Sullivan Ford Case Study

Introduction This case details the position of Carol Sullivan-Diaz, the 28-year-old daughter of Walter Sullivan who died at the age of 56. Walter had bought a Ford dealership in 1983 that eventually grew into what is now Sullivan Ford Auto World. The business sells cars but also services them. Carol is disappointed by current turnover in car sales and sees that the service revenues are below average for this size of dealership. Carol’s now has to decide what way to tackle the future. She can sell the business but will probably only return a value below what it might be worth if profitable or she can look at the operation and see if she can turn it around herself. While she has a bachelor’s degree in economics, an MBA degree and a background in health care management, she also served time working with her father so she appears to have the skills and experience to tackle the issue if she so desires. Characteristics of Services The car sales and car service are closely linked. Here, we look at the car service following on from the car sale and both these processes are happening with the same provider, Sullivan Ford Auto World. While we generally say that services are intangible, in this case the car sales service has a high goods content that is the car at the end of the process. The car service on the other hand, is intangible. The core business here can be looked at as the car sales and the supplementary service is the car servicing. Sullivan is trying to establish the service as a stand-alone service. Sullivan could have customers that have not bought a car but have their own car serviced at the garage. But Sullivan would hope that when they sell a car, this customer will come back regularly to have their car serviced. However, survey results suggest Sullivan is not getting repeats. Another difference here is that when a car is sold, ownership changes to the buyer but in services we say that ownership does not change. What happens is that the car service â€Å"process† changes the physical possession that is the car. As we know, services cannot be stored. The physical car can be stored and kept as stock or inventory but the car servicing cannot. Therefore, it is essential that the servicing is kept working in order to generate turnover. If the service department has capacity to service ten cars per day, it must try to meet that target because if it is idle at any stage, that time (and time is money) cannot be regained. In the sale of a car, the customer can be involved as they are making the purchase decisions. They will decide if they need or want the car and then seek information. They can view the car, test drive it, smell the â€Å"new car† smell and enjoy the experience. They can contact Sullivan and see what’s on offer in advance. With the car service, the customer is not really involved (except to deliver the car for appointment) as car service is specialised and the customer will not be present when the service is being carried out. They cannot see the â€Å"service† and may have to wait and drive for days to be sure the service was successful. When the customer is buying a new car, they will be fairly sure of what they are getting. Ford has a good reputation and is seen to be a reliable brand, so the customer can be confident. The service is not the same. It is harder for Sullivan to maintain consistency with the service. Sullivan will be depending on his own mechanics to provide the quality whereas the car purchase will depend on Ford. Also, if there is a problem with the service, it will be difficult to hide this from the customer. It will be essential for Sullivan to be aware of the customers expectation so as he will not be disappointed afterwards. I also feel that there is a feel-good factor to buying a car and the customer is often happy to be involved in the deal but with a service, it usually happens when there is a problem so the customer may not feel happy when availing of this service and needs to be made feel comfortable. Walt said this himself when talking about the front end; â€Å"everybody’s happy when someone is buying a new car† and also observed of the service side â€Å"customers always seem to be miserable back there†). Also, as it takes time to service the car and doing without the car may inconvenience the customer, they may have a negative perception before the process starts. There is need to be aware of the difference between the car service and the customer service. The service may be good but the customer service can be bad at the same time. Customer Behaviours ) A search quality is a characteristic that can be easily accessed before purchase. [1] In the case of the car, the customer will be able to research qualities like colour, performance. He can get a feel for the car by looking around the interior, the boot, see what the engine looks like and sounds like. These are qualities he can use his five senses to evaluate. They are tangible. Ford’s reputation should eliminate risk when purchasing. However, this is not the case for the service. He cannot have a pre-purchase experience. There is no tangibility. For this, his behaviour will change. He may seek testimonials from others and depend more on word of mouth. He will seek advice on the reputation of Sullivan’s service. From the case, we see that there are problems with the service. Delays at processing, inconvenient scheduling, availability of parts etc. There is a risk here as the service may not be satisfactory so Sullivan must reassure the customer. Sullivan must ensure that the mechanics are fully trained and that customers have confidence in them b) An experience quality is a characteristic that can only be assessed after use. [2] Generally, there is a feel good factor after someone buys a car. With a reliable brand like Ford, customers would feel little risk involved and would enjoy their new car. Providing that the car runs well, the buyer should be in a position to pass on this experience by word of mouth. This is not true of the car service. Firstly, the customer may not know if the service worked. There is a risk there even after the service. One could, for example, have left the car in for servicing because every now and then the car may lose power. I believe that the customer will still be wary for some time after. If the car then loses power, there will be that sense of let down. I have found I am often on edge after a service, almost waiting for something to go wrong. If the customer is unhappy with the delays, etc outlined earlier, that too will affect the experience quality. Sullivan’s customers do not seem to be enjoying the experience between delays, inconvenience and a grubby work entrance as well as the mechanics not explaining what is happening. c) A credence quality is a