Auto Knight

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Marketing Plan for Auto Knights, Inc.November 11, 2008

Marketing TeamKolade AjayiCumba Dixon

Pavel HrynkevichAlbert Manzano

Biby MathewDiane Turner

MARK 6305 Value-based MarketingDr. Scott Wysong

Fall, 2008


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TABLE OF CONTENTS

EXECUTIVE SUMMARY ....................................................................1

COMPANY BACKGROUND ..............................................................4

MISSION STATEMENT ......................................................................5

OBJECTIVES .....................................................................................6

ENVIRONMENTAL ANALYSIS ..........................................................7

SWOT ANALYSIS ............................................................................14

MARKETING RESEARCH ...............................................................18

TARGET MARKET ...........................................................................25PRODUCT/SERVICE ........................................................................27

PRICE ...............................................................................................29

PLACEMENT ....................................................................................32

PROMOTION ....................................................................................35


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Marketing Plan for Auto Knights, Inc.Page 1

Executive Summary

Auto Knights, Inc. is a new business venture that will offer routine automotivemaintenance services. Our goal is to become the brand name that the autodriver automatically thinks of when requiring auto services. The followinginformation includes a comprehensive marketing plan that will be used to launchthe business in the first quarter of 2009.

For purposes of this plan, the following Assumptions are to be made:

Auto Knights, Inc. is a fully-funded start-up company.

All funding required for marketing initiatives has already beenfactored into the overall business plan budget.

OurMission Statement clearly defines our purpose of being the leader in theroutine automotive maintenance field as well as excelling at customer care.

The primary Objectives are to 1) increase brand awareness to 20% by 2009 2)capture 10% of the target market by end of 2011 and 3) open two new locationsby end of 2011.

By completing a comprehensive Environmental Analysis, we learned that ourtwo major competitors are Pep Boys Auto and Christian Brothers Automotive.Several current trends will both challenge our company and also offer someunique opportunities for growth.

OurSWOT analysis is based on market and industry research as well as an in-depth review of the owners perceived strength and weaknesses.

Strengths:

We offer services during non-traditional business hours as well as nightappointments.

Flexibility that results from being a small business; therefore we are ableto quickly react and respond to rapidly changing local market conditions.

One owner has previous automotive maintenance service experience aswell as extensive industry knowledge.

Weaknesses:

Consumers have a lack of brand awareness. Limited service coverage area due to the fact we have only one facility.

The industry labor pool of certified automotive technicians available forhire is very small.


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Opportunities:

Limited competition during our non-traditional hours of operation.

Aftermarket automotive maintenance providers are outperformingtraditional auto dealership services for routine automotive repair services.

Due to substandard customer care and quality in the industry, AutoKnights, Inc. has the opportunity to become the leading provider ofexcellent customer care.

Threats:

Lack of available supplier parts to replenish Auto Knights, Inc.s inventoryduring night hours.

Auto dealerships are now targeting the same automotive routinemaintenance market.

Due to the slowing economy, people are driving less, thereby reducing thedemand for maintenance services.

The primary and secondary Marketing Research reinforced the companyfounders belief that there is a market for excellent auto services offered outsideof normal working hours. This research also confirmed that our proposed TargetMarket has the correct customer base and location for our new company.

Determining the correct Price was based on analyzing the competitors pricingstrategy as well as performing a breakeven analysis. By offering servicesoutside of normal business hours and including an optional pickup/deliveryservice, we believe customers will be willing to pay a slightly higher fee for thesame services offered by our competitors.

The Placement of our initial business location is at 1234 Carroll Avenue inSouthlake, Texas. According to our research, the population of Southlake andthe surrounding areas of Grapevine, Colleyville, Trophy Club and Keller meet ourtarget demographic market. Locating our business at the intersection of Carrolland Southlake Boulevard will provide a convenient, central location as well ashigh-visibility. Additional locations will be opened in the Plano/Frisco andHighland Park areas of the Dallas-Forth Worth Metroplex.

We will promote our services in Southlake and the surrounding areas by use ofIntegrated Marketing Communications (IMC). Our IMC approach will becomprised of an internet website, sales promotion items, direct marketingcampaigns and various advertising tools such as radio and print ads.

Implementation of our marketing plan will begin in January, 2009, when webegin advertising our new venture in preparation of the Grand Opening which isscheduled for end of first quarter of 2009.


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To measure the success of the marketing plan, a formal Evaluation of how wellthe companys stated objectives have been met will be conducted. This will beaccomplished by analyzing the companys profit/loss and growth at the end ofeach of the three years 2009, 2010 and 2011 covered by this plan. AutoKnights, Inc. will also rely heavily on the customer feedback surveys to capture

the customer satisfaction ratings.


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Company Background

The concept for Auto Knights, Inc. was realized on January 15, 2008, by sixworking professionals who met in the waiting room of a local automobiledealership in Dallas, Texas. Each expressed dissatisfaction and frustration withthe lack of decent customer care and honest service in the automotive repairindustry. They all agreed that there was a market for a repair service thatcatered to the convenience of customers due to their hectic working schedules.

From this initial conversation, the idea of forming an automotive repair companythat catered to busy professionals and families was introduced. The founderscontinued to meet on a weekly basis and further refined their vision of AutoKnights, Inc. The goal was to create a successful automotive maintenancecompany that specialized only in routine automotive services and repairs whileproviding excellent customer service for most light passenger vehicles. Whileother companies offered the same services, Auto Knights, Inc. would differentiateitself by offering the services during non-traditional working hours, therebyallowing the customer more flexibility to schedule car repairs. An optional,premium service would be to pick up and return the vehicle to the ownersresidence or place of business.

The founders of the company invested their own money in the sum of two milliondollars each. With funding secured and the business plan in place, Auto Knights,Inc. plans to open for business in the first quarter of 2009. The Board ofDirectors has voted to hire a marketing firm to promote the companys launchand to establish a considerable market share for Auto Knights, Inc.


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Mission Statement

Auto Knights, Inc. strives to be the premier provider of superior routineautomotive maintenance services within our service areas. We cater to the busylifestyles of professional individuals and families in our local community byproviding excellent service, customer care and convenience 24 hours a day.

