Hunter Business Group: Team TBA Group #4 Alana Avram Iris Hsiao

Hunter Business Group

Direct Marketing & Customer Contact Matrix

The Evolution of Gasoline Service Station & the Branded TBA Market 1950 1960 1970 1980 1990 Star specialty competitors Car dealership Private garages Specialty repair shops Gasoline service station dealers

The Star Oil Account TBA business  Revenue fell over 20% Losing money in 1991~1992  Strong customer relationships

TBA business



Revenue fell over 20%

Losing money in 1991~1992



Strong customer relationships

Team TBA Initial agreement The HBG license the Star brand Independently manage a direct marketing operation No compensation on sales below 20 million/year Reduce operating costs by 50%

Initial agreement

The HBG license the Star brand

Independently manage a direct marketing operation

No compensation on sales below 20 million/year

Reduce operating costs by 50%

Team TBA Create a dealer database Organize sales & marketing effort around sales teams FSR TSR CSR Weekly conference calls Dealers Station owners Marketing coordinator Accounting resources Information systems General manager

Create a dealer database

Organize sales & marketing effort around sales teams

The Hunter Customer Contact Matrix Projected revenues for 1993-$20 million Reduced product costs (80%of revenues) Estimated gross margin $4million

Projected revenues for 1993-$20 million

Reduced product costs (80%of revenues)

Estimated gross margin $4million

Direct Marketing expenses Increase in mail and phone contacts---less face-to-face contact Dealers graded by purchase volume Average mail contacts: at least monthly, even for low volume dealers Average phone calls: min. every 2 months

Increase in mail and phone contacts---less face-to-face contact

Dealers graded by purchase volume

Average mail contacts: at least monthly, even for low volume dealers

Average phone calls: min. every 2 months

Gold Accounts Incentives for dealers Volume and variety “ Gold Account Program” Purchase of at least $17,000 from TBA $1250 batteries, $2500 tires, $250 filters and $250 chemicals every 3months

Incentives for dealers

Volume and variety

“ Gold Account Program”

Purchase of at least $17,000 from TBA

$1250 batteries, $2500 tires, $250 filters and $250 chemicals every 3months

AA, A and B accounts Only 14 stations qualify for Gold status $100 bonuses to sales teams for each Gold Account addition Dramatic increase in Gold accounts

AA, A and B accounts

Only 14 stations qualify for Gold status

$100 bonuses to sales teams for each Gold Account addition

Dramatic increase in Gold accounts

Team TBA Results Satisfaction survey of 2,200 dealers Increase in TSM contact frequency despite reduced # of field representatives and less personal contact People differentiate based on “valued communication”

Satisfaction survey of 2,200 dealers

Increase in TSM contact frequency despite reduced # of field representatives and less personal contact

People differentiate based on “valued communication”

Integrated Marketing approach:600% increase in #of contacts Face-to-face from 83 to 18 Dealers need no face-to-face contact

Integrated Marketing approach:600% increase in #of contacts

Face-to-face from 83 to 18

Dealers need no face-to-face contact

Early Successes After 6 months… 24% increase in #of active Star accounts Over 100 Gold accounts 1993 sales surpassed $20 million target

After 6 months…

24% increase in #of active Star accounts

Over 100 Gold accounts

1993 sales surpassed $20 million target

BUT: 1994:decrease in sales volume and #of active accounts Expected reduction in #of service stations with bays

BUT:

1994:decrease in sales volume and #of active accounts

Expected reduction in #of service stations with bays

Planning ahead Assumption of 1,500 active accounts Sales revenue $16 million Expected TBA operating income $360,000 3 alternatives

Assumption of 1,500 active accounts

Sales revenue $16 million

Expected TBA operating income $360,000

3 alternatives

Assumption of constant fixed costs at $1.5 million Maintain fixed operating expenses at 40-45% ($1.28 million) Hybrid: reducing fixed costs AND sales and marketing costs consistent with 1993 decline in revenue Alternatives

Assumption of constant fixed costs at $1.5 million

Maintain fixed operating expenses at 40-45% ($1.28 million)

Hybrid: reducing fixed costs AND sales and marketing costs consistent with 1993 decline in revenue

Alternatives

Question & Comments? Thank you!

Question & Comments?

Thank you!