Introduction Carmax (NYSE:KMX) is in a slight tight situation now, as investors and Wall Street thinks of new and used car market being on top while its net profit is declining. As an example, when Carmax’s first quarter results were not able to match the expectations, its stock price fell nearly 5%. This clearly points out the question on Carmax’s proven tremendous growth story. Economic Conditions According to Carmax annual report (2016), used car retailing business is dependent on many economic factors and unemployment rate is one of the factors. It helps in determining consumer buying power. Gradual decrease in it from 10% to 4.9% since financial crisis, (U.S bureau of Labour Statistics, 2016), provided the boost to the automotive retail …show more content…
Their low, no haggle price; high quality vehicles; a broad selection; and customer friendly sales processes, these four pillars, have created a solid and loyal customer base, (Carmax, Inc., 2016). Tom Dougherty, CEO of Stealing Share, wrote an article ‘The Process at Carmax Wins the Day’ praising the ease of buying from CarMax. He bought two cars for his children from Carmax, (Tom Dougherty, 2015). Such strong brand equity provides Carmax competitive advantage over competitors. As mentioned above, the four pillars of value creation are in practice by Carmax since very long, which obviously got noticed and practiced by the competitors. To stand out from this competition and maintain their competitive advantage, Carmax CMO Jim Lyski, has chosen the emotional way. He said “We know our competitors have tried to replicate our key pillars, so we set out to communicate the unique Carmax experience in more emotional way.” (Scott Davis, …show more content…
According to CarMax annual report, 90% of their customers who bought from them had visited their website or mobile app, and they committed to provide the same customer experience that they have always received at the stores. (CarMax, Inc., 2016) In order to do so, earlier this year, CarMax announced its Digital and Technology Innovation Centre, (CarMax, Inc., 2016b) where their employees will work on development of new features for apps and platforms to enhance CarMax’s buying experience, in a start-up like environment. (Jonathan Lacoste, 2016) Historically, CarMax had used mass marketing, like broadcasting and mass promotion, for growing its brand value. Now with the CMO’s vision, they have great opportunity to create value through personalised experience using analytics. Using information, provided by customers through website or mobile app, to help them have better personalized experience. Customers nowadays do a lot of online research before going to a store and using that information, keeping those researched cars ready when they reach the store. This personalization gives CarMax a great push. (Eric Krell,
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CarMax practices several services including extended service plans, wholesale auction, service and repair, and auto finance. CarMax also attracts the customers through wide-range of selections, low price, and high quality. These activities result the high customer satisfaction which is the most important aspect for its growth. According the case, Austin Ligon, who was the CEO of CarMax until the year of 2006, said that the information system of CarMax is the one of their biggest competitive advantages. The information system provides the inventory demands and helps to keep track on the customer needs and wants through the customers’ online searches. This allows the company to understand the customers’ demands. Even though CarMax has potential to continue its growth, there is a weakness which could be an obstacle for growing. CarMax offers no haggling prices so depends on the customers’ behavior about negotiating, the customers who wants to negotiate will return to other
In this argument I will be focusing on Fox Car Rental, Inc. as the basis for a systematic analyses of the organization, as I identify the strength, weaknesses, opportunities, and threats to the existence of the organization and its operations. Also, I will be providing three pitfalls to strategic management. In order to facilitate my argument, the use of a strategic matrix analyses will be utilized.
Introduction/Objective: Team 1 selected the short case study of CarMax vs. AutoNation vs. ZAG, (De Wit, & Meyer, 2010). Each member of the team reviewed the selected reading to identify the changes in the business model, convergence, compliance and the paradox within the case study. This case study was brief, but very informative and provided an excellent example of the effects that business model change can have on the automotive industry. By challenging industry rules tension was noted, therefore forcing the competition to conform to new standards through compliance or choice of redirection. Breaking industry rules can actually be beneficial in establishing a competitive edge against the competition. According to the authors, De Wit &
Offering consumers access to an extensive inventory online along with warranties, service, financing, appraisals, and add the consumer’s ability to sell the car to the dealership is CarMax’s brand. CarMax needs to continue to leverage their competitive strengths while making sure they offer the best-priced cars to the very competitive used car buying consumer. While it may be attractive to CarMax to enter new car market, they risk losing the ability to conduct their business model as manufacturers have various rules and contract requirements to carry the Chevrolet, Buick, Cadillac, Honda, or Toyota product lines. With this, they risk losing their brand recognition and identity with their consumers. Additionally, costs associated with buying an existing dealership with inventory and various licensing and franchising fees have the potential to drive up costs and therefore threaten their ability to price
They have over 11,555 worldwide rental car locations and are at the point where they can cover their short-term liabilities with cash flow from their operations. Hertz’s adjusted earnings per share increased 77.1% meaning that their market value has increased. Their revenues increased by 34%, while they had a cumulative cost savings of $3 billion (Hertz Annual Report, 2013). This demonstrates that Hertz has the financial resources and the access to markets that they need. Hertz has successfully integrated their ExpressRent kiosks in more than 48 markets and their eReturn option for Hertz Gold loyalty program members, in which they have the ability to choose the Hertz ‘Fuel Purchase Value Option’ that lets them automatically buy a full tank at the start of the rental, so they can turn in the car with the gas at any level and not have to worry about filling up on the way to the
Macy’s is an upscale department store founded in New York back in 1858. Since then, multiple stores reside in eight hundred forty locations within forty-five US states. Recently Macy’s purchased Bloomingdale’s, another upscale department store; both companies operate under the same ownership while using two different brands. The current article indicates that Macy’s goal “is to offer more localized, personalized and smarter retail customer experience across all channels.” (Rijmenam, 2012) To help with this goal, Macy’s developed an Omnichannel strategy, created data-driven websites and put to use big data. The Omnichannel approach helps in providing more shopping & sales data through the use of the desktop, mobile devices, by phone or from
During the Great Depression, every work place was hit hard and many were out of work. The demand for vehicles declined, and the automotive industry took a hit. Once the Second World War began, the automotive industry was given a push in the right direction, and their vehicle production flourished...