Core Values:

We value and respect our employees by promoting a fun and upbeatworkplace.

We consistently strive to exceed our customers expectations by providinga quality, timely and responsive customer experience each and every visit.

We support activities that have a positive influence for our local youth.

We believe in a responsibility to our community by consistently following

best practices to ensure a safe and eco-friendly environment.


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Objectives

Auto Knights, Inc. formulated the company objectives based on both theEnvironmental/SWOT analysis and the market research. Both avenues ofinformation indicated the absence of automotive routine service providersoffering non-traditional hours of service. Based on the perceived limited directcompetition, Auto Knights, Inc. should be able to easily achieve the statedobjectives.The following objectives have been established on a per year basis for each ofthe first three years of operations.Year One (2009):

Capture at least 3% of the auto maintenance service consumers in ourtarget area.

Increase brand awareness from 0% to 20%.

Year Two (2010):


Obtain a sales profit of $1,000,000.

Year Three (2011):


Gain a 14% brand penetration of the routine automotive maintenanceservices market in the Southlake area.

Based on the customer feedback surveys, achieve a 95% overallcustomer satisfaction rating and a 90% willingness to recommend.

Open two new locations in similar target markets in the DFW area:o Plano/Frisco

o Highland Park


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Environmental Analysis

Competitor Analysis

Competition is inevitable, especially when one company dominates the playingfield and is rewarded easily with substantial profit. One by one, the market isaccepting the companies who are able maintain a profit, increase customerstandards and promote affordable prices for products and services. Theaftermarket automobile maintenance industry is now saturated with corporatefranchises and independent service providers. Auto Knights, Inc. is on par with itstwo primary competitors - Pep Boys Auto and Christian Brothers Automotive.

The following analysis provides a brief synopsis of the primary competitors. Thisinformation was obtained from each of the competitors websites (Pep Boys

Auto1 and Christian Brothers Automotive Corporation2 ).

PEP BOYS AUTO 3

Primary website: www.pepboys.comMascots: Manny, Moe, and JackSlogan: Parts, Services and so much moreMain Headquarters: Pep Boys

3111 W. Allegheny Ave.Philadelphia, PA 19132Main Phone:215-430-9000Fax: 215-227-7513Toll Free: 1-800-737-2697

Stock Symbol: PBY-NasDaq Stock Market

Brief History of Pep Boys Auto

The company website, www.pepboys.com, tells of how the well-known Pep BoysAuto came into existence. In 1921, there were four Navy friends who pooledwhatever money they could which totaled about $800. Using this initialinvestment, these friends opened the very first auto parts supply store inPhiladelphia. The company continued to do business and opened two morelocations in Los Angeles, California. The business eventually established itself asa multi-billion dollar company. Today, in 2008, Pep Boys Auto states that theyhave 560 stores in the United States as well as stores located in Puerto Rico.

Pep Boys Auto Company Profile

Pep Boys Auto has gained a reputation for being the ideal shop for those whowant to repair their own vehicles, instead of spending the money to have the

1www.pepboys.com2www.cbac.com3http://www.hoovers.com/pep-boys/--ID__11472--/free-co-factsheet.xhtml
http://www.pepboys.com/http://www.pepboys.com/http://www.pepboys.com/http://www.pepboys.com/http://www.cbac.com/http://www.cbac.com/http://www.pepboys.com/http://www.cbac.com/http://www.pepboys.com/http://www.pepboys.com/


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vehicle fixed by a vendor. The company does business with clients of varyingsizes by promoting top of the line products as well as independent automobileparts. Pep Boys Auto also provides onsite maintenance services to itscustomers. Pep Boys Auto is competitive in four targeted areas in the aftermarketindustry: 1) do-it-yourself 2) do-it-for-me (service) 3) buy-for-resale (sales to

professional garages) and 4) tire sales.

Pep Boys Auto provides the following products and services for its customers.These products and services may vary depending on the location of the businessin the United States and Puerto Rico

Oil & Filter ChangeEngine Air Filter ReplacementCabin Air Filter ReplacementRadiator Repair and ReplacementCoolant System Drain and Fill

Coolant Hose Repair and ReplacementBrake Fluid System Drain and FillTransmission Fluid System Drain and FillPower Steering Fluid System Drain and FillDifferential Fluid Drain and FillFuel Filter ReplacementFuel System CleaningTiming Belt ReplacementSerpentine Belt ReplacementTire RotationTire Mounting and Balancing

Wheel AlignmentSafety InspectionsEmissions Testing

Christian Brothers Automotive Corporation4

Primary website: www.cbac.comMascot: UnknownSlogan: UnknownMain Headquarters: Christian Brothers Automotive Corporation

15995 N. Barkers Landing Suite 145Houston, TX 77079

Phone: (281) 870-8900Fax: (281) 870-1200

Stock Symbol: Unknown

4 http://www.hoovers.com/Christian-Brothers-Automotive-Corporation/--HD__fhtfhcfjr,src__dbi--/free-co-dnb_factsheet.xhtml
http://www.cbac.com/http://www.cbac.com/


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Brief History of Christian Brothers Automotive Corporation

Christian Brothers Automotive Corporation (CBAC) shares on their websitewww.cbac.com of how the company laid the foundation and became theprofitable company that it is today. The story begins with the primary owner, Mark

Carr, who founded the company in 1982. Even though Mr. Carr had limitedexperience in repairing and maintaining automobiles, the customers were quicklyastounded by his professional treatment, especially by his sincere honesty andintegrity. Mr. Carr realized that customers had been treated inappropriately andthat his method of conducting business was very untraditional in the automotiveindustry. He continued providing quality customer service to his clients andrunning his business on structurally sound ethics and morals.

In 1997, Christian Brothers Automotive Corporation teamed up with aninvestment company to open several new locations in strategic areas in order topromote and grow the business. In 2008, Christian Brothers Automotive

Corporation has 41 locations in 7 different states - Alabama, Georgia, Kansas,Missouri, Oklahoma, Tennessee and Texas.

