Penzil Quaker State

Introduction

The Pennzoil Products Company and Quaker state corporation joined on December 1998 to become one of the leading worldwide automotive consumer product companies. The company was marketing more than 1300 products in more than 90 countries. Quaker State Company before its merger with Pennzoil was operating since 1932 in Canadian market and was successful in capturing the market share. Pennzoil entered the Canadian market in 1989 which was quite late as compared to Quaker’s inception. With its marketing strategies Pennzoil was able to capture the lube market and reached on number fourth position in market share. After their merger a subsidiary of the PQS named Jiffy Lube became the world’s largest quick lube operator and franchisor. Through its marketing campaign PQS was able to penetrate in the market and gain market share even though big competitors like Petro Canada, Imperial Oil, Moto master and Havoline were in the same business.

Problem Statement

After reviewing the case, it is observed that the major challenge which the company needs to address is whether Pennzoil-Quaker State (PQS) implement One to One Promotional program introduced by Quality Marketing Solutions (QMS) or not.

Analysis

Canadian car market was involved in the dilemma that as the technology has advanced there would be less frequent visit for Lube, Oil and filter (LOF) change. The requirement for the LOF change was three times a year recommended by the manufacturers but in reality the vehicle owners were stretching the time period to 2.2 times per year. With the advancement in technology the oil category was divided into three different segments including base oil, semi synthetic and full synthetic creating more complexity and Stock keeping units (SKUs). These lubricants were distributed to retailers and from them to final consumers. The LOF market was further divided into two parts referred to do it yourself (DIY) or (DIFM). Due to less price premium the DIFM market share increased and vehicle owners moved to convenient technique. The DIFM was served into 4 categories of retail installers who were responsible in boosting the market share of DIFM sector. The four broad retailers are new car dealer, repair specialist, mass merchant and quick lube. The new car dealer is the leading market share holder who contributed 42 percent market share.

With the increase in DIFM market the manufactures plus their marketing partners would have serious concern because they could manipulate vehicle owners in buying their product and creating awareness to increase the oil change process. The consumers are not abiding the guidelines by the oil manufacturers because they lack interest or knowledge on when to change and why to change the oil on time. The another anxiety for the manufacturers and marketing partners is that there is a misconception that due to technological advancement each and every car requires long time interval oil change which in fact would result in creating negative impact car’s performance. In order to overcome the situation the PQS can use certain techniques to like continue to educated consumer on importance on regular oil change, they can also persuade the retailers to enforce the consumers to increase oil change or they can focus on selling more technological advance oil so that oil change mileage age would increase that would give relaxation to vehicle owners. PQS must maintained friendly relationship with consumers and promote their oil through discount schemes and after sale services if anything goes wrong in their products.

The final consumers are not aware of the quality of oil and even sometime they don’t have an idea which brand is the best in terms of performance, effectiveness, efficiency and cost. The main factors that tend to influence which brand a consumer should use is mostly on the hands of the retail installers, he might be mass new car dealer installer or mass merchant. When the vehicle owner goes at a service station he might be manipulated by the installer employees on selection the oil brand. Sometime advertisement also plays the part because excess advertisement can lead a consumer to buy what the company wants him to buy. The available list of oil, promotion schemes like discount, after sale service, free tips to boost performance of the car might also help in influencing the sales of particular brand. Out of all the factors installer manipulation can be fundamental aspect for increasing the sale of any of the brand’s oil because installer’s employees are the one who end in deploying the oil which they have selected from the manufacturers. To conquer the market share and sales PQS should develop strategies so that the oil which would be poured into consumers cars would be of PQS. The company should build strong relationship with all installers from new car dealers to quick lube retailers. They should give huge incentive and commission when retailers achieve their targets. After sale service, coupons, free oil change on lucky draw techniques and free check up of vehicle these types of moves would shift market share of PQS to bullish region. Major strengths, weakness, opportunities and threats are summarized in exhibit 1.

Current and Potential Customers’ Segments

There are four segments in the markets which have been discussed above. Each segment is very important for the growth of business.

1. New Car dealers: PQS lacks in catering this segment because most of the car owners during two to six years maintains their car from the dealer free of cost. PQS does not produce private label products and most of the time new car dealer uses those companies oil which they are selling. This segment only caters 2 percent sales one percent in each segment of DIFM and DIY.

2. Repair specialists: This sector contributes overall thirty three percent in DIFM and DIY segment which shows that Repair specialists have great impact on the sales of PQS products. This segment has strong brand positioning of PQS and carries all line of products of the company. They also provide technical support to their consumers and due to marketing efforts in various mediums like billboards, tv and auto racing which gives racing appeal to shop owners and vehicle owners.

3. Mass Merchant: This segment contributes forty percent of sales volume and is one of the most essential segment in term of sales and profit. It have strong brand image, complete product line and brand trust. Never ending advertisement in National Media, Regional Media, Auto Racing Road side assistance, Reminder card and engine warranty have shoot the sales of PQS in this segment.

4. Quick Lube: This is the concept which is new in Canada being brought up from USA and has

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