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Service Marketing Case Study 1

The document is a case study about Sullivan Ford Auto World, a car dealership experiencing declining sales and low customer satisfaction ratings for its service department. Carol Sullivan-Diaz, who now runs the family-owned business, is concerned about its poor financial performance and needs to identify solutions to improve stability. A SWOT analysis reveals weaknesses like a lack of dedicated employees and proper management, as well as threats such as a possible shutdown if sales continue declining. Answers to questions provide advice on distinguishing between car and service marketing, comparing the dealership's sales and service departments, and parallels between auto dealerships and health services to help Carol improve the service quality, marketing, and long-term viability of the business.

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Rishabh Vishwakarma
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610 views5 pages

Service Marketing Case Study 1

The document is a case study about Sullivan Ford Auto World, a car dealership experiencing declining sales and low customer satisfaction ratings for its service department. Carol Sullivan-Diaz, who now runs the family-owned business, is concerned about its poor financial performance and needs to identify solutions to improve stability. A SWOT analysis reveals weaknesses like a lack of dedicated employees and proper management, as well as threats such as a possible shutdown if sales continue declining. Answers to questions provide advice on distinguishing between car and service marketing, comparing the dealership's sales and service departments, and parallels between auto dealerships and health services to help Carol improve the service quality, marketing, and long-term viability of the business.

Uploaded by

Rishabh Vishwakarma
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Prestige Institute of Management Research

Indore
2022 - 2023

SUBJECT –SERVICE
SERVICE MARKETING (PT505MMAJ)

INTERNAL ASSIGNMENT ( Case Study–1)

Submitted To : Submitted By :

Dr. Arpit Loya Rishabh Vishwakarma


MBA (PT) – 5th Sem
Scholar
Schola No - 1121312616
INTERNAL ASSIGNMENT – (Case Study – 1)
CASE STUDY – Sullivan Ford Auto World

Summary of the Case

Walter Sullivan had purchased a small Ford dealership in 1981, renaming it Sullivan’s Auto
World and had built it up to become one of the best known in the Metropolitan area. In 1996, he
had borrowed heavily to purchase the current site at a major sub urban highway intersection, in
an area of town with many new housing developments. Carol Sullivan- Diaz, aged 28, A young
health care manager unexpectedly finds herself running a family-owned car dealership that is in
trouble. She is very concerned about the poor performance of the service department and
wonders whether a turnaround is possible. By national standards, Sullivan Ford Auto World stood
toward the lower end of medium-sized dealerships, selling around 1100 cars a year, equally
divided between new and used vehicles. In the most recent year, its revenues totaled $26.6
million from new-and used-car sales and $2.9 million from service parts, down from $30.5 million
and $3.6 million, respectively, in the previous year. Although the unit value of car sales was high,
the margins were quite low, with margins for new cars being substantially lower than for used
ones. Sullivan-Diaz had studied carefully were the results of the customer satisfaction surveys
that were mailed to the dealership monthly by the research firm retained by the Ford Motor
Company. Purchasers of all new Ford cars were sent a questionnaire by mail within 30 days
of making the purchase and asked to use a five-point scale to rate their satisfaction with the
dealership sales department, vehicle preparation, and the characteristics of the vehicle itself. The
nine-month survey findings disturbed her. Although vehicle ratings were in line with national
averages, the overall level of satisfaction with service at Auto World was consistently low, placing
it in the bottom 25 percent of all Ford dealerships. The worst ratings for service concerned
promptness of writing up orders, convenience of service hours, and appearance of the service
department.

Statement of the Problem


This study aims to identify the possible solutions that could keep the Sullivan Ford Auto World
stable
From all the existing internal and external barrier that challenges the company’s stability
thru improving its customer service.

SWOT ANALYSIS

Strengths –

1. Auto World is one of the best known in their metropolitan area.


2. Long time customers know how the business works.
Weaknesses –
1. Lack of dedicated workers/ employees.
2. Lack of proper management.
Opportunities -
1. Sell the business at a rational price.
2. Wait for some time to increase the sales again.
3. If business runs good, the family can hire a manager to handle it.

Threats –
1. Possible shut down of business if sales continue declining.
2. Customers switching to another car shop because of slow service.

