Transcript Dodge Neon Presented By: Doug Fala, Greg Hodge, Lisa Patterson, Jody Thyen,

Dodge Neon
Presented By:
Doug Fala, Greg Hodge,
Lisa Patterson, Jody Thyen,
& Anne Matthews
Strengths
• Low cost
• Great fuel mileage
• Safety
Weaknesses
• Poor performance ratings
• Low market share
•Ineffective advertising campaign
Major Competitors
• Honda Civic
• Ford Contour
• Toyota Corolla
• Saturn
Decision 1
Goals
• Raise market share from 8.4% to 10.0%.
• Increase contribution from $118M to $160M.
• Reduce fixed costs.
Results
• Raised market share from 8.4% to 9.7%.
• Increased contribution from $118M
to $137M.
• Lowered fixed cost by increasing
plant capacity.
Decision 1 cont’d...
Changes
• Introduced a special interest rate of 4.9%.
• Offered a $500 rebate & increased production on DX models.
• Offered dealer incentives.
• Increased production capacity from 69% to 98%.
• Increased advertising budget from 17.3M to 21M.
• Targeted ‘new families’ & ‘commuters.’
Decision 2
Goals
• Raise market share from 9.7% to 10.5%.
• Drive sales toward the DX model.
• Increase profit margins per unit.
• Increase sales in the Great Lakes & Pacific regions.
Results
• Market share dropped from 9.7% to 9.2%.
• Contribution from $137M to $90M.
• Profit margins increased by 20% on the
base model & 14% on the DX model.
• DX sales increased by 3% from
decision 1.
Decision 2 cont’d...
Changes
• Implemented a $130M vehicle upgrade.
• Increased dealer incentive goals.
• Increased production capacity from 98% to 116%.
• Changed advertising demographic target from ‘income’ to ‘age.’
• Changed advertising psychographic target from ‘economizers’
to ‘traditionals.’
Decision 3
Goals
• Increase market share from 9.2% to 11.5%.
• Increase our sales profit margin.
• Change our advertising strategy to better fit our
customers.
Results
• Raised market share from 9.2% to 11.7%.
• Increased contribution from $90M
to $210.5M.
• Profit margins on the base model
increased from 2,653 to 3,009 &
4,103 to 4,527 on the DX model.
Decision 3 cont’d...
Changes
• Introduced a special interest rate of 1.9%.
• Offered a $1000 rebate on the base model & $1500 rebate on
the DX model.
• Eliminated dealer incentives.
• Decreased production capacity from 116% to 98%.
• Increased the MSRP price of the vehicle by 3.5%.
• Adjusted our media allocation - less magazine ads
& more T.V. commercials.
Decision 4
Goals
• Maintain at least a 10% market share.
• Increase sales of the DX model.
• Maintain profit margins per unit.
• Maintain current fixed cost.
Results
• Market share dropped from 11.7% to 9.54%.
• Contribution dropped from $210.5M
to $130M.
• Profit margins remained at 3,009 on
the base models & 4,527 on the DX.
Decision 4 cont’d...
Changes
• Shifted production to produce more base models.
• Decreased our advertising budget from $21M to $17M.
• Shifted our media allocation to more newspaper ads & less T.V.
• Decided NOT to offer a new model because of our vehicle
upgrade that hit last quarter.
Decision 5
Goals
• Sell 60,000 units.
• Maintain a market share of 9.54%.
• Maintain profit margins per unit.
Results
• Raised market share from 9.54% to 9.78%.
• Increased contribution from $130M
to $137.4M.
• Profit margins remained constant at
3,009 (base) & 4,527 (DX).
• Sold 59,500 units.
Decision 5 cont’d...
Changes
• Increased our T.V. media allocation by 10% and decreased
our newspaper allocations by 10%.
Model Sales
Profit Margins
Neon Contribution by Model
5000
Per Unit
4000
3000
Base
2000
DX
1000
0
Y2Q2
Y2Q3
Y2Q4
Period
Y3Q1
Y3Q2
If we had it to do over...
• Should have offered an interest rate lower than 4.9%
in decision 1.
• Should have been more aggressive with special
interest rates & rebates in decision 2.
• Should have done a better job at targeting our
customers with our advertising tactics.