characteristic that consumer may have difficulty assessing even after purchase because they do not have the knowledge or experience. [3] This may not be an issue when buying the car. The buyer immediately knows how a new car is. One expects that the driver is experienced enough to know how the car feels and also would be aware of their expectations. When it comes to the car service, the customer may not know anything about car mechanics but will know how they feel after and if they are happy with the car. They do not need any expertise to know if the problem has been resolved. Sullivan’s people are not communicating with them well. d) There are different risks involved with the two services. Ideally, buying a new car should involve no risks but you can be unlucky. You could end with a car that has problems but this is reasonably rare. The car service is different. You have to trust the service provider that they can do the job. You may be depending on recommendations and unsure of the quality of the service. The customer will not be present so has to rely on the provider that they will do the job correctly (and will work first time, â€Å"was it fixed right†) and indeed must feel sure that they will actually do the job at all. This is an area open to fraud, as the customer will not see the process. The customer here may be worried about the risk of delays. It tells us that Sullivan is slow to write the orders, not convenient when it comes to scheduling, unsure of availability of parts and this all takes times. e) The decision making process for buying the car will be as follows. First, the customer recognised the â€Å"want† for the car. Next they will seek information. The information will come from research, word of mouth, specialist publications, etc. Step three will be the evaluation of alternatives. The alternatives are fairly limited and will be to decide if he wants to take public transport, get a bicycle, depend on lifts but if one ants to be independent, there are no alternatives. Next is the purchase and then after that, evaluate the product. Has it satisfied his needs? Was it of value? f) The car service will have a different 3-stage process. Firstly, at the pre-purchase stage, the customer will be aware of their need and that means that the car needs servicing. They will explore solutions and that may mean going to t he service provider or look for alternatives. They will talk to third parties and maybe the supplier themselves. This will help them identify risks and their desired service level. The zone of tolerance will be established at this time. An alternative will be to service the car at home or get a friend who is skilled to do this that they trust. If they decide to go ahead, they will then make that decision. Service will be delivered and payment made. After this step is the post-encounter stage. Here they will evaluate the performance and compare it to their expectations. Are they satisfied or not with the service? Interestingly, the survey shows that the customers are made aware of what they had to do if they needed a service but less than a third had been introduced to someone in that department Flower of Service Below is the Flower of Service and analysis of the problems facing Sullivan. The â€Å"core† is the car servicing and both the facilitating services and enhancing services surround it. [pic] Facilitating Services Information – This is the first step in the service where the customers get the information they need. In Sullivans, they are told what to do if they need a service but they are not being introduced to any of the team. Here they should find out about the scheduling, how long the service will take, the price, does the warranty cover it, etc. Order Taking – This is where the bookings are taken; the scheduling is put into place and so on. Sullivans seem to be falling down here. Their survey results show the worst ratings and things like promptness of orders, scheduling convenience, service hours convenience are all pointed out. The fact that all orders were hand-written slowed down processing and often the telephone ringing slowed it down even more much to the frustration of the customers. Another frustration was that if the job was not of routine nature, a price could not be given on the spot. The customer would be called later in the morning with an estimate. Billing – People expect clear and precise billing and there is nothing to suggest that there is a problem here and as all orders are handwritten and with carbon copies, it should be easy for the bills to be clear. Also, the customer is either given an instant quotation for routine work or will contacted with a quotation so this should make billing clear. Payment – As the cars are due to be collected by 6pm on the day of the service, it would be expected that payment be made then. The service writer would have all the paperwork in order when the customer would collect the car. Enhancing Services Consultation – This is more than just information. Information really consists of answering the questions of customers whereas consultation is deeper and probes the specific needs or requirements of the customer and then draw up an appropriate plan. This would be important in an area where the customer is unfamiliar with actual service. The mechanic should diagnose the problems and then take the customer step by step through the possible solutions and alternatives. Here in Sullivans, they explained what to do when a service was needed but after that not many were introduced to someone in the service department. This is where the expertise lies and therefore consultation should have followed. The survey also said that customers were offered poor explanations of the work done and found the staff rude and impolite. Hospitality – This is the welcome that customers should get on arrival and a sense of being a valued customer. This should be easy to deal with as a smile and a friendly face costs nothing. Feargal Quinn, of Superquin fame, says, â€Å"If somebody comes to us looking for a job, we make sure they know how to smile†. [4] It is the small things that make people feel welcome. Sullivans seem to be failing here too in the service department. When greeting the customer, there must be a smile, it must be sincere and there must be eye contact†. [5]In Walt’s time, he made everyone welcome in the front office and had little time for the service area. This showed. It was shabby and greasy. The customers were interrupted by ringing phones while waiting for their car re ports to be written. Rick Obert was â€Å"gruff and argumentative†. The service department people feel uncomfortable bringing people over to the service bays so that does not seem hospitable. There was a man in a confrontation over his service so that certainly lacks