Christian Brothers Automotive Corporation Company Profile

The companys primary mission and purpose objective found on the websitestates To glorify God by providing ethical and excellent automotive repairservice for our customers, according to Colossians 3:17 and And whatever youdo in word and deed, do all in the name of the Lord Jesus, giving thanks throughhim to God the Father.

Christian Brothers Automotive Corporation provides the following products andservices to its customers:

Oil & Filter ChangeEngine Air Filter ReplacementCabin Air Filter ReplacementRadiator Repair and ReplacementCoolant System Drain and FillCoolant Hose Repair and ReplacementBrake Fluid System Drain and FillTransmission Fluid System Drain and Fill

Power Steering Fluid System Drain and FillTransfer Case Fluid Drain and FillDifferential Fluid Drain and FillFuel Filter ReplacementFuel System CleaningTiming Belt ReplacementSerpentine Belt ReplacementTire Rotation
http://www.cbac.com/http://www.cbac.com/


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Tire Mounting and BalancingWheel AlignmentSafety InspectionsEmissions Testing

Legal and Political Environment

The name of the game is revenue and how much of it a company can earn. If abusiness has an untapped strategy or tactic, the company should exploit it todominate the target market industry. When this happens, there is usually abacklash to the competition because certain products and services or informationthat results from this new strategy or tactic are not readily available to thecompetition.

A great example is the automobile industry. Car manufacturers must invest largeamounts of funds necessary for research and development. They recoup the

initial loss by economies of scale and, in return, receive a profit from sales to theindustry communities of interest. The data pertaining to the newly developedvehicle parts specifications and specialized methods of vehicle repair is keptconfidential from independent auto repair shops and public consumers. The onlygroup who has access to this information is the car dealerships who safeguardthe sought after data and overcharge the consumers for maintaining the car. Thisis one of major hurdles that Auto Knights, Inc. has to face, and it has a crucialimpact on our business.

Auto Knights, Inc. is among the thousands of independent automobilemaintenance shops registered in the United States that are affected because of

the inability to have access to this information. Shops reportedly found thateither much of the data or some of the data was missing from informationprovided by car companies. 5 How are independent auto repair companies tostay in business when they are literally turning away clients because certainrepairs require the technical specifications to which the independent providersare not privy to, but are essential to perform the service? Research shows thatindependent repair shops turn away 1.2 million consumers each year becauseof a lack of repair information. Based on those numbers estimates that theindependent aftermarket is losing $5.8 billion in service and parts sales annuallybecause of the inability to access the necessary repair information. 6

When issues similar to the ones stated above arise, shortly thereafter comes theintervention of the United States government. Currently, there is a legislation billbeing debated in Congress entitled Motor Vehicle Owners Right to Repair Act.The purpose of this legislation is to require automobile manufacturers to provideinformation to independent automobile maintenance shops. This will allow

5 Moore, Bob, Repair accessibility Issues Heard Loud and Clear, Aftermarket Business,116(November 2006): 116 Moore, Repair accessibility Issues Heard Loud and Clear, 11.


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equitable competition with the auto dealerships. Unfortunately, groups such asthe National Automobile Dealers Association Political Action Committee (NADAPAC) represent those who do not wish for this bill to pass. An organization likethe NADA PAC gave $2.9 million to House and Senate candidates. In addition,the owners of car dealerships and their executives gave another $4.25 million.7

If the legislation is not passed, Auto Knights, Inc. will continue to experience adiminished ability to perform all car repairs and services. The company must takethe necessary steps to ensure that a profit will be realized within the first threeyears of operation. While Auto Knights, Inc. is powerless as a singularindependent business owner, as more and more independent auto shopsinterconnect and demand that the relevant information be shared, there is alarger chance of the independent repair shop surviving. As a result, Auto Knights,Inc. will be able to provide a higher standard of products and services to thosecustomers who prefer patronizing the aftermarket industry instead of autodealerships.

Trends in the Automobile Industry

Trends are another obstacle that Auto Knights, Inc. faces, but it comes with theterritory when targeting a profitable area of the aftermarket industry. Trendscome and go similar to seasons, but some trends have a heavier impact thanothers, just like the seasons. Trends are nothing more than a window ofopportunity to capture as much revenue as possible. These windows ofopportunity are a result of a weakness in the automotive industry and are oftenexploited to turn a profit. When one industry market performs at poor standards,the customers voice their opinions by choosing another market. It is almost like a

see-saw effect. Usually, when a market performs poorly and customers aredissatisfied, there is always another market to pick up the slack and turn a lossinto a profit from those dissatisfied customers.

Consider the automotive industry and the aftermarket industry. Customers havediffering experiences within these two industries, and some express opinions thatcar dealerships (automotive industry) are notorious for providing unacceptablecustomer service. According to the May 2008 issue of Consumer Reports, more

Americans (71 percent) are very satisfied with independent repair shops forvehicle service than new car dealers (53 percent)8 Once these customersactually utilize an independent repair shop, they experience the quality work and

affordable services which are within their budget. As evidenced by theConsumer Reports study, millions of car owners trust the independent repairshops to provide affordable and competitive automotive repair service. 9 As a

7 Barlas, Stephen, Debating Right to Repair, Aftermarket Business, 118 (February 2008): 28 Anonymous. (2008). Automotive Aftermarket Industry Association; Higher Level of

Satisfaction With Independent Repair Shops Than Dealership. Pg. 239. RetrievedOctober 25, 2008, from University of Dallas ProQuest Database (1544383301)

9 Anonymous. (2008). Automotive Aftermarket Industry Association; Higher Level of


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result, a lucrative window of opportunity exists for Auto Knights, Inc., which is apart of the aftermarket industry, when customers are dissatisfied with theautomotive industry.

Another trend occurring currently in the market is that original equipment

manufacturers (OEM) and car dealerships are attempting to re-kindle therelationship with previous customers as well as current and potential customers.These businesses are finally realizing that it does indeed take more money to re-capture an old client as opposed to attracting a new customer. The dealershipsare actively looking to extend their relationships with vehicle owners beyond thatthree-time window. 10 The reason why some dealerships are resorting to thisstrategy is because of low sales and a customer base that is fleeing toward theaftermarket independent auto repair provider who will actually cater to thecustomers needs. Dealerships are starting to take notice, and, before theybecome a victim of their own tactics and put themselves out of business, thedealerships are changing the approach to customer relations. This change in

approach within the automotive industry is a very real threat to the success ofAuto Knights, Inc.

