Plattsburgh Motor Service

SWOT analysis for the industry

Strength: Weakness:
Technological development Matured industry
Wide reach of distribution network Increasing competition
Available infrastructure facilities

Opportunity: Threat:
Increasing number of different automobile The total volume of sales is increasing
models modestly
Government mandated safety and emission Increasing life of products
control equipment Increasing labour and maintenance cost

1. PMS’s dual problem of stagnant sales and declining profit

The automotive aftermarket industry is now considered to be a mature industry

characterized by slow growth. The following factors are accountable for the stagnant sales
and declining profit.

a) During the 1980s recession consumers were neither buying new cars in substantial
numbers nor having their older cars fixed frequently.
b) More customers have begun to perform their own maintenance or repair jobs on
their own cars due to increase in labour costs and decrease in gas stations that
perform service on automobiles.
c) Manufacturers of automotive replacement parts have begun to use a multi channel
distribution strategy.
d) Advertising of branded auto parts by manufacturers has become common. This
increased self service by the users.
e) Technological improvement in auto parts design, manufacturers, and material has led to
a longer life for some products.

2. Inventory and pricing practices

Inventory practices

Manufacturers use standardized national ranking for automotive parts. This ranking
indicates how popular certain products are. Automotive parts are ranked A, B, C, D and W.
Parts ranked A are extremely popular and are the fastest moving product industry wide.
They should be stocked by all members of the traditional members of the distribution
channel. Parts ranked with B and C is not as popular as A. Parts ranked with D should be
stocked by warehouse distributors, while the jobbers should stock them with caution. Parts
ranked with W are suggested for warehouse distributors, stock only.

Pricing practices

As is the case in most distribution channel relationships, the greater the intermediary’s
responsibility and risk, the larger the discount on merchandise purchased or the greater the
makeup on merchandise sold. Manufacturers of automotive parts customarily provide
members of their distribution channel with price sheets. These price sheets are printed on
different coloured stock and the colour indicates the members of the distribution channel. A
yellow price sheets shows list price (the highest price but rarely charged), user/net price
(the price charged to nondealer customers) and dealer price. Green price sheets for stocking
dealers who usually stocks inventory. They will get an extra margin because they are taking
higher risk by stocking inventory. The blue price sheets are used by warehouse distributors.

3. Alternative marketing mix strategies

The sales of the automotive parts industry is reducing and so the profit. So it is necessary to
look for the alternative marketing mix strategies.

Product

The whole product in the automotive parts industry is ranked A, B, C, D and W. Where
products A and B are extremely popular compared to others. PMS can look forward for the
distribution of either highly popular product categories A and B or for others. By doing this
company can concentrate in few products which will improve the distribution quality and it
will give a cost advantage by economies of scale.

Price

By going for the production of only a few products the number of distribution of each
product will increase and the product will become more standard to the company. So the
company need to handle only a few types of products which will provide more convenience
in handling the products which can be converted into reduced distribution charges. This will
help the company in getting a market advantage for its services. Promotion

The recent trend in the automotive industry is showing more customers have begun to
perform their own maintenance. So a good marketing campaign can help the company in
creating a good awareness about the product among the customers and increase the
sales.As the market for branded parts is in fashion the company can think of increasing its
brand equity by better promotional campaigns

Place

Automotive parts are a necessary item all over the places. So the reach that the company
can attain will create good value for the investment. So the company must try to improve
their customer reach by widening the distribution network and by increasing the number of
outlets.

Submitted by:

Abhimanyu Kr. Singh (01)

Jayaram Haridas (02)
Ajay Sahu (03)
Amal Mohan (04)
Amit Mohan (06)
Anjan Mohapatra (07)
Ankur Sachdeva (08)

Rajiv Gandhi Institute Of Petroleum Technology-MBA 2010