Autobytel Case Study

1671 Words Oct 5th, 2013 7 Pages
Autobytel Case Study

Problem Statement
How should Autobytel adjust its product and marketing mix to achieve profitability?

Alternatives
Alt-1: Increase efforts on new car sales

Alt-2: Increase efforts on Service & Parts

Alt-3: Increase efforts on used cars

Alt-4: Increase financing and insurance services

Alt-5: Expend wholesale business

Alt-6: Explore rural market

Alt-7: Go global

Alt-8: M & A

Alt-9: Reposition marketing mix Critical issues
Autobytel’s primary source of revenue was dealer
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Mass advertising would not be effective.

Alt-7: Go global
Autobytel should go global to increase its customer basis. It could use Europe as a test ground then expend to other part of the world. Autobytel should start market research, build alliance with partners and dealerships.

Alt-8: Reposition marketing efforts
Current spending was excessive and not sustainable. Autobytel should tie its marketing budget with revenue. All Autobytel’s customers were internet users, therefore internet advertising should be most effective. As to dealers, Autobytel should use field reps to sign them up and provide services. In either case, mass marketing should not be used.

Alt-9: M & A activities
Another way to expend customer base was through M & A. An ideal target would be another online service with strong presence in used car sales, or in a different geographic area.

Analyses of Recommendations
According to 5-force analysis (Exhibit 1), the industry of online automotive buying service was not attractive, but opportunities existed in certain segments. The automobile retaining industry derived revenue sources from new car sale, used cars sale, services and parts. There was striking disparity between revenue generation and profit generation among these activities. New cars generated 60% of revenue, but only 13% of the profit; used cars generated 29% revenue, but 27% of the profit;

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