Another trend that is occurring in the automotive industry is that car dealershipsare entering the automobile body repair market once again. As a result,customers are able to move back and forth between the automotive andaftermarket industries to get the best deal at the most affordable prices. In anera when more and more auto dealers seem to be staying out of the body shopbusiness, those dealer body shops that do remain seem to be thriving. 11 Manydealerships are taking the initiative to work with all types of insurance companiesto ensure that the dealership gains the customers business which will increase

profits substantially. Customers tend to be more satisfied when the shop thatworks on their vehicles is on their insurance companys list of recommendedrepair shops.12 Customers are actually getting the best of both worlds when theinsurance company is directly involved with the dealership as this directrelationship relieves the customer of having to personally file a claim as well asalleviating any concerns that there will be no remediation if the dealershipperforms substandard repair work. Auto Knights, Inc. will seize this opportunityby working with insurance companies to be included in the list of recommendedrepair shops.

Satisfaction With Independent Repair Shops Than Dealership. Pg. 239. RetrievedOctober 25, 2008, from University of Dallas ProQuest Database (1544383301)

10 Clapper, Casey, Dealerships Move to Capture More Repair Dollars, Motor Age 126 (March2007): 22.11 Engebretson, Joan, Body Shop is Key Profit Center for Dealership, Automotive Body RepairNews 47 (March 2008): 312 Harris, Donna, Study:Insurer Referrals Benefit Body Shops, Automotive News 81 (February2007): 6241


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SWOT Analysis

Internal Strengths

The founders invested their own capital. Therefore, there is noaccountability to outside investors.

Auto Knights, Inc. has the flexibility resulting from being a small business:o Able to quickly react to changes in the local market.

o Absence of bureaucracy in the decision-making process.

Auto Knights, Inc. management has a rich cultural diversity and wealth ofvarious business experiences. This background will guide the strategicvision and direction of the firm as well as helping to prevent negativegroup think.

One of the founders has previously worked for an automobile repaircompany and has a robust understanding of the inner workings of theautomotive maintenance industry.

Auto Knights, Inc. offers routine maintenance services during non-traditional business hours, including overnight service.

Auto Knights, Inc. will pick up and return a vehicle to either the customersresidence or place of business.

Auto Knights, Inc. specializes in routine maintenance services for bothforeign and domestic light vehicles, thereby ensuring a large potentialcustomer base.

All technicians are board-certified.

Auto Knights, Inc. utilizes a database that contains detailed information onall manufactured vehicles and repair parts.

Internal Weaknesses

The founders have a lack of experience in starting and growing a smallbusiness.

The founders are working professionals who have elected to continuepursuing careers outside of Auto Knights, Inc. Finding time to support anddevelop the business is a potential risk.


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There is a lack of qualified, certified automotive technicians available forrecruiting and hiring. Filling vacant positions or increasing the staff maybe a challenge.

As a new business, Auto Knights, Inc. has not established local business

contacts and relationships.

There is minimal public recognition of the Auto Knights, Inc. brand.

The founders are not able to fund any additional capital. Therefore, untilthe business shows a profit, there will be no opportunity to expand thebusiness. Also, if the business incurs repeated losses, there is aconsiderable risk that the business will fail as there are no financialreserves.

Customers may be hesitant to trust Auto Knights, Inc. with transporting thevehicle to and from the service facility as the company has an unknownreputation with the public.

Auto Knights, Inc. has only one location at this time, so the service areafor the pick up and delivery service must remain limited. This will limit thenumber of customers that can be reached.

External Opportunities

Due to rising fuel costs, people are keeping vehicles longer than in thepast. Older cars require more maintenance services. This affords AutoKnights, Inc. the opportunity to develop a longer relationship with thecustomer.

There is limited competition for the non-traditional hours business as fewautomotive services in the area are open 24 hours a day, 7 days a week.

There is considerable customer frustration about the lack of customerservice in the automotive service industry. Auto Knights, Inc. can benefitfrom this situation by differentiating itself from the competition by havingsuperior customer care.

The aftermarket auto maintenance business is still out-performing autodealerships and is not going away anytime soon. 14

14 Angell, Sue, Automobile Dealerships vs. the Aftermarket, Aftermarket Business 117 (September2007)


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miles and greater because of the high-price to fix and maintain theseautomobiles. Auto Knights, Inc. is also targeting the same market. 17

Dealerships are offering more incentives to customers to maintain vehicleswith 90,000 miles or greater. 18

Dealerships are offering extended warranties and auto repairs outside ofthe more typical 3-year warranty. This will encourage the customer to visitthe dealership instead of independent maintenance services such as AutoKnights, Inc. 19

Due to the slowing economy and rising oil and gas prices, people maylimit driving. Less driving results in longer times between necessaryroutine maintenance services which will lessen repeat business for AutoKnights, Inc. 20

There is a potential risk that the customers will not adopt the pick up anddelivery service due to concerns about the vehicles safety duringtransport.

A major competitor, with a deep capital base and bulk-based pricing, couldoffer Auto Knight, Inc.s unique pick up and delivery service for lowerconsumer prices.

17 Clapper, Casey, Dealerships Move to Capture More Repair Dollars, Motor Age 126 (March2007): 22.18 Clapper, Dealerships Move to Capture More Repair Dollars, 22.19 Clapper, Dealerships Move to Capture More Repair Dollars, 22.20 Gasoline Prices Dent Car Repairs, Wall Street Journal, July 30, 2008


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Marketing Research

The purpose of the survey was to determine customer demand for our servicewhich is 24-hour automotive routine maintenance services. The survey assistedin specifying our target market, provided the necessary information for our pricingstrategies and encouraged feedback from the respondents previous automotivecar service experience so that we can ensure better customer satisfaction.

