Conroy Acura’s case
Analysis

What are the strategies should Conroy implement to improve his company’s long run profitability? * Sherden- 20-80-30 rule : Top 20% of customer generate 80% value of profitability , we may lose half of them serving the 30% bottom.
Facts : * The major source of revenue for Conroy is the sales of MDX AND Tl , leading with the total gross life time profit of ($702,026 +$797,729 = $1499755) , which is more than all others even if we look at the sum profitability as well ($185,040 + $155,821 + $366,547 + $215,470 = $ 922878) * Margin in these two cars is high if we compare it with CSX , RSX , TSX * Volume of these cars is high in comparison to the premium RL . * Spending on these two cars , in order to increase our over all profitability is striking more * Spent on retention and aquisition of customer is equal in all segment cars .
On the basis of above facts, the following assumptions, stratergy and projections are formed
Assumptions:
* Since the number of cars sold in MDX and TL is more than the highly premium RL .we assume that if we increase our marketing effort on it there is a scope of increasing sales in it . * If we curtail our expense on the retention of CSX , RSX and TSX fron $ 10 to $ 5 that will not harm much the retention rate .As spending equally in all segments for the retention rate is not a good option * Also if we spend more on the acquisition of premium segment of cars , we will be able to attract more customers * Providing economy to the customer in lower segment cars,will be a form of retention strategy in itself. * Their will be increase in sales if we reduce our margins
Strategy : Segmented Marketing * Marketing spend : we are trying to focus more on the mid- premium segment for marketing spend * Providing economy :
In case of lower segment car, we are trying to provide economy to customer by decreasing margins . * Using economy factor in premium segment cars is not a good option , with marketing point of view because usually consumer buy a car in higher segments for various reasons like prestige , comfort etc .
Reduce the margins of CSX , RSX and TSX from 8% to 7.6 %
Reduce the retention spend on CSX , RSX and TSX from $ 10 to $5
Increase the aquisition spend on TL nad MDX from $ 241 to $ 290
The projected changes in sales and revenue are shown in the excel as per above changes

* Original Excel * Modified excel :

RESULTS