Autobytel is spending more than it earns, with an advertising budget that has traditionally overspent its revenues, let alone other expenses, Autobytel needs to slow down the advertising and marketing growth, raise prices or a combination of both?
Autobytel has traditionally used a mix of different advertising strategies to attract customers. What would be the best mix for future growth?
Autobytel is looking to expand into several new markets while looking at its current product mix. What should Autobytel pursue and how should they pursue it?
Autobytel needs to change its marketing position in order to differentiate it self from its competitors. Old positioning statements are being copied and better implemented by their competitors. What should Autobytel’s new position statement be?
Marketing and spending:
Autobytel should look at reducing the growth rate of sales and marketing from 40% a year to only 10% a year.
Autobytel needs to do a better job in determining who their customers are, how best to market to them and measure the effectiveness of future advertising campaigns. Much of this can be done by mining their own database of car buyers.
New Car Business
Do a better job of marketing to car buyers in order to drive more traffic to the web site. Continue to maintain a positive relationship with participating dealerships. Increase average Autobytel fees per car by 25% to generate more revenue.
Used Car Business
As with the new car business, Autobytel needs to drive more customers to the website and continue to maintain a positive relationship with the dealer. Autobytel should drop the customer to customer sales site from the website and instead find ways to drive people selling cars to dealerships
Financing and Insurance
This represents a potential growth area for Autobytel. The company should find ways to increase the number of loans generated through the site.
Autobytel should also aid dealerships in pursue generating more business for service and parts. As with used cars, Autobytel should avoid referring customers to service stations outside participating dealers
Autobytel’s new positioning statement:
Autobytel, bringing car buyers and sellers together to save money.
Marketing and spending:
Table 1 represents financial performance and growth rate projection of Autobytel. In years 1996-1999, the percent growth of marketing dollars decreases, leveling off at approximately 40% growth in 1998 and 1999. In order to keep up with that level of marketing growth, projected revenue growth would need to exceed approximately 145% for two years before Autobytel breaks even. This would be a difficult growth rate to maintain, especially when revenue growth is trending downward. On the other hand, if Autobytel decided to hold its advertising dollars even for two years, the company would need to have revenues grow for two years at approximately 75% to break even. However, looking at past revenue growth, though it is decreasing, it probably won’t drop from 140% to 75% in one year.
In Table 1, it shows a smoothed revenue growth drop from 140% in 1998 to 120% in 1999 and 100% in 2000 and 80% in 2001. With this 20% decrease each year, Autobytel would be able to maintain a 10% increase in marketing and in 2001 marketing would represent only 21% of its projected revenue.
Since marketing dollars will become increasingly limited in the future, Benvenuto will need to develop a strategy for allocating dollars to the most effective sources. Although, being the only internet company to be listed in the”Marketing 100 list” is admirable, this also represents an overspending of marketing dollars in the past. In a sense, Autobytel was trying to market to everyone. The Super Bowl ads are an example of this. Autobytel knew that the ads increased activity on their web...
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