wit:
y

Less than 33% of the respondents said that they had been introduced to someone in Auto Worlds service department Over-all level of satisfaction with Auto Worlds service was consistently ranked Low placing it in the bottom 25% of all Ford dealerships
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1. Case Background (Continued)

y For interpersonal variables such as attitude of service department personnel, Auto Worlds ratings were relatively poor y More than 50% of respondents indicated that they would use another Ford dealer or some other place for maintenance service. y The rating for overall satisfaction was below average.
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2. Statement of the Problem

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GROUP 2: Sullivan Ford Auto World

To determine what other potentials might exist for Auto World to improve its sales volume and selling gross. To determine how marketing cars is different from marketing service for the same vehicles. To know the differences between the sales and service departments at Auto World. To identify, from a consumer perspective, useful parallels between running a car sales and service dealership and operating health care services? To give Carol Sullivan-Diaz good advice on how to improve service quality in Auto World.

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4. Areas of Consideration & Major Assumptions

 Carol has a Masters degree in business administration.  Carol is quite familiar with the operations of Auto World.  Similarities between health care services and auto sales and maintenance services.

Selling Auto World now would also mean selling it at a loss. Auto Worlds service work order process was still done manually and had not been computerized.

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1 PREPURCHASE STAGE

2 SERVICE ENCOUNTER STAGE

3 POST ENCOUNTER STAGE

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1
AWARENESS OF NEED

4
MAKING A PURCHASE DECISION

PREPURCHASE STAGE

2
INFORMATION SEARCH

3
EVALUATION OF ALTERNATIVE SOLUTIONS & SUPPLIERS

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High / Low Contact Service Model Moments of Truth

Service Encounter Stage

Servuction Model

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Fully Focused

Service Focused

Market Focused

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I.Internal analysis Strengths  Carols experience, knowledge and expertise  Technically skilled and competent staff  Attractive showroom  Favourable location  Well known dealership  Huge amount of insurance policy on Sullivans life

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Weaknesses Inappropriate attitude of service staff Lack of interpersonal skills of service manager Problems with service writers High turnover of service staff Revenues are falling Poor appearance of service department and waiting area Service procedures not customer oriented Inefficient recording and bookkeeping Carol has only six-weeks to resolve the dealership problems

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External Analysis Opportunities  Develop new markets  Change of management by introducing a service culture and providing training programs  Use of advanced technology

Threats Poor industry forecast Competition

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6. Alternative Courses of Action

Advantage
y y

Disadvantage Extended hours are required from Carols Carols heart is not in auto service industry Carol may lack the necessary experience and influence to handle the disagreements between the service and sales departments

y y

Carol is an owner and therefore is expected to y have a high level of loyalty to Auto World y Carol has personal knowledge of Auto Worlds y operations and she knows how to provide good service to their clients and co-employees Carol can apply her experience in the health care industry which revolves around designing new services, handling complaints, & market research Carol is only 28 years old. She brings with her innovative and fresh ideas Carol will have a chance to personally save the business that her father worked so hard to build

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6. Alternative Courses of Action (continued) 2. To Engage a Service Marketing Expert With a Background in Sales to Run Auto World
Advantage y Will not require Carol to lose her present job y The new service marketing expert will be able to view things objectively without being affected by existing relationships and biases y Since the new service marketing expert is also good in sales, he or she will be able to formulate strategies to increase profits Disadvantage y Will entail additional cost y The new service marketing expert may not be aware of the existing culture in Auto World since he is an outsider y The level of loyalty may not be as high as that of Carol s

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6. Alternative Courses of Action (continued)

3. To Accept Bills Offer to Buy Auto World on an As-Is Basis at a Low Price
y

y y

Advantage If Auto World is no longer viable, y then selling it now will cut further losses Carol will be able to continue in her y chosen career heath care services There might be a connection between Walters sudden heart attack at a relatively young age and the pressures he was experiencing with his business Carol will be able to avoid this

Disadvantage If Auto World is still viable, then Carol would be missing out on an opportunity to increase profits The act of giving up and selling what her father worked so hard to build might not look good in Carols resume

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7. Recommendation
Utilize Carols Background and her Masters Degree In Business Administration To Improve Auto Worlds Quality of Services

Option No.1 is recommended because of the following reasons: Because of her long exposure to her fathers business, Carol is in the best position to pinpoint the areas that need to be improved. Carols MBA degree gives her valuable advantage in terms of scientific methodology and discipline. Carols background as a marketing strategist in the health care industry will be very useful as the auto sales and service industry is similar in many ways.
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8. Action Plan
Computerise all service operations to cut on turn-around time and avoid clients long waiting hours. Hire service marketing expert to run the service department with a keen sense of salesmanship. Engage services of training consultant to provide customer care programs for the entire service department staff. Service personnel will thereafter be encouraged to meet with clients and to discuss the clients concerns. Design and implement an audit program to check on after-sales services provided to clients. Reward employees with high evaluations and impose sanctions on those who fail. Hire attractive and well trained receptionists for the service department, which should be renovated to have a warm and friendly ambience. Maintain the promotions and discounts to continuously improve the volume of sales. Hire one or more mechanics to maximize the use of equipment and facilities. Monitor if the protocols and process are organized and being followed.
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THE END