Client Marketing Audit Engine Builders
The paper is intended to outline the marketing situation of the Company and to make reasonable recommendations about the proper tact and development of a strategic marketing position.
As written in A Framework for Marketing Management and Marketing Management Millennium Edition, Tenth Edition (Kotler, Philip), “Modern marketing calls for more than developing a good product, pricing it attractively, and making it accessible to target customers. Companies must also communicate with present and potential stakeholders, and with the general public. The marketing communications mix consists of five major modes of communication: advertising, sales promotion, public relations and publicity, personal selling, and direct marketing.”
Kotler also wrote that for a company to develop an “effective marketing communication requires eight steps: (1) Identify the target audience, (2) determine the communication objectives, (3) design the message, (4) select the communication channels, (5) establish the total communication budget, (6) decide on the communication mix, (7) measure the communications’ results, and (8) manage the integrated marketing communication process.
Within the following marketing audit an honest attempt has been endeavored to accurately observe behaviors and contemporaneously record conversations with employees, ownership, prospects and customers in such a was as not to divulge the identity of the source. Hopefully, such anonymity has bolstered the honesty of those that have given information to the author. In turn, the resulting honesty should have improved the chances for an accurate compilation of the current marketing position of the Company.
To the extent that accrued sales data and financial statement information was not available for review and comparison to industry norms and metrics the audit was limited to interviews and subjective data. While some polling has been executed with customers in order to paint an accurate picture of local and surrounding demographics and market share, the Company should endeavor to obtain more comprehensive market share data to fully exercise their place in the industry.
During the past five weeks, the following elements of the marketing position of the company have been reviewed:
Part I. Marketing Environment Audit
· Macro environment
Part II. Marketing Strategy Audit
· Business Mission
Part III. Marketing Organization Audit
· Formal Structure
· Functional Efficiency
· Interface Efficiency
Part IV. Marketing Systems Audit
· Marketing Control System
· New-Product Development
Part V. Marketing Productivity Audit
· Profitability Analysis
· Cost-Effective Analysis:
Part VI. Marketing Function Audit
· Sales Force
Essentially it is the Auditor’s opinion that the Company suffers no problems that well thought out communication both internal and external to the firm coupled with consistent execution through solid team building processes and a permanent change in attitude cannot remedy. Albeit there lies strong institutional resistance to change in the Company which is endemic to most all small closely held operations, much can be done to effect the positive change absolutely required if the Company ever desires to stretch beyond a local company serving customers haphazardly.
Part I. Marketing Environment Audit
Since the customer demographics include direct retail purchasers as well as automotive engine repair shops we look to the individuals and their buying habits within the two groups. First, the individual buying habits of the customers dictates how to approach not only the existing demographic but new undeveloped markets as well. Traditionally, the Company has combined mass mailing with direct in person customer contact by the outside marketing department.
In 2000, a major competitor in the rebuilt engine company from Indiana, “Jasper”, entered the Texas market by employing a direct sales force with full management staff in the major markets. Jasper sells directly to the end user, the repair shop mechanic and this approach has changed the way customers can buy engines. In addition, ownership has caused Internet exposure via the websites to become formidable additions to the strategic marketing front consistently generating almost 40% of the sales volume according to ownership since no financial data is made available to employees for management purposes.
Jasper prices significantly higher than CLIENT, Inc. but offers a stout warranty. The Company can compete on both the distance advantage and the warranty if it accounts for it in price. In response to Jasper as well as a declined engine market, the company has hired a marketing person to lead the marketing and sales effort for the foreseeable future. Within the last two months, CLIENT., INC mailed 8800 pieces of a combination flyer event invitation to remind customers that CLIENT., INC is still in business. The mailer resulted in approximately 100 attendees to the barbeque event November 8, 2003. Two or three motors were sold as a result.
No doubt exists that as long as man drives the internal combustion engine; demand will exist for rebuilt replacement engines. CLIENT., INC stands ready to serve this demand. Several factors contribute to the overall demand in a given market as regards engines. First, the general economic health can contribute to whether people drive their cars longer requiring sometimes a replacement engine or they buy a new one. CLIENT., INC obviously prefers the former. Price conditions currently are tough as what is believed to be an end to general industry compression in the number of engine producers, which started in late 2000 and is now tapering off. Nevertheless, ownership has attributed its loss in volume to a poor economy while this Auditor believes a case could be made that the business has shrunk due to improper handling of several strategic issues.
Ownership’s short-term attitude to the cost of warranty rather than coupling that with the consequences of irritating customers over warranty such that they cease the relationship may not have been realized.
As a response to this compression, CLIENT., INC has laid off much staff shrinking the payroll to have its height in 2000 when gross sales were also double what they are today. The Company has held prices stable for the past eighteen months, as it has found innovative ways to cut costs. ls engine builders
The President has indicated a desire to transform the company from a mom and pop operation to a firm that allows rigorously recruited and hired employees to take charge and responsibility of the company’s destiny toward growth and profitability so that all stakeholders will prosper. As such, systems from accounting to order entry to dispatch, communications and fuel and fleet management must be improved and brought up to date so that the company can jump ahead of expectations and get away from the reactionary mode of operating. New skill sets must be recruited to fit the model if this company is going to ever achieve anything more than a fifty-employee company.
As indicated earlier, Jasper Engines is a late entry to the Texas market and at the top of the price tier. Other competitors include Four Star, Thunderbolt, Jasper, Roadmaster and others as well as local small town machine shops. Jasper has effectuated a policy to sell to anyone. Others have marketed repair shops but tend to work through parts distributors where possible.
Summary Conclusion Part I.
In 2000, the Texas remanufactured auto engine market changed by the entry of Indiana’s Jasper Engine and Transmissions to the State. Jasper changed the industry here not only by entering as a formidable competitor but in their marketing tact of selling directly to the consumer through the repair shop rather than through a jobber or distribution network. Jasper seized onto the extreme high dollar end of the market with its pricing structure where the Company and others missed out by pricing too low and delivering lower quality.