Marketing Management

1. Marketing Management II
Case Study Report
on
Eco7: Launching a New Motor Oil
Submitted by
GROUP - 1
Dewanshu Mishra - 21A2HP431
Naveen Kumar Reddy - 21A2HP441
Sai Nethra Reddy - 21A2HP416
Soni Kumari - 21A2HP421
Poojitha Gondesi - 21A2HP425
Priti Thote - 21A2HP401
15 December

2. SUMMARY
After constructing the Eco7 oil refinery in 1936, Avellin expanded its product line to include
petroleum in 1995. Due to strong competition and insufficient economies of scale, Avellin
had to cut its profit margin for marketing fuels. Avellin changed its focus to other industries,
such as Industrial Materials and Automotives, which accounted for 60% of revenue and 40%
of profit for the company. By the end of 2014, Avellin had ten lubricants mixing and
packaging units and seven regional distribution networks. Avellin also founded Avellin Auto,
a fast-lube company. In the automobile industry, he gets roughly 65 percent of revenue, with
a gross margin of 22 percent. The remainder of the company's revenue comes from sales of
motor oil and automotive chemicals.
Q1. How do consumer's purchase motor oil?
Ans- Many consumers considered motor oil to be a commodity item. Consumers of motor oil
were divided into two categories: do it yourself (DIY) and do it for me (DIFM). The
consumer who changes the motor oil on their own, comes under DIY category. Such
consumer buys PCMO in bottles from the source of mass merchandisers like Walmart or
automotive part store. This category of consumers is younger in comparison to DIFM lives in
rural parts and are also very sensitive towards the prices.
DIFM are the elderly people with good education. These consumers enlisted the professionals
for the services because of good source of earnings, living in the urban region and uses the
luxury automobiles. They are highly dependent on the professionals for the maintenances of
their vehicles.
Q2. Asses Avellins position in the PCMO industry, including consumer perception and
the distribution strategy.
Ans- In 2012, Avellin held 11% of the market share, ranking third in the purchase of
passenger car motor oil in the United States. However, it has seen a decrease of 3% since
2000 yet holds the top position for DIFM (Do-It-For-Me) customers.
Since its inception, Avellin has concentrated on being the preferred brand in DIFM, as it is
simple for independent customers to swap brands. Following which, Avellin has worked hard
to provide its consumers with the good services and pricing strategy possible. Consequently,
Avellin generated much of its revenue, accounting for 68% of its sales, from independent
DIFM consumers.
Consumer perception:
As seen in exhibit 3 of data sheet,
• Price focused DIFM customers account for 45% of PCMO customers, with Avellin
accounting for 17% of it surpassing all its competitors. This tells us that price
conscious customers prefer Avellin to other brands and hence Avellin can focus on
this set of consumers to increase its sales.

3. • Quality focused DIFM costumers account for 30% of PCMO customers, Avellin
accounting only 10% of it. This means that customers who place a high importance on
quality regard Avellin to be a subpar brand when compared to competitors.
• DIY customers make up 25% of PCMO customers, while Avellin has 15% of it
crossing Moto line and heading next to Baud. This implies that buyers regard it as a
standard brand.
Distribution strategy:
Avellin's revenue originated from three different sorts of sales:
a) Independent DIFM: They account for 68 percent of total sales. To foster client trust and
loyalty, the company developed the Aventage programme, which covers 4400 of its 6000
customers. This project include managing in-store displays, providing customer education
and assistance, and offering bulk savings.
b) National Retailers: They were in command of 9% of Avellin's PCMO sales. Avellin had
been satisfied to have DIY items on the shelves to build loyalty among its DIFM customers.
c) AvellinAuto: The AvellinAuto network had 436 outlets as of 2014, accounting for around
7% of PCMO sales. AvellinAuto shops were served directly by the company's regional
distribution facilities rather than through a wholesaler, resulting in a $0.75 higher effective
manufacturer gross margin per five quarts.
By deploying its regional distribution facility, we can observe that Avellin implements an
extensive distribution strategy in Avellin auto. This strategy entails making a deal with
certain merchant or selling items under their own brand. Avellin employs selective
distribution strategy by selling through national retailers. Products are dispersed in several
locations with this technique (merchandisers, warehouse clubs, auto parts stores), but not as
many as with an intense distribution plan.
Q3. What is the strategic role of Eco7? How should Avellin weigh
consumer interest in and willingness to pay for a green motor oil? Is it the
right product at the right time?
Ans-Eco7 is an excellent innovation of Avellin for the market mainly focused on the
automotive lubricant products. They have produced it to meet the needs for economic friendly
products in automotive market. Their motive behind producing Eco7 is to stop the emissions
of radiation which is harmful to the environment. They found that most of the customers of
Eco7 are DIFM consumers. The unique thing is that the motor oil is prepared from recycled
oils, and it was a high-quality environment-friendly oil with an affordable price. The electric
and hybrid vehicles which are mainly based on gasoline had cultivated the majority of
consumers. Likewise, there was an emphasis on the green factor providing the best value in
terms of quality and value of money.
The habitual attraction of consumer towards fuel efficient vehicles have convinced them to
produce Eco7 to meet their requirements and also to reduce the environmental issues. The
price they have charged for Eco7 is same as for synthetic lubricants in the market and quality