The answers to the following seven major questions provided significant insightinto the consumer thoughts and aided in determining if there is a window ofopportunity in starting up an all night automobile routine maintenance shop.

1. Would you use an automotive service that is open 24 hours a day?2. Thinking of the last time you chose an automotive maintenance service

facility, what was the most important factor in the selection?3. How likely would you be to pay a nominal fee for services provided outside

of normal business hours? (Normal hours being defined as Monday toSaturday 7 AM to 6 PM)

4. How likely are you to allow a 24-hour automotive maintenance service topick up your car, complete the necessary work and return it to yourresidence or place of business?

5. What is the largest fee you would pay for the service to collect and returnyour vehicle to your residence or place of business?

6. How many miles are you willing to drive for automotive maintenanceservices?

7. Based on your previous visits to automotive maintenance service facilities,please tell us about your worst experience.

Research Design

Our research design consisted of an internet survey. The survey contained tenquestions with seven questions being closed-ended and three being open-ended(See Customer Survey in Appendix.). The first six questions were directly relatedto the customer interest, pricing strategy and specification of the target market.Questions seven through nine were to give us data on our target marketdemographics. Question ten was to give us consumers feedback on theirprevious routine automotive car experiences.

The Sample

The sample consisted of 84 respondents. The majority of the respondents werefrom the Dallas/Fort Worth Metroplex area. The survey was a conveniencesample distributed to students of the University of Dallas, family, friends and co-workers.


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Analysis of Results

The data we received from the survey was very useful in determining our marketstrategy development. There are some cases where the survey results proved

different than we what believed, but provided new opportunities for our marketingstrategy. The analysis below consists of the results of the seven major questionsmentioned previously. Please refer to the Appendix for an actual view of thesurvey in its entirety.

Would you use an automotive service that is open 24 hours a day?

Ninety-four percent of the persons surveyed responded with an outstanding yesthat they would use an automotive maintenance service that was open 24-hoursa day. This confirmed that our service has a differential advantage over ourcompetitors and that there is an interest to use our service. The information alsoshowed that there is a potential market demand for the service so we have awindow of opportunity to establish our business in those communities interested

in our product and services.


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Thinking of the last time you chose an automotive maintenance servicefacility, what was the most important factor in the selection?

This question was crucialbecause it shows the important factors the consumersconsider when choosing an automotive maintenance service facility. Our initialthought was that the Hours of Operation and Days Open were going to be themost significant factors for consumers. However, the results of the surveyshowed otherwise with Quality of Repairs, Cost, Location and CustomerService being the most significant drivers.

While the data showed that our initial thoughts were incorrect, it is very possiblethose percentages were low due to the fact that currently no automotivemaintenance service facility stays open 24-hours a day in the Dallas/Fort WorthMetroplex. Therefore, it may be possible that in the consumers mind, thosewere not important factors because no current automotive service has everprovided extended hours or days beyond the defined normal business days andhours.

This provides an excellent opportunity for our companys strategy because weare revolutionizing the common trend in auto maintenance. Our market strategy

will be to encourage the consumer to realize that his or her time is very importantand Auto Knights, Inc. will provide an important service in such a manner that thetime spent on routine automotive maintenance service is minimal


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How likely would you be to pay a nominal fee for services provided outsideof normal business hours? (Normal hours being defined as Monday toSaturday 7 AM to 6 PM)

The results showed that consumers are indifferent to paying a nominal fee for

services provided outside the normal business hours as the percentages arespread out. This information is significant in the pricing strategy of our servicesfor consumers who decide to bring their cars to our 24-hour automotivemaintenance service shop.


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How likely are you to allow a 24-hour automotive maintenance service topick up your car, complete the necessary work and return it to yourresidence or place of business?

The results showed us that consumers are most likely to utilize our specializedpickup/return service of the vehicle from either the residence or place of work.This indicates once again that this extra service we provide gives us a differential

advantage and that consumers are willing to purchase this service, therebysupporting our business and marketing strategy. The data also verifies that ourservice is an excellent opportunity for revolutionizing the common trend in automaintenance and that there is a potential market demand for the service.

What is the largest fee you would pay for the service to collect and returnyour vehicle to your residence or place of business?

The purpose of this question was to help us in our pricing strategy for picking aconsumers car up and returning it to the residence or place of work. From the

results of the survey, the price ranged from a minimum price of $0 to a maximumprice of $200. The average price was $40 for the largest fee the consumer wouldpay for the service.


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How many miles are you willing to drive for automotive maintenanceservices?

This question aided in our decision as where to locate the business. The resultsshowed that the farthest a consumer was willing to drive for our 24-hour

automotive repair shop was a maximum of 50 miles and a minimum of 2 miles.The average distance that consumer was willing to drive was 20 miles.

This result, along with the demographics questions on age and income, greatlyassisted in determining our target market.

Based on your previous visits to automotive maintenance service facilities,please tell us about your worst experience.

This was an important question because twoof our objectives are customersatisfaction and customer recommendation. Learning about the worst

experiences our potential clients had with our competitorsshowed us what pathsnot to tread if we want to succeed with our new business. This research dataprovides a beneficial advantage for us by enabling us to know how to service ourfuture customers better.

The results showed that our competitors lack quality and even minimal customerservice. An underlying theme from the responses was a huge distrust inautomotive maintenance service shops. Many people believed that the marketlacks any integrity. Our marketing strategy is to address this issue by offeringsuperior quality and customer service which are two factors that are vital to ourcompanys success.

In order to implement a successful business and marketing strategy, we will learnfrom and then incorporate strategy that has proven successful by ourcompetitors. Our company has passion. We have passion for everything we do,from the cleanliness... to our award winning showroom. 21 We have a chance tosucceed where our competitors have failed on numerous occasions, even whenthey had a chance to redeem themselves as they never took the opportunity. Wehave done our research and are aware of our weaknesses, but customer serviceis our strength and will continue to guide us into the future. 22

Implications of Market Research

The key to service success is communication. Thats key. But its got to happenon both sides. 23 This is absolutely true as we cannot provide service until we

21 Miller, Chris, Thinking Outside the Bays, Aftermarket Business 116 (January 2006): 1.22 Miller, Thinking Outside the Bays, 1.23 Niederkohr, Tschanen, All Night Repairs Have Little Effect on Traditional Distribution Channels,

Aftermarket Business 117 (October 2007): 10.


