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MRKT2401 IMC I Updated January 2024 IMRAN RAZA
THE COMPANY:
Mr. Lube opened it’s first store in Edmonton in 1976, Arnold and Clifford Giese a dedicated and innovative father and son introduced a new concept to the Canadian oil change market. The plan was simple, to offer a fast drive-through oil change without making an appointment, while also offering a range of vehicle maintenance services in a clean and efficient manner.
Achieving great success with the opening of their first outlet, father and son saw the potential and expanded successfully through a franchising program in 1981, with motivated and eager franchisees. Currently Mr. Lube has over 162 locations, a mix of both corporate and mainly franchise outlets that are dispersed across Canada but with lesser penetration in Eastern Canada and rural communities. A new “Strategic Plan” involving new partners and investors is looking to grow the business aggressively over the next 3 years with an addition of 30 to 35 new outlets, Mr. Lube is growing to become one of Canada’s largest maintenance service provides. The aim being to provide customers greater location convenience as well as increase Mr. Lubes overall market share in the face of aggressive competition in the oil change market.
THE CANADIAN MARKET AND COMPETITIVE ENVIRONMENT:
The vehicle maintenance service market for 4-12 year old vehicles in Canada is worth almost $10 billion per annum of which oil change services constitute $1 billion. There are several major players in this highly competitive market, the average industry growth over the past 5 years has been 2%. However the Covid-19 outbreak in early 2020 has hindered growth of the market and overall economy. Car ridership was reduced massively esp during 2020 and the early part of 2021 with ICBC mailing out rebate checks to car owners for savings made due to much fewer claims by customers. The pandemic prolonging with a new wave in early 2023 in China causing some concern in Canada with the Government imposing some restrictions on travelers from China as well as the latest variant, the highly immune evasive Omicron XBB 1,5 quickly becoming dominant, would dent consumer confidence over the next year or so. The challenge for the oil change and service industry, would be to retain market share and revenue at pre-covid-19 levels with consumer culture shifting towards working from home.
Among the major players in the oil service business are Mr.Lube, Pennzoil, Jiffy Lube, Great Canadian Oil Change and Lube City Express Oil change. An IBIS study suggests that no player has a market share of greater than 5 percent. But in another study by J.D. Power, Mr. Lube is the biggest player with 41%of the market with Pennzoil at 14% and Jiffy oil at 11%. However the auto dealers take the major share of the oil change and basic auto maintenance business, which Mr Lube is determined to change through a concerted marketing and IMC strategy.
New car dealers pose an issue for Mr.Lube based on the belief among buyers that their warranties would be voided if they get their cars serviced else where than the dealership itself. This perception on part of the buyers is not true, and in fact they can get their cars serviced at Mr. Lube for basic auto services without affecting their new car warranties. This consumer perception needs to be changed through adequate communication.
Mr. Lube faces competition from companies like Jiffy Lube offering more or less a similar positioning strategy with negligible point of difference, stressing fast, efficient, no hassle service. However they lack market penetration with fewer outlets, with currently around 120 across Canada, but aggressively pursuing growth through franchising opportunities.
PRODUCT AND SERVICES:
- Mr Lube delivers a fast 15 minute oil change that includes, oiling door hinges, washing windshields, checking tire pressure, checking all lights rear and front, and topping off radiator, windshield and battery fluids. Mr. Lube offers quality Imperial Oil and the leading synthetic motor oil brand, Mobil 1.
- Other maintenance services include a fuel system service, transmission fluid service, differential fluid service, engine flush, cooling system fluid change and cabin air, fuel, and emission filter replacements, all are provided at recommended intervals.
- Mr. Lube also sell batteries, wiper blades, provide light bulb replacements and rotates tires.
- No appointment is necessary. Services are personalized with a free cup of coffee and a copy of the daily newspaper, (Due to Covid-19 these perks had been temporarily put on hold till things normalize) leaving the customers with a feeling of engagement that their car being well cared for by trained technicians.
