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Problem: What positioning and pricing will work with channel partners and resonate with consumers?
Aaron Jonnerson:
Avellin:
Market
Product
o High quality motor oil could be used for longer time before it broke down
o PCMO broke down intro three categories
Conventional – most widely used
From $2.50 to $4.00 per quart, most affordable motor oil
Synthetic Blend
From $5.50 to $9.00 per quart
Offered greater longevity, withstood high temperatures thus required less
changes
Could be used in any vehicle – preferred for high-performing vehicles that
generated more engine heat
Accounted for less than 20% of industry sales
Full synthetic
From $5.50 to $9.00 per quart
Most expensive oil
Offered greater longevity, withstood high temperatures thus required less
changes
Used petroleum as base material, was then refined and included additives to
boost performance
Accounted for less than 20% of industry sales
Consumers
Distribution
Independent DIFM
o Avelline created the Aventage Program
o Involved sales managers, management, in-store displays, customer education, bulk
discounts
o This provided Avellin with customer behavior and trends data
o Helped them assure service quality was upscale
o Out of their 6,000-independent fast-lube customers, 4,400 were in the Aventage Program
o Also sold to 6,500 oil change-plus stores and repair shops
o Independent DIFM = 68% of sales
National Retailers
o Only for the DIY segment
o Accounted for 9% of sales
AvellinAuto
o when opening new stores, they aimed for locations that minimized the impact on existing
customers (looking for new customers)
o Effective manufacturer gross profit was $0.75 higher per five quarts
o Had 436 open
o Generated 7% of PCMO sales
Remaining Percent
o The remaining revenue share came from national DIFM chains, car dealers, convenience
stores, and online sales
Avellin avoided cannibalizing their own products and sales to try and not exuberate current prices
Competition
Sevoline
o Ranked 5th in the market
o Only competitors to introduce motor oil called SevoGreen
Introduced in 2011
Manufactured by recycled oils
Cost twice as much as regular oils ($7.50 per quart)
Sold to the DIFM channel mostly
Introduction generated buzz in the industry
Sales penetration showed promise
Few customers were motivated or trained to promote SevoGreent – sales could be
better
Didn’t invest a lot in marketing campaigns
Baud
o Had almost 2,000 stores that only sold its product
Largest fast-lube chain
o Strong presence in mass merchandisers and clubs
Preferred brand at Walmart
o Stronger in the DIY and DIFM segment that wanted quality products
Motoline
o Had 1,200 stores
o Long term relationships with mufflers, brakes and tire chains
Avelline
o Preferred by independent fast-lube stores, oil change plus stores and repair shops
o Top in segment that seek best price
o Worked hard to provide best service and promotional programs to wholesale distributors and
customers
Market Leaders for PCMO were Baud (23% of branded sales) and Motoline (15% of branded sales),
followed by Avellin (11% of branded sales)
Private-label motor oil accounted for 18% of market shares
o Grows steadily
For DIFM installers, private label motor oil offered discounts, thus generating higher gross margins
o Consumers were easy to up-sell from traditional motor oil to private-label synthetic
Motoline was the only top-3 company to enter the private-label market
40% of consumers were undecided about the brand for their next oil change
Brand Loyalty
o DIY
More likely to research characteristics, performance and benefits of the brand
Loyalty was high
Based on brand trust and familiarity with product
o DIFM
Convenience of installer location and speed were crucial (service quality)
Due to this, Baud and Motoline invested in expanding their fast-lube chains in
early 1990’s
o Resulting in them being the easy/obvious choise for cosumers
More open to professional suggestions (83%)
And 56% only seeked a specific PCMO product