1. WBB 10202 - INNOVATION MANAGEMENT HALFORDS MOTOR OIL redesign and re-branding of an existing product Prepared by: Mohd Syahmi Nuruddin Mohd Khairul Najmi Najid Alif Izamie Osman
2. Introduction A leading retailer of car parts, cycles and accessories in UK. 1.2 million customers every week. Around 12,000 product lines. Annual turnover of in excess of £500 million. Own brand of motor oil in 1990s but did not sell well. Not highly valued by customers. The company set out to in investigate.
3. Company History 1892 – Founded as local hardware store in Birmingham by F.W. Rushbrooke. 1965 – Halfords Limited. 1969 – open its 300th store. – become part of the Burmah Group. 1980 – changes; recognizing customers’ needs. 1984 – changes of ownership 1 (Ward white Group). 1989 – change of ownership 2 (The Boots Company).
4. Company History 2000 – Rod Scribbins became MD. – ‘Arcade’ superstore programme (Bikehut, Audio Parts, Ripspeed and Touring). 2002 – Acquired by CVC Capital Partners from The Boots Company . – Rod Scribbins appointed CEO. Until today – the business moved to a custom-built head office and warehouse in Redditch, Worcestershire. Head office employs 600 people, with 400 stores with total staff of 9,000.
5. The problem Why the not motor oil? How Halfords saw this as a business opportunity they wished to exploit? Was there something particularly unusual about motor oil? Who were the competitors? What were the other brands? Was this a market in which Halfords could be competitive?
6. Design Brief Did not have sufficient expertise in-house to tackle the task of exploring the task of re-branding and repackaging a major product. Commissioned Pentagram (international design group) with a brief to redevelop the motor oil brand. Involved redesigning the container, re-labeling, and repositioning it in the market. Product design expertise rarely found in-house Such projects commonly contracted to third-party experts.
7. Research Pentagram undertook its own market research on retailing motor oil and undertook a series of in-depth interviews with consumers in the form of focus group to try to uncover some of the issues surrounding motor oil.
8. Finding from Pentagram Overall decline in sales as modern cars require less servicing and less frequent top-ups and changes. Premium grade motor oils rather than standard grade becoming more prevalent. The industry is dominated by some of the largest firms in the world (most notably the world’s oil companies). The ‘flashy’ Grand Prix-style branding gives no help for consumers to select the correct oil.
9. Brand leaders in Europe BP and Castrol. Shell Oils. Exxon (Esso) Mobil.
10. Purpose of Engine motor oil: Lubricant of the moving engine parts to prevent wear. Reducing friction. Maintaining engine cleanliness. Protecting against engine rust and corrosion. Cooling engine parts. Sealing combustion gases. Permitting easy starting. Extending engine life.
11. Different types of engine oil There are different types of engine oil and consumers have to pick the oil is the best for their own usage and application. They have to choose an oil depending upon how they use their car, and the outdoor temperature they are driving in.
12. Outdoor Temperature As the temp. changes, the viscosity of the oil changes. When oil in an engine is cold, the oil will be thick. If it is too thick, it may not even allow the engine to turn over and start. If it is too thin, it may allow the engine to start but it could be too thin when the engine warms up to do its work properly.
13. Viscosity measurements The Society of Automotive Engineers (SAE) established a viscosity classification on top of oil cans for consumers awareness. 5W – very thin oil used in extremely cold weather conditions, up to… 50 – very thick oils that have specials uses such as very hot applications or racing engines. Most people use a multi-graded oil that covers the highest and lowest temperatures that will be encountered.
14. SAE Viscosity grade Was useful and helped Pentagram paint a picture of the product, the brands and the market. 50% of cars required premium grade oil 70%of sales was standard grade. Many consumers were not buying the correct oil; moreover Halfords was not selling its most profitable lines. Many motorist did not buy motor oil and left this to the annual service of their car.
15. Motor Oil Buyers DIY enthusiast – regular motor oil purchaser which undertook their own servicing of their vehicle. DIY part-timer – did not service their own vehicle but regularly checked their vehicle and would top-up their engine with oil if necessary. Emergency – only purchased oil in an emergency.
16. Research Conclusion DIY enthusiast is the group that most likely to purchased the Halfords store brand. This group armed with more knowledge that would make their purchase decision based on performance and price. However the price itself would be sufficient There needed to be additional qualities that would convince the DIY enthusiast to select the Halfords brand ahead of the branded oils.
17. Consumer testing The price was a significant factor in the decision- making process. They have low knowledge about the properties and performance of motor oil. Many were buying incorrect oil for their car. Halfords brand hold up well under analysis and regarded as a trusted brand. Consumers feel leading manufacturer brands of oil are expensive, yet only few tried it.
18. Consumer testing Problems with pouring a heavy 5-litre container. The only way to determine how much oil was in a can was to lift it up and feel the weight. So, if the Halfords brand can solve the pouring problem and make it simple, provide a viewer for oil level and offer some better info and labelling regarding properties and performance, maybe this would encourage people to try Halfords brand.
19. New packaging The problem seemed to center on the inability to accurately direct the flow of oil Designers developed the ‘pull-up teapot pouring spout’. A ring tab is pulled, revealing a long neck about 50cm in length, giving sufficient direction in pouring. Improve direction of flow.
20. New packaging The handle for the container is in line with the spout, helping to direct the flow of oil.
21. New packaging Labeling issue solved: A premium-grade oil for most 16-valve petrol engines. A diesel grade for diesel engines. A standard grade. Offered in three different colors. After one year, volume of sales increased by 18%, its value by 44% and profits by 54%.
22. Discussion This case clearly illustrates the value of packaging and labelling in product development. The motor oil remained unchanged, but the packaging and labelling was considerably altered, enabling Halfords to reposition its oil as a slightly more upmarket store-brand oil. Initial sales were very encouraging and if copying is viewed as a form of flattery then Halfords is surely content.
23. END OF PRESENTATION Thank you for your attention!!!