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4.4. The 4Ps
The 4Ps refer to the marketing mix: product, price, placement (location/distribution) and promotion.
Auto Hicksville has the core competencies embedded its crew to work on all models of domestic vehicles and a large number of foreign ones. Quick turnaround is always on objective at Auto Hicksville with as all employees focused on superior customer service and the shop will have 3 service bays working in parallel.
Auto Hicksville considers that being honest and accurate with customers in terms of estimates for quoting costs and repair completion time is very important in this business. Auto Hicksville employees are focused on delivering their promises. The company's strategy to build strong customer relationships based on integrity and trust is expected to be the catalyst in establishing a strong regular customer base.
Auto Hicksville will use a fairly good degree of technology to manage its diversified auto parts inventory. The goal is to maximize inventory turnover, while managing to always have a specific part in the shop when needed. For this purpose, the company has established strong vendor relationships with the most reputable vendors in terms of shipping time of auto parts.
The company will position its service to target the low to medium income market segments as the economic recession is estimated to last longer. Moreover, this segment is likely to own cars of longer usage period, which usually require more repair services. The company will adopt a lower margin on its price quotations and will increase profit by increasing the quantity of customers served.
The same type of margin will be adopted for auto-parts acquired from its vendors. For emergency repairs and auto-parts orders, an extra 20% will be charged over the normal price and the company will guarantee the repair within 48 hours from the moment the car enters its auto shop.
For the local community and therefore our returning customers, the company will have a fidelity card, with 10% off for routine checks and operations, such as oil change or engine check.
4.4.3. Placement - location
The auto shop will be located in the center of Hicksville, with easy access from any place of the city. The operational office, where the financial and executive managers will seat, will be incorporated in the auto shop. That way, the management will be in touch with the customers at all times.
The storage will also be incorporated in the auto shop as the auto parts have to be available for change in any moment and timing is crucial. This part of the auto shop will be equipped with a software that will keep track of all the objects in the inventory at any moment and will return all parts that are missing/needed and will have to be ordered to avoid a stock rupture. The distribution of auto parts from vendors to the auto shop will be insured by the former and shipping costs will be paid by the vendors for normal orders and shared for urgent ones.
As promotional activity, the following strategies will be used by Auto Hicksville to attract its customers:
Network recommendations - the company will use its own network to recommend the company's services. The network includes among others auto-parts vendors and towing companies. This will be done through the owner who acquired knowledge about the market and the services provided by his company throughout his entire work activity.
Direct marketing - contact potential customers in the local community by phone, fax, email or letter to present the company's services. Design, print and distribute flyers about its services to create customer awareness.
Participate to auto fairs and expositions either as guest or a formal participant to create visibility on the company's services.
Auto Hicksville will also sponsor the publishing of a number of articles in the local newspapers and magazines that are usually more read by its targeted customers. This will provide more information about the company to potential customers and create product/service awareness.
Create a company website to provide more visibility to customers searching for repair services in the area. The website will have a full list of auto-parts available on stock at each moment in time, an updated price list and the possibility to require quotes via email. In the future, the company will take under consideration the possibility of developing a forum in which customers will be able to ask questions about their car problems and get the expert's answer within hours.
5. The market
5.1. Market analysis summary
Hicksville, NY has a population of 41,269 inhabitants according to 2000 Census data. The population is divided in roughly equal gender segments (49% male, 51% female), it has an average age of 39 years and most of the people are in the 25-64 age segment (53%). The vast majority of the inhabitants are white (80%), followed by Hispanic or latino (7.3%), Asian (7%) and others (5.7%).
The per capita income had a steady growth rate from one year to another (see fig. 3):
FIG. 3 - PER CAPITA INCOME in HICKSVILLE, NY - 1998-2000 DATA
Source: Census, 2000, www.census.gov
According to more recent government data, the average salary for an individual was $43,202 and for a household $67,703, in Hicksville, in 2008 (see fig. 4).
FIG. 4 - PER CAPITA INCOME in HICKSVILLE, NY 2008
The employment outlook has moved on an upward since 2006, with the number of jobs increasing by 38% since (see fig. 5). Also, the city has an unemployment rate of 3.1%, below the national average of 5.8%.
FIG. 5 - EMPLOYMENT OUTLOOK - HICKSVILLE, NY 2008
In terms of industries, the leading companies come from: educational, health and social services with 19%, retail trade with 13% and professional, scientific, management and administrative services with 11%. The most popular job listings include: commercial and investment banking, miscellaneous store retailers and search & navigation instruments mfg.
According to the Census 2002, out of the 19,837 inhabitants over 16 years of age and employed, the commuting to work was as follows:
14,923 car, truck or van - drove alone
1,734 car, truck or van - carpooled
2,380 - public transportation
386 - walked
100 - other means
314 - worked from home
FIG. 6 - TRAVEL TIME to WORK
5.2. Market segmentation
The most relevant market segmentation for this plan is the one based on income (see fig. 7). The segments targeted by Auto Hicksville are the low and medium income ones.
FIG. 7 - INCOME MARKET SEGMENTATION - HICKSVILLE, NY - 2000
Source: Census, 2000 www.census.gov
Auto Hicksville will focus its strategy on the low and medium income individuals. Those two segments are the largest and the start-up investment needed for a repair shop to correspond their standards is not as high as it would be for the high income segment.
5.3. Target market segment strategy
The success keys to our strategy include the following:
Increased customer fidelity - regular customer will beneficiate from special prices and customized service package. As price is important for low and medium income individuals, we expect to have a considerable number of regular customers attracted by this measure.
Short response time - quotes and repair services will be provided fast. As vehicle is essential for transportation from home to work and back, we expect this speed of response to attract many customers.
5.4. Market needs
Hicksville auto repair market is a rather small one. Accurate statistical data is not available. However, an estimate based on the county's average number of vehicles per capita shows that Hicksville's automobile ownership should be around 30,000 units, as the county average of per capita registered automobiles is 0.72 (NYS DMV, 2006).
As the number of households/families increases and as individuals migrate from rural side to urban, the average time spend in a vehicle increases and so does the usage. The market needs regular auto repair and check services. Auto Hicksville intends to focus on delivering such services and offer price discounts to regular customers. Given that the target market segments are price sensitive, this price strategy is expected to be successful.
5.5. Market trends
US vehicle ownership is increasing over time despite the crude price reaching record high. More and more Americans use personal vehicles for transportation and due to the expansion of urban areas, commuting has become more popular. Therefore, automobiles are used more intensively during the day in terms of miles per time unit. The vehicle usage is proportional to the number of miles the vehicles was on the road. Hence, the demand for auto repair is increased by both increased vehicle ownership and vehicle usage.
The demand for auto repair services on the low and medium income segments increases with urbanization. Cities become more and more developed and as companies more…[continue]
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