Questions
Que1. How does marketing car differ from marketing service for cars?
Ans1. Marketing Cars
a. Big ticket item
b. Prospective customers may debate purchase months in advance
c. Purchase may involve exchange of existing vehicle
d. Generally an exciting and positive activity
e. Creation of the product takes place in a distant factory (reflecting years of R&D efforts)
f. Much of the advertising effort in undertaken by car manufacturer
g. Distribution takes place through franchised dealers who take responsibility for personnel
selling, and participate in promotional programs with manufacturers
h. Initial experiences with a new car will tend to be positive and the benefits should be
readily apparent.
Services of Cars
a. Need for service tends to increase in frequency and cost as car ages.
b. Service price is hard to predict but much lower than new purchase often less than $40 for
routine work (oil change, lubrication etc...)
c. Service is a nuisance, involving trips to the garage for drop- off and pick up, as well as loss
of the car for a day or more.
d. Some service problems (e.g. water leak, electrical failures) are hard to detect and often not
fixed right the first time.
e. Service is provided by the dealer(or another garage) not by the manufacturer whose role is
limited on service.
f. Customer will tend to go for service to dealer for which vehicle was purchased unless
service proves unsatisfactory.
g. Not always easy to determine whether service problems are the fault of the manufacturer
or the service provider...
h. Hard to determine if service done right and whether cost was justified.
Que2. Compare and contrast the sales and service departments at Auto World.
Ans2.

S.No Car Sales (Fornt End) Service/Parts (Back End)


No mention of advertising, reminders
Extensive advertising and special offers to generate service
1 promotions to attract car buyers business
Eye-catching site in convenient same location but service building is
2 location greasy and hidden showroom
3 Customers can walk-in Customers must make appointments
4 Attractive, morden facility 30-year -old, greasy facitity
Flowerbeds outside the customer
5 entrance customer enter by side door
Sales peope work in an attractive Service writers work in cramped room
6 high ceilinged showroom with peeling paint
Morden, well-maintained equipment
7 High-polished new cars on display in service bays.

a. Service revenues are dropping faster (-19.6%) than car sales revenues (-12.8%) in the most
recent year
b. The split between “front end” and “back end” departmental gross is more weighted
towards car sales than in most dealerships (63.8 v/s 60%)
c. A high proportion of customers will use another supplier for service in the future (loss of
service revenues)
d. Those customers who are likely to buy another Ford in the future are a lot less likely to buy
it from AW (sales losses on new cars).

Que3. From a customer’s perspective, what useful parallels do you see between
operating a car sales and service dealership and operating health services?
Ans3.

S.No New Car Sales New Babies


Happy department in car
1 dealership Happy department in a hospital
Usually a planned activity with
some anxiety but high potential for Usually a planned and eagrly anticipated
2 satisfaction event, although not without anxiety
3 Often a family affair Often a family affair
Treating Car Problems Treating Sick People
1 Owners hate to be without cars Customers are worried and uncomfortable
Outcome not certin, owners
2 worried and costs outcome not always certain
worried about dislocation due to
3 lack of car concerned about personal dislocation
incidence of car problems rises incidence of health problems usually rises
4 with vehicle's age with age
preventive maintenance and check-
5 ups are a good idea regular check-ups are a good idea
can get initial warranties, may be can insure against illness to avoid risk of
6 able to obtain serivice contracts high hospital payments
can choose which health plan/insurance
7 can choose which service supplier plan
word-of-mouth recommendations play
Word-of-mouth recommendations and important role of influencing choice of
8 often influence choice a health plan or doctor

Que4. What advice would you give to Carol Sullivan – Diaz?


Ans4. 1. Improving Service Quality
a. Areas needing improving, epically items rated “bad” or “poor”
b. Computerization of customer records
c. Physical renovation of the area
d. Effort to recruit and train better service workers

2 Marketing the service department


a. Physical renovation of the faculty
b. Customers introduced to service department when new cars are purchased
c. Promotional incentives to bring cars in for service
d. Reminders to customers when cars are due for service
3. Marketing the dealership
a. Promote car service as a package to build relationship
b. Reconsider appropriateness of price-based promotions( how about promotion
featuring an extended service contract?)
4. Sell versus turnaround
a. Poor time to sell the dealership.
b. Introduce important innovations seems feasible.
1. The dealership has some funds left from insurance policy.
2. Carol seems confident about her own ability to renter the health care field later.
3. As partner in a dual- career marriage, she may afford to reinvest her salary.

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