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complete the research and determine the demand within our target market. Wewill ask our customers to speak up; we will listen and then provide the servicethey demand.

The results of our research support our marketing plan strategy. Some of the

results did differ from our initial thoughts, but we are able to see the opportunitythe data presented that actually strengthen our strategy. You have to be awareand take advantage of every opportunityYou cant afford to lose customers.24

Overall, the marketing research did confirm the customer demand for a 24-hourautomotive maintenance service as well as helping us to specify our targetmarket. Our approach to pricing was also confirmed. The insight into theconsumers experiences in regards to past automotive care experiences with ourcompetition will prove invaluable in refining our approach to customer care.

24 Miller, Thinking Outside the Bays, 1


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Target Market

Overview

Auto Knights, Inc. realizes that customers utilize a vehicle daily to be productiveand maintain a current lifestyle, whether it is to travel to and from work or to fulfillpersonal obligations. We recognize that customers have more important thingsto do throughout the day than wait while the vehicle is serviced. We also realizepeople are driving their vehicles longer and therefore, doing more maintenanceon them. 25

Since Auto Knights, Inc. provides routine automotive maintenance services, thetarget market could be so broad as to include any person who drives andmaintains a vehicle. However, due to our differential advantages of 1) offeringservices outside of normal business hours and 2) offering a pickup and deliveryservice, the Auto Knights, Inc, target market must be narrower and more focuseddue to the higher price that we charge for these advantages.

Our marketing strategy is to help people relieve the stress of finding andobtaining routine automotive services by picking up and returning the car duringhours when the owner does not need the vehicle, such as during the night.

Based on all these factors, the target market for Auto Knights, Inc. is the workingprofessional and/or family members who, due to their very busy lifestyles, do nothave the time or desire to wait while automotive maintenance repairs arecompleted.

Auto Knights, Inc. is providing these automotive maintenance services because itreleases clients from the burden of taking the time to take the car into the shop.If we can free up that time so you can do something else, its worth it and thatswhat people are telling us. 26

25 Entertainment & Travel editors from staff and other reports. Copyright 2008, Entertainment &Travel via VerticalNews.com.26 Niederkohr, Tschanen, All Night Repairs Have Little Effect on Traditional Distribution Channels,

Aftermarket Business 117 (October 2007): 10.


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Demographics

The first of the demographics to determine our target market was the age range.The results from the survey showed that 83% of the target market age rangeshould be in the 25-55 age brackets.

The second of our demographics to help determine our target market was theyearly annual income of the respondents. The results from the survey show that68.4% of the annual income fell in the $50,000-$100,000+ income brackets. Webelieve that the customers in the higher income brackets will be willing to pay forour services.


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pre-addressed reply card in the automobile. The customer will be asked to returnthe card. The card will not only contain several customer feedback questions,but will also have a freeform text box to allow the customer to compliment orcomplain about our services. For any card returned that is rated as less thanexcellent, the onsite manager will be required to contact that customer to discuss

the concerns. The cards, along with the managers notes, will be presented atthe monthly manager/owner meeting. Feedback will be evaluated, and anynecessary corrections to either personnel or procedures will be discussed. (See

Appendix for customer feedback survey.)


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Price

To determine how to price each of the 20 routine automotive maintenanceservices offered by Auto Knights, Inc., we researched the pricing structure of sixcompetitors: Jiffy Lube, Meinke, Pep Boys Auto, NTB, Christian Brothers

Automotive and Wal-Mart. First, we collected the prices for each service from thecompetitor. Then, we calculated the average industry price for each of the 20services. Finally, we calculated what fraction each type of service constitutes inthe overall services performed. (See Competitive Pricing Grid in the Appendix.)

Based on the information obtained from a local auto service provider27 and on ourcost estimation, Auto Knights, Inc. will incur costs which are at the average levelin the industry. The gross profit margin for a healthy auto service company isabout 72-74%. In other words, 26-28% of sales are variable costs. The fixedcosts are about 62-64% of sales. This leaves about 10% as a net profit.

We projected the estimated fixed and variable costs for the first year ofoperations. A breakeven analysis calculation was then performed to determinethe number of services needed to be sold and the sales dollars required to breakeven. (See Figure 9-1 Year One Breakeven Analysis.)

Auto Knights Inc. will have two pricing structures the Silver and Gold levels.The Silver pricing level will be for customers who elect to visit the facilitypersonally and wait for service completion. The Gold pricing level will bestructured to include the surcharges for using our exclusive automobile pickupand return service. (See Figure 9-2 Pricing Levels.)

The Silver level will have a 15% markup above average industry price. The Goldlevel will have a 30% markup due to the fact that Auto Knights, Inc. will bepositioning itself as a premium service provider. In conjunction with averagecosts, these markups will allow us to cover the higher than average advertisingexpenses which are inherent to a new firm penetrating a market.

27 Information gathered from in-person interview with a local auto service provider management andstaff. All requested to remain anonymous.


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Breakeven analysis for Year One (2009)

Estimated Sales and VariableCost*Sales 976,000

Variable Cost 388,000Gross Profit 588,000

Estimated Costs*

FixedSalaries 299,600Payroll tax, absentee wages, employeebenefits 54,000

Rent 77,676

Real Estate Tax 7,620

Utilities: power, heat, light 16,800

Computer: CRM, repairs 15,600Phone 9,744

Training 3,600

Other Expenses 5,000

Total Fixed Cost 489,640

Net Profit 98,360

Breakeven AnalysisAverage Number of Visits a year* 4,080

Average Gross Profit per Service $ 144.12

Breakeven point in units (services) Fixed Cost 489,640 =3397.50Gross Profit per

unit$144.12

Breakeven point in sales Fixed Cost 489,640 =$812,680.50Profit Margin 60.25%

* Estimations of sales, profit margins and costs derived from research and interviewing local auto service company.

