For exclusive use University of Technology Sydney, 2015
9-110-027
REV: AUGUST 8, 2011
V. G. NARAYANAN
LISA BREM
Tra answorrld Auto Partss (A)1
It was an unussually cool an nd foggy mo orning in the summer of 22009, but Ellen Bright, CE
EO of
Transsworld Auto Parts (TAP), was too preo occupied to n notice the weeather. She w was focused o on the two balanced b scorecards beforee her. One, frrom the luxurry division, sshowed stron ng financial reesults; whilee the other, from the econo omy division,, reported dissappointing ffinancial perfformance but good progrress in achiev ving the targeets for its no on-financial g goals. She wo ould soon bee meeting witth the headss of each diviision and wo ondered whatt feedback sh he should giv
ve
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After much discussion at the corporate level, a thorough review of the alternatives with
TAP’s board of directors, and gaining preliminary agreement from union leaders, we’ve made the difficult decision to shut down the product lines and customer divisions that cater to these low-performing segments and focus only on luxury and economy car makers. Most of the plants affected will be in the U.S., leaving the majority of the facilities in Europe and Asia intact
(see Exhibits 6a and 6b). We have not made this decision lightly, but we feel it is the only way we can save TAP. On the positive side, I believe we can grow our top line by selling more products to our customers in profitable segments and win over new customers in new markets, primarily in Asia.
2 Efraim Levy, “Autos & Auto Parts,” Standard & Poor’s Industry Surveys, June 25, 2009, pp. 3–4.
2
This document is authorized for use only in 2015A Management Planning and Control by Lily Liu, University of Technology Sydney from March 2015 to August 2015.
For exclusive use University of Technology Sydney, 2015
Transworld Auto Parts (A)
110-027
Based on a competitive analysis conducted by an outside market research firm [see Exhibit
7] and an internal analysis of our core competencies, we’ve decided to differentiate ourselves in the economy division by producing high quality car parts with the lowest lifetime price.
Increase the frequency of purchases by your customers. No matter how poor your current product or service, you must have some customers or clients. One key strategic dimension that you should be thinking about is how to augment and reposition your product in order to sell more to this group.
In light of an evolving market, faced with new competitors, and after a careful analysis of their current customers, the Vanguard Group (hereinafter referred to as “Vanguard”) realizes it must rethink its entire marketing strategy. However, in order to protect and leverage their competitive advantage, which is their low management fees, and to optimize the loyalty that their customers continuously demonstrate toward their organization, they must now target the most profitable segment for them, and develop the best way to serve and delight these customers.
Expand the limited advertising program for current niche market products to retain and gain market share.
1. Target a new customer segment that id young and always ready to try something new and exciting.
show our customers the care of our business but promote our business in a positive way.
This is an important part of the long-term growth potential; weed out those customers who are more effort-intensive and seek to increase their value to the company or reduce their impact on the workforce; have them buy more or don’t sell to them. This area also focuses on customers who spend more with competitors, so efforts might sway their loyalty. It’s all about customer lifetime value.
Being a big DIY fan made choosing a company for this essay simple, Advanced Auto Parts has been a company that I’ve had the pleasure of doing business with for many years. But stronger than my loyalty for this company, is my loyalty to the thousands, no, millions of new do-it-your-selfers that will be hitting these locations in droves. Many are more than just those looking to save a few dollars by doing their own repairs… they are true DIY enthusiasts. Advanced Auto Parts’ mission statement specifically addresses these enthusiasts through their mission statement: “It is the Mission of Advance Auto Parts to provide personal vehicle owners and enthusiasts with the vehicle related products and knowledge that fulfill their wants and needs at the right price. Our friendly, knowledgeable and professional staff will help inspire, educate and problem-solve for our customers.” Breaking it down, Advanced’s mission covers two areas: 1) Vehicle-related products at the right price, and, 2) Knowledgeable and professional staff that inspire, educate and problem-solve.
In business marketing, market segmentation and targeting specific markets aids organizations by reducing the risks involved in decisions of how, where, when, and with whom the brand, product, or service will be advertised, directed, or promoted to. Positioning the product or service to the accurate target while controlling the marketing budget are tactics used by marketing professionals to assure reaching the largest target group and controlling costs (Boundless, 2014). Attracting the right customer is the ultimate objective of targeting specific markets by directing the research and efforts in a manner
After a self-satisfied period, American auto manufacturers encountered formidable competition from the Japanese (the most intense competitor, holding a combined U.S market share of approximately 25%) & German manufacturers. American market share was lost to these foreign brands as a result of better gas mileage, attractive design features & affordability provided by these foreign entities. Consequently, U.S car sales struggled in the European market while these foreign auto makers established production facilities & or expanded their already existing facilities (the Japanese manufacturers) in the U.S. Japanese manufacturers have instituted innovative productions by modifying U.S. manufacturing models, adapting & utilizing technology. Even so, the U.S. have merged with & established strategic commercial partnerships with other
(Select USA, n.d.), have identified the United States as having one of the largest automotive markets in the world, as it is home to thirteen (13) auto manufacturers. Similarly, Investopedia.com, (n.d.), states that the North American automobile production market, is dominated by what is known as the “Big Three”, which includes; General Motors, producers of Chevrolet, Pontiac, Buick, and Cadillac, Chrysler, producers of Chrysler, jeep and Dodge, and Ford Motors, producers of Ford, Lincoln and Volvo”.
The 1980s and 1990s saw much investment and collaboration between domestic and foreign auto makers. Not only did the foreign acquisitions enable the domestic companies to obtain technologies to compete for
The brand will leverage its expertise, product offer and marketing strategy to increase its customer base while driving sales and profit. The following sections review the various strategies that will support this effort.
Provide some value added service to gain added revenue and also to ensure that the customer does not switch.
The automotive industry is one of the most profitable business sectors on international level. The most important producers can be found in Germany and the U.S., which have the highest number of automakers with tradition on the market. However, Asian automakers have gained some solid market segments in the past decades.
As we all know there is no shortcut to success, the same implies on the business stratagies as well. The long path is painful but always fruitful. So the first and the most important tast is to deep research on the market. As we do more reserach we will come to know more about the market policy and the risk taken in the business. We have to learn by our own steps also taken in diffrent modes. We have to learn from others also and need to follow them in their positive steps to some extent, as this may lead to different ideas captured. We have to also deal with the current position of the market as well. If we want to attract the customer we have to follow the present trends of the market.