Sullivan Ford Auto World

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CASE 1

SULLIVAN FORD AUTO WORLD

OVERVIEW

The owner of a Ford car dealership dies unexpectedly. His 28-year-old daughter, a health care manager with an MBA degree, temporarily takes command. She is shocked to find that the once-thriving dealership is losing money and realizes that she must choose between selling the business at an unfavorable price, or working to turn it around. She suspects that improving the performance of the service department will be the key to saving the business.

STUDY QUESTIONS

1. How does marketing cars differ from marketing services for those same vehicles?

2. Compare and contrast the sales and service departments at Auto World.

3. From a consumer perspective, what useful parallels do you see between running an automobile sales and service dealership and running health care services?

4. What advice would you give to Carol Sullivan-Diaz?

Answers

1. Marketing a service for cars is usually harder than marketing the same cars and the consumer behavior towards purchasing a car service differs from a consumer behavior towards purchasing car. Products have search qualities representing the characteristics that are easily reviewed before a purchase occurs. This is a challenge for marketers to communicate the benefits of a car service which is harder than a product (car) to evaluate. Price too is an important factor in a marketing mix and the pricing strategy of a car service differs from the pricing strategy of a car.

The characteristics of services address a clear framework from which we can differentiate between the marketing of cars and the marketing service of those same cars. These characteristics are intangibility, inseparability, variability, and perishability.

Intangibility:

A car as a product is tangible, which means the customer can touch and see the product before deciding to make a purchase unlike car services which are intangible. So service marketing should focus on the satisfaction and value a consumer can get in return to his purchase. Service marketing must tackle more the consumer perception of the value of the service due to this intangibility. Sometimes it is necessary to attribute tangible measures for the service which highlights the Physical evidence in service marketing representing a new “P” added to the 4 traditional product marketing mix “P”s (product, promotion, price, and place).

Inseparability:

Unlike products (goods), services can’t be separated from the service provider. The production and consumption of services is simultaneous contrary to products (goods) where it can be produced and stored then on a later stage purchased and consumed. This has its implications on marketing a car service and marketing a car. This highlights two other “P”s (processes and people) in service marketing that are added to the four product marketing “P”s.

In the case of a car service, the technicians (people) perform the different service tasks (conditioning of steering and suspension, oil change, etc.) in an efficient way (process) to ensure delivery of the qualified service. In return, the customers pay a price for the added value by the different things that form the service such as the skills of the technicians, the use of specialized equipment or tools, service time and much more. Marketers of a car service should consider these issues.

Variability\Heterogeneity\ Non-standardization:

Products are homogenous compared to the nature of the services which are heterogeneous. Ford cars of the same type are almost identical. However, the car service provided by auto dealers might not be the same, even the service might be different in the same car service center and with the same technicians to two different customers.

Perishability:

Service perishes. It differs from a product which can be owned and stored for later use. Ownership changes to a buyer when a car is sold, but there is no transfer of...
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