hospitality and should have been dealt with immediately. Safekeeping – People expect that their possessions would be safe while being kept by the service provider. The customer here would hope that their car is safe while on the premises for the service and when not being worked on by the service people, that it would be parked in a safe place and manner. A perception here could be that Sullivans is lacking here. While there is no direct evidence, the fact the building was â€Å"old and greasy† and the service writers’ room was â€Å"cramped with paint peeling† might lead customers to believe there is a lack of safekeeping in the department. Exceptions – These are services that fall outside the normal service. We are told that the scheduling is inconvenient and service hours are too. Here exceptions should be made. There does not seem to be an atmosphere of making the customer satisfied. It seems as if Walt’s idea of not bothering with the service department has grown. There does not seem to be an ethic of problem solving. I felt from reading the piece it was a case of take it or leave it. There also seems to be no way of handling complaints. The man who Was shouting at the end had issues of â€Å".. three visits†¦service stinks†¦who s in charge†. This should have been dealt with quickly in a hospitable manner. Advice On Marketing Mix Carol has a background that could be very useful in dealing with this. She has a bachelor’s degree in economics, an MBA degree and is involved in health care management. She worked with her father so she has the skills and experience to deal with this. The 7 Ps are; Product, Place, Promotion, Price, Physical Environment, Process & People. I will look at these individually and see how Carol can mix them to help improve her situation. Product – The product in this case is the actual car service. This is the core of their offering and it is essential that this is a safe, reliable product. The customer has to be satisfied that the service is of quality. They could give the customer some confidence by making sure that they are introduced to a member of service team who can answer any questions or worries they might have about the service. Customers did worry about the product. They worried about how much the service might cost, how long it took, how did the warranty sit, etc. These are basic parts to the product that must be addressed by Carol. Place – The â€Å"place† of Sullivan’s car sales appears to be of no concern. It is on an intersection of a busy urban highway, with many new developments near by. In 1996 he bought the current site and developed it into what it is now. The place seems to be known as the study says â€Å"everyone seemed to know Walt†. But the worry from Carol’s point of view for the service department is that this area cannot be seen from the road. So people looking for services and who may not be as familiar with Sullivan’s could easily pass by. On top of that the building looks â€Å"old and greasy†. Promotion – As far as I can see from the study, the only promotion that takes place is on site promotion. The garage is decked out with bunting, flags and banners that say â€Å"Lets Make A Deal†. This is an area that she could easily develop. She could offer a free service with a car sold. She could also make appointments in advance by working out the customers’ average mileage and schedule an appointment like a dentist would. She could manage supply and demand better by offering discounts for services on days she finds are quiet. She has the academic background for this as well as her medical and family business experience. Price – In this case study we are not told that the price is affecting the number of customers that avail of it. Price is often the most thing that will make customers decide where to buy so Carol could look at this. Where there is an issue is the explanation of the work, how much it will cost and will it work on first attempt and not be a recurring cost. Physical Environment – Judging from the description of the garage, the physical environment of the service area leaves a lot to be desired. Firstly, the service area is hidden behind the showroom. Even though the equipment is modern, the building is old and greasy. The service writers work in a cramped room with peeling paint and the customers have to stand and wait while orders are being written up. This seems like an old style office plan and not acceptable in modern day car dealing. The study has told how stressed and bothered customers are when in the building so the physical environment should be made pleasant to help calm the clients. Process – The process here needs an overhaul. Customers find the order taking slow and it can be interrupted easily by the phone ringing. She must computerise it immediately. The customer leaves the car and collects it later. This is fine but the service hours are inconvenient along with the scheduling so the whole process is a trauma for the customer. She needs to implement an evaluation system that she can monitor the quality of service and maybe get the staff to explain the nature of service. She needs to put a new process in place that will allows the car to be dropped off and have a convenient entrance, instead of a side door of a greasy building and then be met with a smiling service writer who will schedule a service that is convenient. People – This is a very weak area for Carol. The survey results show that the people served by Carol and her sister were much more satisfied. The customers reported that interpersonal variables were poor. For example, politeness and understanding customer problems rated badly. The service manager was said to be gruff and argumentative with customers. This has to be addressed. When people are dealing with a possession as personal as a car, the dealer has to be polite, patient and understanding. Larry Winters is vital here. He has been leading salesman and has shown strong management capabilities. She also needs to employ more mechanics to utilise the equipment and have the service department working to capacity. Conclusion I think Carol has the skills to turn her business around. She is educated and has experience in her own business. She has the turnover of people coming through the business so if she uses her know how, I believe she will succeed. ———————– [1] Essentials of Marketing, Charles W. Lamb, Joseph F. Hair, Carl McDaniel, 2011 [2] Essentials of Marketing, Charles W. Lamb, Joseph F. Hair, Carl McDaniel, 2011 [3] Essentials of Marketing, Charles W. Lamb, Joseph F. Hair, Carl McDaniel, 2011 [4] â€Å"Crowning The Customer, How To Become Customer Driven†, Feargal Quinn, O Brien Press, 1992 [5] Mechanization Takes Command, Organizations As Machines, Gareth Morgan â€Å"Images Of Organization†, Sage Publications, 1986.