Figure 9-1 Year One Breakeven Analysis


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Auto Knights, Inc.PRICING GRID A

uto

Knights,

Inc.

SilverLevel

Package

Auto

Knights,

Inc.

GoldL

evel

Package

Oil & Filter Change $34.26 $38.73

Engine Air Filter Replacement $26.37 $29.81

Cabin Air Filter Replacement $32.78 $37.06

Radiator Repair and Replacement $416.69 $471.04

Coolant System Drain and Fill $97.61 $110.34

Coolant Hose Repair and Replacement $135.21 $152.85

Brake Fluid System Drain and Fill $76.15 $86.09

Transmission Fluid System Drain and Fill $132.66 $149.97

Power Steering Fluid System Drain and Fill $98.08 $110.87

Transfer Case Fluid Drain and Fill $77.34 $87.43

Differential Fluid Drain and Fill $87.54 $98.95

Fuel Filter Replacement $75.61 $85.47

Fuel System Cleaning $142.57 $161.17

Timing Belt Replacement $354.63 $400.88

Serpentine Belt Replacement $105.12 $118.83

Tire Rotation $11.37 $12.85

Tire Mounting and Balancing $18.39 $20.79Wheel Alignment $74.73 $84.47

Safety Inspections $14.38 $16.25

Emissions Testing $31.34 $35.43

Figure 9-2 Pricing Levels


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Placement

Location

Auto Knights Inc. has decided to build the headquarters and first service locationin Southlake, Texas. The organization chose Southlake because of the plentifulbenefits the city currently provides to a startup company as well Southlakehaving a population that matches our target customer demographic.

The facility, located at 1234 Carroll Avenue, is at the intersection of Carroll andSouthlake Boulevard. Being near the Southlake Town Center, a heavilypopulated retail/residential development will provide Auto Knights, Inc. with ahigh-traffic visibility.

Auto Knights, Inc.s target service area is a 10-mile radius from our physicalservice location which will include not only Southlake, but also the neighboringareas of Colleyville, Grapevine, Keller and Trophy Club. Since SouthlakeBoulevard is the main thoroughfare for Southlake, our facility will be easilyaccessible to all residents, commuters and visitors to Southlake and thesurrounding areas. This location will also have easy access from the followingroutes: Texas State Highway 121, Texas State Highway 114 (connecting toInterstate-35 West and Interstate-35 East) and Farm-to-Market Road 1709.


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Demographics

The additional reason why we choose Southlake to begin our operations is dueto the demographics. The following facts were taken from the City of Southlakeswebsite (www.cityofsouthlake.com).28

The City of Southlakes population is estimated to be 26,100 as of January

1, 2008, and by 2010 population projection of 28,019, projected build-outof 30,160.

The transportation infrastructure that feeds into the City of Southlake aremajor highways are S.H 114 and F.M. 1709.

The labor force and economic base, the labor pool ages 18-65 within 15miles of Southlake: 596,972.

These demographics indicate that there are several opportunities for potentialcustomers who are not satisfied with their current service provider to come to our

location and experience the excellent customer service that we will provide. Thestatistics also show that there is an extensive labor pool available to us forexpansion of our operations in future months. The last attractive factor is that thefounders have the opinion that Southlake is known for its high brand value andclass distinction which is the target market in which Auto Knights, Inc. aims to besuccessful.

28http://www.cityofsouthlake.com/repository/unmanaged_content/Departments/EconomicDevelopment/FastFacts2008.pdf
http://www.cityofsouthlake.com/http://www.cityofsouthlake.com/


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Dcor

Our facility will be designed to blend in with the architecture of the SouthlakeTown Center. The exterior will be red brick with Austin stone trim. There will alsobe extensive landscaping.

Our facilitys exterior will be closely aligned with the existing Southlake TownCenter architecture (picture is of Southlake Town Hall):

The interior customer greeting area and waiting room will be decorated with soft,neutral earth tone colors. There will be ample high-end furniture (sofa and wing-back chairs) for the customers along with cherry wood accent tables. For our

customers comfort, we will offer our customer a complementary beverage -coffee, tea, water or a soft drink during each visit. The actual service bays will bepainted a bright, clean white. The office staff will follow a dress code consistingof a monogrammed company polo shirt and khaki slacks. Each technician will berequired to wear a company issued uniform as well.


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Promotion

For the launch of the business, Auto Knights, Inc. will use the followingpromotional elements:

Internet Marketing

Auto Knights, Inc. will create and maintain a website that offers the internetconsumer a full description of our services as well as special promotions anddiscounts. (See example ofwww.AutoKnights.com website in the Appendix.)

Sales Promotion

Auto Knights, Inc. will offer coupons as a way to pull in customers and increaseour bottom line during the first few weeks of operation. We plan to distribute thecoupons via our website, through our direct mail promotion and in our print ads.We project the use of coupons will count for twenty percent of our business in thefirst few weeks of operation. (See coupon in the Appendix.)

Direct Marketing

Auto Knights, Inc. will utilize direct marketing to reach the majority of householdsin Southlake and the surrounding areas. We will mail a flyer containinginformation on the ranges of services offered along with a discount coupon forthe first visit. We will use Martin Worldwide, Inc., (www.martinworldwide.net) aninternet company that sells mailing list for communities and cities within theUnited States. We have allocated 10% ($25,500.00) of our advertising budget to

direct marketing. (See flyer in Appendix.)

Advertising

Auto Knights, Inc. will incorporate several advertising tools to reach an evenwider customer base. 78% of the total promotional budget will be allocated to theoverall advertising budget.

Radio77% of the advertising budget will be spent on ads on two radio stations, KERA90.1FM and KLTY 94.9FM. We believe 90% of our target market will be reached

through these radio stations given that the median age of the population inSouthlake is 36.7 (2002 Census report) which is falls within the listeningdemographic of these stations.

PrintNewspaper advertising will comprise 15% of the advertising budget.

Advertisements will be placed in both the Dallas Morning News and the Fort
http://www.autoknights.com/http://www.martinworldwide.net/http://www.autoknights.com/http://www.martinworldwide.net/


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Worth Star Telegram to ensure a more complete coverage within Southlake andthe surrounding communities. (See newspaper ad in Appendix.)