- New Product: Over the past several years, Mr. Lube has moved to provide full tire services and now are re-branded as Mr.Lube Plus Tires. Customers can purchase new tires in store or online and get installed with no appointment required, besides coming in for tire repair or seasonal tire change.
Mr. Lube maintains a database and follows all manufacturers recommendations which abides by the warranty and guarantees, and the right service for all brands and model.
TARGET MARKET PROFILE:
Anyone owning a car is a potential customer needing an oil change and basic auto services. Psycho-graphics in the form of “Time Scarcity” can be an issue with owners choosing Mr. Lube over a dealership. Geographic segmentation can also be a factor with most locations situated in major towns and cities in Ontario, British Columbia, and Alberta. With penetration lacking in rural communities and other regions. Demographics can also play a part with younger consumers preferring a fast oil change and service compared to older demographics.
CONSUMER BEHAVIOR FINDINGS:
- Non-dealer service locations hold a majority when it comes to share of service occasions at 55% vs 45%. However dealerships carry a larger share of overall service spend at 53% of dollar spending over a twelve month period in 2018. Per occasion spending is higher for dealer service locations at $290 vs $225 for non-dealer service outlets.
- Vehicle owners, whose vehicles are 4-12 years old, the younger Generation X, Y and Z are more likely to service their cars at non-dealer outlets, compared to Baby Boomers and Pre-Boomers.
- Among half of all owners past experience plays a vital role in the decision to choose a service facility. The retention based on past satisfaction is more dominant among Boomers and Pre-Boomers at 70%. Generation Z and Y (40%) tend to base their decision more frequently on a recommendation from a friend or relative member .
- Of the most satisfied customers 86% say they will definitely return, whereas 84% say they will definitely recommend the service facility. For those with lower satisfaction 38% say they would return and with only 22% willing to recommend the service facility.
- New car owners act as brand promoters for the first 3 years after which their enthusiasm wanes. This can be important finding for the dealership to sustain owner loyalty and satisfaction at the dealership service center.
- With a vast majority of vehicles out of warranty period, owners are always exploring other options, therefore customer satisfaction is critical for building and retaining customer loyalty for service outlets. Word-of-mouth is spread through highly satisfied customers, who can be the best brand promoters in attracting younger customers as they are more recommendation orientated then their older counterparts. Besides younger owners drive on average 20,000 km more over their ownership of a vehicle compared to older Boomers and Pre-Boomers.
- With the addition of full tire sale and service, a local franchise owner is seeing more Tesla cars coming in, despite the facet they do not need oil change. The franchisee observed, “Technology is changing and cars are changing, we are looking at ways to adapt and service our customers”.
- Social media presence especially those aimed at younger segments, seem to be under utilized with less than 2000 followers on platforms like Twitter, Instagram and Pinterest.
On a 2018 Canadian Customer Satisfaction index, Mr. Lube was rated close to the Industry average of 765 points on a 1000 point scale, with both its direct competitors Great Canadian Oil Change at 798 and Jiffy Lube 772 points ahead on the list. Not a situation Mr. Lube Management team would be terribly happy about and would want to improve over the medium to long term.
CURRENT IMC STRATEGY:
Mr. Lube has the largest market share among the players in the quick lube market, being way ahead of Pennzoil, Jiffy Lube and the other smaller players according to J.D. Powers and Associates. Their biggest concern are the big manufactures and dealers that still take the lions share of the oil change and basic auto service business, which Mr. Lube is determined to change.
- Going up against the big manufacturers and dealers needed a strategy rethink and work on the marketing and IMC front, so V.P. Marketing at Mr. Lube hired Vancouver based Rethink agency to create a unique identity and fun image, above are a few print examples from a 2016 campaign. The agency also launched video and social media campaigns from 2015 to 2019, their campaign can be viewed at https://rethinkcanada.com/work/mr_lube.
- Past advertising employed the slogan, “Doing it right before your eye.” The slogan captures the essence of the services delivered, but needed an image change , as research indicated, most people don’t care what happens under the hood.
- The outlets are recognizable from the street based on the attractive, attention grabbing blue and yellow color scheme.
