Case Study on Sullivans Auto World

1. Players Sullivans Family Walter Sullivan - Founder of Sullivans Auto World, but unfortunately he died at the age of 56 (heart attack) Carol Sullivan-Diaz Elder Daughter of Walter Sullivan & got married to Dr. Roberto Diaz, Presently working as assistant Director of Marketing in HMO. During College student she had worked part-time in her Fathers business on secretarial & bookkeeping tasks and also as a service writer in the service deptt. Gail & Joanne Twin sister of Carol presently, studying in college & working on a vacant service writer position as a part time. The dealership Front end sales department (newly developed). Larry Winters - Sales Manager Seven Sales persons, one of the salespeople would be leaving at the end of the following week. One Office Manager One Secretary Back end service department (30 years old) Rick Obert - Service Manager One Parts Supervisor Jim Fiskell, one of the two service writers who had recently quit. 2. Core Issues a) In the recent year, Sullivans car sales revenue totaled $23.1 million

down from $26.5 million the previous year. This represents 12.83% drop. $2.51 million revenue was generated from service & parts down from $3.12 the previous year which represents 19.55% drop. This clearly shows the performance of service department was significantly worse in the recent year. Although the unit value of car sales was high, the margin was quit low whereas, the unit value of car service was low but the margin was high.

b) The contribution margin (known as the departmental selling gross)

c) d)
e)

f)

g)

h)

form car sales and service both were below the previous year, resulting insufficient to cover the dealerships fixed expenses. Service revenues were below average for a medium size dealership. Considering the marketing mix, Sullivans Auto adopted 4 Ps only i.e. Product, Promotion, Place and Price. The service facility was not easily visible from the highway. The building was very old (30 years) and greasy. As a result, some of the sales people feel a bit uncomfortable taking customers over to the service bays. The service system wasnt computerized which made the service operations ineffective, time consuming and unprofessional causes, customers were unsatisfied & moving away and this was the major cause of declining sales. Car sales of Sullivans Auto World were also declined primarily due to high interest rates, regional economy turndown and Industry forecast wasnt encouraging. The overall level of customer satisfaction with service was consistently low.

3. Recommendation Decision to be taken by Carol Sullivan-Diaz Should Carol sell out the dealership or try to make a turnaround? If yes how? Recommendations to Carol If Carlo want to makes her carrier in Auto Dealership then she shouldnt sell the dealership & try to make a turnaround
Implement a staff training programme to improve communication

between employees and customers. Customer service would be a primary element and especially applicable in the services department where customers were responded to sharply or have actually been cut off in telephone conversations.
Redecorate and maintain the cramped room where customers wait.

The servicing building looked old and greasy so improving this and maintaining a cleaning system to keep its state would be advisable.
Computerizing the service work-order processes would improve

performance in terms of efficiency, as writing up orders was another area identified in the customer surveys as a worst rating. By computerizing existing manual orders speed of service can be

enhanced while protecting important documents against unforeseen circumstances such as fire.
Improving flexibility in relation to convenience of scheduling work

required, and of service hours. Implementing a service of pick up and delivery of vehicles could be very beneficial or alternatively it would be advisable to offer a replacement car during the period of servicing from a pool of second hand cars.
Improve communications by introducing the customers to the service

departments and incorporated with staff training, should result in positive relationships being built. This should increase customer satisfaction and have the desired, advantageous effect upon service quality.
Advertising

budget may reduce and allow for word of mouth advertising to replace it. Ps as the extra 3 Ps i.e. People, process and Physical evidence are applicable towards pure services. As both the service offerings are fairly central in the continuum a balanced mix of all the seven Ps is necessary to successfully market the service offer.

In the context of marketing mix, Sullivans Auto must consider the 7

Management should change the service Manager Mr. Fiskell.