BillboardsAuto Knights, Inc. will rent a billboard for $5000 a month for the first three months

of operations. A billboard will serve as a visual reminder of Auto Knights Inc.slocation. The expense of the billboard will use the remaining 8% of theadvertising budget. (See billboard in Appendix.)


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Budgets

Promotional Budget

Internet Marketing $15,250.00 6%

Sales Promotion $15,250.00 6%Advertising $194,000.00 78%Direct Marketing $25,500.00 10%

$250,000.00100

%

Allocation of launch Budget

$15,250.00

$15,250.00

$194,000.00

$25,500.00

Internet Marketing

Sales Promotion

Advertising

Direct Marketing

Allocation of launch budget, percentage

Internet Marketing

6%

Sales Promotion

6%

Advertising

78%

Direct Marketing

10%

Internet Marketing

Sales Promotion

Advertising

Direct Marketing


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Advertising Budget

Radio $150,000.00 77%Newspaper $29,000.00 15%Billboard $15,500.00 8%

$194,000.00100

%

Advertising budget in dollar

150,000.00

29,000.00

15,000.00

RadioNewspaper

Billboards

Advertising budget in percentage

Radio

77%

Newspaper

15%

Billboards

8%


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Implementation and Evaluation

Implementation

Auto Knights, Inc. is a startup business and, in order for the company to become

successful, the company has formulated a step-by-step timeline of the actions tobe executed. These documented strategies and tactics will allow Auto Knights,Inc. to capture a very respectable share of the automotive maintenance servicemarket within a short time period. The organization will open for business prior tothe end of the first quarter of 2009. During the first quarter and prior to the actualcompany launch, the organization will be using Integrated MarketingCommunications concepts to gain brand awareness and capture potential clientsby utilizing internet marketing, sales promotion, direct marketing and advertisingmedia. By the end of the first quarter of 2009, Auto Knights, Inc. will be fullyoperational and ready to serve the clients that will be attracted during the initialIMC campaigns.

Prior to the actual opening of the business, Auto Knights, Inc. must have thefollowing business areas designed and implemented in order for the first year ofbusiness to function properly and be profitable. The following areas are:

Building and equipment setup

Automobile supplies stock (oil, filters, manual/electric hand tools, etc.)

Administrative staff and procedures

Certified technicians

Integrated Marketing Communications concepts (internet marketing, salespromotion, etc.).

Finally, Auto Knights, Inc. must continually strive to make current and potentialcustomers aware of our services in order to recoup the initial investment in thecompany. This process is never completed and will remain an ongoing effortuntil the life of the business has been relinquished.

The following timeline listed below illustrates the steps Auto Knights, Inc. willimplement for the forecasted Years One through Three:

Pre-Launch Setup Phase

Auto Knights, Inc.s primary website will be live by mid-first quarter of2009.

Promotional items will be printed.

Signage for Auto Knights, Inc. displaying the company logo will be placedat the physical facility.

Year One

The Grand Opening of Auto Knights, Inc. facility will be held.


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Promotional and advertising items will be created and distributed.

Customer survey feedback will be distributed with every service.

Marketing efforts will continue to establish brand awareness.

Year Two

Increase promotional and advertising frequency and penetration.

Obtain exceptional sales revenue.

Increase market share of automotive maintenance services in Southlakeand targeted service area.

Year Three

Increase brand penetration in the target market.

Open two new locations in the Dallas/Forth Worth Metroplex (Plano/Friscoand Highland Park).

Obtain strong customer service satisfaction and recommendation scores.

Evaluation

Results are crucial for ensuring a profitable success, especially for a startupcompany such as Auto Knights, Inc. To guarantee a long-term success, AutoKnights, Inc. must first determine if the current implementation plan is producingdesirable results in the short-term. Therefore, the company has decided toemployee the following methods to measure the effectiveness of theimplementation plan. The Customer Survey will occur at the conclusion of everyservice while the third-party reviews will occur at the end of each of the threeyears covered in the implementation plan.

Customer Survey

The primary goal for Auto Knights, Inc. is to have an exceptional customersatisfaction and recommendation score as this is literally the strongest foundationpossible for the business to be successful on a day-to-day basis. If an honestconnection cannot be established with the customer, the future success of thecompany is in jeopardy on the initial day of business.

We believe that in order for Auto Knights, Inc. to become and remain successful,the company must ask for and listen to those individuals who will experience the

frontline impact of the companys products and services. This will include boththe customer and the employee. Each individual involved in the serviceinteraction will provide a unique perspective. The employee will be able toprovide tangible feedback on current service procedures and policies which willbe shared informally with management. The customer perspective will be moreintangible such as overall impressions of the company and services provided. Togather the customer feedback, a customer survey feedback form will be placed inthe vehicle at the conclusion of the service.


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Third-party Accounting Firm

Auto Knights, Inc. has invested a tremendous amount of time, resources andfinances for the initial start as well as the future lifespan of the company. Toprotect this investment, Auto Knights, Inc. will engage a third-party accountingfirm that is in good standing and is a member of the National Associated CertifiedPublic Accounting Firm organization. This accounting firm will be responsible forauditing the year-end financial statements. The financial reports literally illustratethe truth of the business and by continuously monitoring the companys IncomeStatement, Statement of Retained Earnings, Statement of Cash Flow andBalance Sheet, the owners of the company will be able to measure the successof the company on a yearly basis. Should the numbers prove not to be asprofitable as desired, a mandatory adjustment of strategies and tactics to realign

the company will occur in a timely fashion.

Third-party Marketing Consulting Firm

Auto Knights, Inc. will engage the services of Latimark to analyze the currentIntegrated Marketing Communications methodology to determine theeffectiveness in meeting the stated marketing objectives. The metrics that will bemeasured will include brand awareness/penetration, target market segmentshare and customer satisfaction and retention.

In the event that any of the feedback produced from the methods above indicates

that the company is not meeting the stated objectives, current procedures and/orpractices will be modified to align the company in such a way that the objectiveswill be met in the future.

Documents

Auto Knight