Sullivans Auto World

1
Sullivans Auto World

• Presenter
• Dawn Birch
• September 2005

2
Session overview

• Case background
• Major issues
• Situation analysis
• Alternative strategies
• Recommendations
• Implementation plan
• Conclusion

3
The company

• car dealership
• new and used cars
• sales and service departments
• medium-sized
• family-owned
• sales volume
• 1100 cars p.a.

4
Current situation

• owner (Walt) has died suddenly
• family not interested in the business
• daughter (Carol - Health Care Manager) is
  temporary GM
• 2 weeks more leave
• concerned about performance of SAW
• wondering what to do

5
Nature of the service

• possession processing
• tangible actions to peoples possessions
• medium level of contact
• people enter the service department to discuss
  service requirements
• medium-high level of customisation and judgement
• continuous service but no formal membership
• fluctuating and random demand

6
Case Issues

• What should Carol do with SAW now that Walt has
  died?
• Carol is not interested in managing the business
  but wants the business to succeed
• Potential sale price is low due in part to the
  poor performance of service department

RIP Walt
7

• How can the performance and service quality of
  the service division be improved?
• service revenues are below industry average and
  declining
• customers overall level of satisfaction with
  service is low
• high staff turnover
• sales staff reluctant to introduce customers to
  the service department.

8

• How can the firms deteriorating financial
  situation be arrested?
• deterioration over last 18 months
• running at loss for last 6 months
• behind in mortgage payments
• accounts payable risen sharply in last 6 months
• service revenues and new car sales falling
• service revenues below industry average
• profit margin being squeezed by promotional
  expenses

9
Major issue

• What should Carol do with SAW to ensure the
  success and continuity of the business?

10
Overview of situation analysis

• Internal analysis
• strengths
• weaknesses
• financial analysis
• market analysis
• External analysis
• opportunities
• threats
• Applying marketing theory
• Summarising the analysis

11
Strengths

• human resources
• technically skilled and competent staff (high)
• above average rating of the sales staff
  performance (medium)
• Carols experience, knowledge, and expertise
  (medium)

12
Strengths cont..

• physical resources
• modern and well maintained equipment (high)
• attractive showroom (medium)
• favourable location (medium)

Sullivans Auto World
13
Strengths cont...

• current market position
• well-known dealership (medium)
• customer satisfaction with NEW cars is above
  average (medium)

14
Weaknesses

• Human resources
• inappropriate attitude of service staff (high)
• service manager lacks interpersonal skills (high)
• problems with service writers (high)
• high turnover of service staff (high)
• loss of key person - Walt (medium)

15
Weaknesses cont..

• Financial situation
• revenues are falling (high)
• deteriorating (insurance and some funds) (medium)

16
Weaknesses cont..

• Physical resources
• poor appearance of service department (high)
• poor waiting area (high)
• back stage is too visible (medium)
• service facility is not visible from highway
  (medium)

17
Weaknesses cont.

• Service processes and operations
• service procedures not customer oriented (high)
• inefficient recording and bookkeeping (high)
• understaffed during peak periods (high)
• business operating as two separate entities
  (high)
• inconvenient service operating hours (medium)

18
Market analysis

• Customer perceptions of service department
• high risk
• poor performance
• poor experiences
• Service is difficult to evaluate
• high in credence qualities
• Repeat purchase is poor

19
Customer surveys

• 30 day survey of new car buyers
• above average rating on satisfaction
• 90 of respondents were informed about services
• however, less that 33 introduced to service
  department

20
Customer surveys cont.

• 9 month survey of new car buyers
• similar to national average on vehicle ratings
• in lowest 25 of Ford dealerships on overall
  satisfaction with service

21
Customer surveys cont.

• intention to use other service suppliers
• For maintenance gt 50
• For minor repairs gt 50
• For major repairs gt 30
• less likely to purchase again from SAW than from
  other Ford dealers

22
Service department rated poorly on.

• promptness of writing up orders
• convenience of scheduling work
• convenience of service hours
• appearance of service department
• attitude of service department
• politeness of service personnel
• understanding of customer problems
• explanation of work performed

23
Average ratings on

• length of time to complete work
• availability of parts
• quality of work

24
Opportunities

• Penetrate current markets
• car repair and maintenance
• extend hours of operation
• provide a drop off/pick up service
• auctions
• Develop new markets
• body shop

25

• Change of management
• new staff initiatives
• introduce a service culture
• internal marketing/training programs
• Adopt advanced technology
• computerisation
• improve service delivery
• reduce level of customer contact

26
Threats

• Economy
• high interest rates
• downturn in regional economy
• poor industry forecast
• Competition
• survey revealed that customers are likely to
  switch

27
Services marketing system

• back stage is too visible
• need to manage the physical evidence
• front stage is shabby
• need to manage the service encounter
• computerise the service writing process
• manage the moments of truth
• establish an effective service recovery program

28
The service marketing system for SAW
29
Flowcharting the customer experience

• Refer to flowchart
• Does each step represent value for the customer?
• Can service quality be improved at any step?
• Can any steps be removed or sped up?
• Where are the bottle necks and failure points?

30
Summary of situation analysis

• Major strengths
• technical skills
• Major weaknesses
• service delivery system
• Opportunities
• improve service quality through internal
  marketing/training and using advanced technology

31
Alternative strategies

• Sell now at poor price
• Improve the service department and then sell in
  1-2 years
• Appoint Larry Winters as Manager to improve
  service department.

What should I do?
32
Evaluation criteria

• customer satisfaction
• service quality
• customer loyalty
• employee satisfaction
• family
• revenues
• cost
• refer to handout of scoring model

33
Recommended strategy

• Appoint Larry Winters as Manager and improve the
  service department
• develop a client-focussed service department
• computerise client records and service writing
• train staff in service skills
• extend hours of operation
• refurbish the service department

34
Justification of recommended strategy

• This strategy will facilitate the survival and
  success of the business without Carol needing to
  be too involved.
• If an external consultant could be hired to
  assist Larry to improve the service delivery
  system
• Refer to handout of implementation plan

35
Conclusion

• What can Carol do to ensure the continuity and
  success of SAW?
• Business success relies upon the improvement of
  the service delivery system
• Larry Winters can manage the change process.