As most car dealers know there has been a huge boost in customers wishing to personalize their vehicles. Many customers consider their vehicle an extension of their own unique personality. But the key to successfully selling aftermarket products as a dealer is showcasing unique vehicles that will catch the eye of the customer. When the customer sees a one of a kind vehicle with clean smooth car window tinting vs. a car with no window tinting at all they are more likely to go for the one with the car window tinting because it is more appealing. If a customer sees a truck that he likes at a dealership but it doesn't have all the features that he saw initially in an add or commercial he may decide not to buy that truck. The customer is more likely to buy a vehicle if it has at least one or two special aftermarket features.
The automobile industry is a pillar of global economy. Globally automotive contributes roughly 3 % of all GDP output. It historically has contributed 3.0 – 3.5 % to the overall GDP in the US. The share is even higher in the emerging markets, with the rates in china and India at 7 % and rising. China produces the highest number of automobiles followed by US and Japan (oica.net, 2015). The industry supports direct employment of 9 million people to build 60 million vehicles and parts that go into them (oica.net, 2015). Many other industries such as steel, iron, glass, aluminium, textiles etc. are associated with the automotive industry and resulting in more than 50 million jobs owed to the auto
Indian automobile industry is one of the largest markets for automobiles in the World with the yearly production of 17.5 million vehicles. Out of which, 2.3 million vehicles are exported abroad. Automobile industry comprises of two-wheeler vehicles, three-wheeler vehicles, passenger cars and commercial vehicles. In the World, Indian automobile industry is largest three-wheeler market, second largest two wheeler market, fourth largest tractor market, fifth largest commercial vehicle market, fifth largest bus and truck market and tenth largest passenger car market. After the economic liberalization, the companies like Maruthi Suzuki, Tata Motors and Mahindra and Mahindra expanded the production and operations all over the world. Only after this, automobile industry has shown a faster growth. It was growing must faster but now in the year 2013-2014 it has shown a negative growth in India. Major reasons for the decline in the automobile industry is because of high inflation rate, rise in interest rate and fuel price. All automobile segments except two-wheeler vehicle are declining. From 2015 growth of automobile industry is expected to
One of the differentiation strategies used by BMW is the creation of auto products that consumers can emotionally relate to. In building the BMW brand, the company has succeeded in positioning its products as prestigious or luxurious. Therefore, most consumers want to own a BMW car solely for the prestige it gives them. BMW products are not only purchased due to their usability or functionality but for the status they give the owner. Subsequently, when a person buys a BMW product, they are emotionally attached not just to the car but to the brand as a whole. This has created increased brand loyalty in BMW growing its customer base as more people search for the status associated with the company’s products.
Hertz operates its car rental business through various brands in 145 different countries. Hertz was named, for the thirteenth time, by Travel + Leisure readers as the Best Car Rental Agency (Hertz Annual Report, 2013). Hertz is one of the top companies in the car rental industry by obtaining 18.6% of the market share (IBISWorld, 2014). In addition to the leading position that Hertz has built within its industry, the focus was to add more value offerings while recreating the experience in car rentals across the globe. Hertz employs both growth and competitive strategies to sustain competitiveness.
Where there is rapid growth comes increased competition; similarities in products across manufacturers have reduced brand differentiation across the board. The problem now is the severe rise of copycat companies and manufacturers that copy designs and speciﬁcations of cars, and proceed to undercut the original manufacturer’s proﬁt margins. So to improve their brand standing, every manufacturer’s individually have resort...
In order to look out for their customers, Pick n Pay released a customer rewards programme called “Smartshopper”. The programme, launched in March 2011, allows the franchise to get to know and understand each customer better by observing each individual’s shopping habits and references. The company has direct access to many Smartshopper customers via e-mail and/or sms, which allows the business to communicate with their customers in a more engaging manner. Pick n Pay asks for feedback from customers, and sends targeted marketing communications directly to them. All of this is done in an effort to both design and execute marketing campaigns and product ranges which are more relevant to their customers by extracting insights from the customers shopping habits data, as well as to assist the company in growing their sales volumes – which will ultimately lead to an rise in profit (FastMoving, 2012).