- National and local advertising have been implemented as shown in examples above resulting in increased awareness, but desirability and action are objectives that need work on, as well as perception change on dealer warranty issues.
THE PROBLEM AND CHALLENGE:
The decisions to get an oil change is a low involvement decision as far as consumer behavior is concerned, the challenge for Mr.Lube is to make oil interesting as it’s low on the consumers radar. To break through the clutter Mr. Lube has to do something entertaining, funny and attention grabbing to provoke consumers to change current behavior. The aim for Mr. Lube is to be a discount oil change provider, but a premium brand built around service experience, convenience, close locations and exceptional training and development of personnel. Another hurdle for Mr. Lube is to alter perception about where oil changes can occur and that services offered by Mr . Lube do not void new car warranties. Changing these perceptions can create significant opportunity and growth for the company. Another area of focus their agency would be to build awareness of newer services like their Tire Plus product as well as attracting electric car owners for non oil change services.
Your immediate challenge MRKT2401 students is to create and implement a new IMC plan that addresses all key issues facing the company. The campaign will cover a one year period commencing from April 2024 and will keep current Covid-19 challenges if any, in mind as well. Prior to developing the campaign, you must conduct research and familiarize yourself with current market and competitive conditions. Any information you collect should be included in the background section of your plan.
Your plan must include advertising, creative and media objectives and strategies along with their execution. A look at their current and possible future positioning strategy is also recommended. You will need to follow the the 5 stages of as the course schedule as the course progresses. Also view the detailed IMC plan in your text in APPENDIX 1 on page 444 to format your plan and study examples of blocking charts and media spending tables. Before the commencement of each stage I will hand out to your group an outline of what you have to accomplish, with a due date assigned on which I will be providing feedback so you may make adjustments and fine tune – no pun intended 🙂 – your plan.
BUDGET:
You will be working with a media spend budget of $21 million based on 170 outlets across Canada. It is recommended that you refer to the various plan models in the textbook for guidance and also confirm with your Instructor for execution details in the creative and media sections of the plan.
Dos
- Be innovative and creative but at the same time you need to work within the philosophy of the Mr. Lube Brand and meet overall marketing and IMC objectives.
- Get to understand the behavior of the different segments in the target market and how they go about making decisions, and do your primary and secondary research as needed.
- It is important that you show, how the outcomes and recommendations in your IMC plan can be measured.
- You may focus your efforts on digital media, inclusive of social media and mobile marketing
- See how you might integrate your campaign ideas and tactics into their website, and how their Twitter handle, Facebook page and YouTube channel can be popularized and made more effective.
Don’ts
- Don’t leave any amount of your $18 million budget unused, the bulk of which is to be used for your media buy and other promotional tools like direct response, public relations, sales promotion, interactive media etc.
- As TV commercials have already been recently produced and are airing, do not make plans to produce new TV ads, unless you really feel a need due to having a brilliant creative idea, you may then develop a story board for a TV ad. However you will need to account for a TV media buy and the execution in a blocking chart along with the rest of the media being used in the campaign.
- Don’t necessarily generalize your campaign activities from coast to coast, you could tweak elements of your campaign for regional and cultural differences.
- Lastly, please don’t hesitate to call me, your Professor, during office hours or when class ends regarding any aspect of your plan . I will continue to be available for awhile at the end of class.
PRESENTATION GUIDELINES:
- Keep your presentation a tight 10 to 12 minutes.
- Spend half a minute on “The Marketing Challenge” being faced by Mr. Lube.
- State their Advertising objectives both quantitative and qualitative. 1/2 minute.
- Describe their target audience profile you are aiming at. One minute.
- Their future positioning statement– 10 seconds.
- Creative plan, covering creative objectives, creative strategy and creative execution–3 to 4 minutes.
- Show slides for creatives including, thumbnail sketches, storyboards, scripts etc
- Media plan, covering media objectives, media strategy and media execution–3 to 4 minutes
- Show slides for media expenditure by month, expenditure by medium and detailed blocking chart by month.
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