4. is also much better in spite of the fact that cost for producing Eco7 is much higher than the
other motor oil produced by the management. So, the consumers started taking interest and
they also believe that quality of Eco7 is higher.
They have packaged the product in an eyecatching green bottles and the campaign slogan they
have used to attract the customers is “you have the green light”. However, this oil's high-quality
performance also needs to be conveyed to the consumers because it would be a crucial factor
for gaining consumers' interest so that they are willing to purchase this oil.
The refining procedure and the additives gave Eco7 longevity and more remarkable
performance compared to the synthetic blend. This oil performed much better at higher
temperatures without breaking down. Usually, vehicles required oil change after 3000 miles,
but this allowed the oil replacement after 7500 miles for most vehicles. All these factors need
to be conveyed to the consumers through proper mediums and channels. At present, the market
test results showed that consumers considered the price of $ 6.75 as expensive among the
company's synthetic oils.
On the other hand, if we compare Eco7 price with the different environment-friendly products
in the market, this was a much cheaper alternative. The research results reveal that the green
factor, price, and performance are critical for the consumers to pay for Eco7. Finally, an
excellent distribution strategy also needs to be created to establish a market for Eco7. This is
the right product at the appropriate Eco7 is an excellent innovation of Avellin for the market
mainly focused on the automotive lubricant products.
Q4. What is the right Launch strategy of Eco-7?
Ans- Eco7 is being released at the perfect time, and Aaron Jonner's son made the right
option. The DIFM section of the market has a preference for environmentally friendly
automobiles and motor oils. This is why, despite its high production costs, the management
decided to launch the Eco7 motor oil. Consumers in the PCMO market are more
environmentally conscious, and they prefer to purchase environmentally friendly goods.
They're also willing to pay a premium for environmentally friendly motor oil.
Eco7's crucial significance in the launch is that it is made from recycled oils, making it an
environmentally friendly, high-quality oil at an inexpensive price. Because of the changing
state of the earth and the changing trends in the PCMO market, Avellin intends to launch this
product. In the oil market, the trend had shifted, and buyers were drawn to automobiles that
were both environmentally friendly and more fuel efficient. Electric and hybrid gasoline
vehicles were popular with the general public.
When compared to the synthetic blend, the refining process and additions gave Eco7 a longer
life and better performance. Without breaking down, this oil worked better at greater
temperatures. Normally, automobiles needed to be serviced at 3000 miles, however most
vehicles could now be serviced after 7500 miles. All of these factors must be communicated
to the customers. Consumers currently regard the price of $ 6.75 to be substantially higher
among the company's synthetic oils, according to the results of a market test.

5. With its Aventage programme, the corporation has been focusing on the Eco7 DIFM market.
Consumers will benefit from this program's exclusivity. Eco7's target market should be the
DIFM section of the PCMO market. The company should take advantage of the Aventage
programme because all Aventage participants are devoted Avellin customers who are willing
to pay higher rates for the company's products if they are environmentally friendly and of
great quality. Around 66.67 percent of Avellin's total consumers have enrolled in the
Aventage programme, and they are unconcerned about Eco7's increased rates.
The following are the essential aspects to consider when developing an eco-7 launch strategy:
1.Competition: Avellin's Eco7 will face competition not only from other "green" lubricants
like Sevoline, but also from other sorts of oils like conventional, synthetic and blend
synthetic.
2.Price: Customers are price sensitive, and the business has more price-focused ones than
quality-focused customers
3. Distribution channels: - The corporation sells its products to a variety of clients through
three main distribution channels. Each channel offers various margins to Avellin and its
retailers, which are vital to consider when evaluating the feasibility of each solution.
4. Product: Eco7 is made out of 65 percent recycled oil and uses 45 percent less energy than
traditional PCMO. Furthermore, the substance has the same longevity and performance as a
synthetic blend of oil, making it superior to conventional oil on several levels.
5. Target Audience: Do-it-yourself (DIY) and do-it-for-me (DIFM) are two distinct
divisions of the target audience. DIYers are younger, more likely to live in small towns or
rural areas, and are more loyal to their preferred brand. DIFM customers are older and have a
higher income, yet they are less loyal to brands.