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Execuive
Summary;
a) General
evaluation for Online Selling Online car-buying services are among the hottest sites on the Internet, and as the model year winds down and dealers scramble to clear out leftover inventories, they're likely to heat up even more. When it comes to gathering information, the sites are undeniably a shopper's delight Although 40% of all new-car buyers report going to the Web as part of their shopping efforts, fewer than 3% actually buy on the Web. And for good reason: For now, at least, car-buying services promise more than they can deliver. You can't always get a quote from an online service, and when you do, it's often subject to change when you close the transaction on the dealer's turf There is an about 15 million new car and 45 million used car sold in the United Stated every year. (IPO, media 2001) Usually the process stars in a showroom. You walking, you kick the tires, you haggle with the salesman, but now a lot of that process is moving onto the Internet. Autobytel and Autoweb are among the most popular websites overall. Cars makers GM and Ford plus car dealers, also have a bit Internet presence. Edmuns.com is a good way to look up the Blue Book value of a car. Even Microsoft is in the act, with its CarPoint service, and CarsDirect has filed for an initial public offering. b) About The
CarsDirect CarsDirect
is a breakthrough Internet company that enables consumers to buy a vehicle
entirely over Internet. With CarsDirect, car shoppers can research, price,
design, order and take delivery of a new car or truck right from their own
company-selecting from among more than 2,500 makes and models produced by every
major manufacturer. Unlike referral services, which simply point people in the
direction of a dealer, CarsDirect customers complete transaction, online, with
full financing, insurance, warranty and documentation support. Based in Sherman
Oaks, California, CarsDirect inventors include Goldman Sachs, Foundation
Capital, Idealab Capital Partners, MSD Capital, and Primeria Ventures, among
others. One of Pioneer in direct online car buying, CarsDirect offers upfront pricing to customers, who can research, price, order, purchase, insure and finance a vehicle online via a Web site that offers product information for nearly every make, model and style of new automobile available in the United States today, as well as the ability to simultaneously compare the specifications of competitive, up-front, no haggle pricing on new vehicles. CarsDirect
is multi-brand online car buying service, providing new automobiles and related
products and services, such as loan and lease financing and in-demand
aftermarket products, including expended service agreements. CarsDirect, a
direct buying, is the first nationwide online service that puts consumers in
control of the total car buying experience, from research, pricing and
customization to real time financing and delivery. Current
Marketing Situation : Although CarsDirect sold its first car in December 1998, its official launch was in May 1999. By August 1999, total sales revenue had topped $100 million. The company projected total revenues would top $400 million in its first year. Although these numbers are impressive, especially for an Internet-based company, the average daily rate of 1.5 million represents only about 52 vehicles per day, given the average vehicle price of about $29,000. CarsDirect.com gets only about percent of this amount to cover its expenses and generate a profit. CarsDirect raised $30 million in its first two rounds of start-up funding and expects to raise another $150 million. A current study issued by Jupiter Media Metrix noted that online car sales would increase to 8 percent of new the car market (or $33 billion) in 2004, with one million cars sold online in 2003. Jupiter Media Metrix forecasts that Internet-generated new cars sales will skyrocket from nearly 13 percent of total new car sales in 2001 to 32% in 2006, or 5.7 million car sales worth $142 billion. In March 2001, CarsDirect.com reported a record 1,400,000 unique visitors to its website, nearly four times the 400,000 users per month visiting the site in early 2000. Supported by its premium national dealer network, CarsDirect.com concluded 2001 stronger and better positioned for the future than ever before. Other key milestones that contributed to the company's success include: The launch of a multi-phase
Automotive Research Center which helps customers make more informed buying
decisions through pricing and cost of ownership comparison tools, in-depth road
tests and reviews, and other up-to-the-minute consumer information.
Research-related page views have increased more than tenfold since the Center's
debut. Cooperative relationships with some of the
world's greatest automotive brands through innovative web site advertising
opportunities. CarsDirect.com helps many of the major automakers as well as
online automotive enterprises like GMBuyPower and Cars.com market their brands
to consumers who are serious about selecting their next new car—now.
Manufacturers like Saab are reporting significantly above average response to
their CarsDirect.com marketing initiatives, again proving that CarsDirect.com
shoppers are deep in the purchase funnel and ready to buy. A partnership with four clubs
within the nation's best known and most respected organization for automobile
owners—the American Automobile Association (AAA). More than 9 million AAA
members in New York, Northern California, Michigan and Washington State can now
choose to buy their new car through CarsDirect.com—a choice already enjoyed by
partner Amazon.com's 29 million customers and Autotrader.com's three million
monthly visitors. The expansion of consumer finance and lease options, a step that has significantly increased the speed and ease of online loan approvals for customers, as well as resulted in a new revenue stream for the company. During 2001, over $117 million in loans and leases were secured by CarsDirect.com new car buyers. The acquisition of competitor Greenlight.com, which increased the number of priority dealers in CarsDirect.com's network to 3,000 and made CarsDirect.com the exclusive preferred partner of Amazon.com. Want to buy a car? Many Web users will first try Autos.com, just to see if it works. So CarDirect.com bought that name last month. Autos.com now brings visitors to CarsDirect.( abcnews January 14 2001) CarsDirect.com and the principals and investors behind it are committed to extending its leadership in this emerging sector of the $360 billion automotive market. The company has received significant investments from: Amazon.com (Nasdaq:AMZN), Asbury Automotive; Clearstone Venture Partners; East Peak Partners, L.P.; E*O Investors, LLC; Foundation Capital; Goldman Sachs; Hambrecht & Quist; Hikari Tsushin; idealab!; Kleiner Perkins Caufield & Byers; Liberty Digital; Michael Dell's MSD Capital L.P.; Morgan Stanley Dean Witter & Co.; Oracle Corp.; TMCT Ventures; UnitedAuto Group, Inc. (NYSE: UAG), and Penske Automotive Group, Inc; and a fund advised by Soros Private Equity Partners LLC, an affiliate of Soros Fund Management LLC. Threats and Opportunity Analyses; Building on the success of the company’s direct online buying service, CarsDirect Connect has been designed for consumers who prefer face-to-face dealer interaction throughout the transaction process. After shoppers select their prefer dealer, they are presented with the name and contact information of their dealer representative. Customers are assured they have engaged the best dealers in their area, because every CarsDirect connect dealer is required to meet strict CarsDirect.com quality and performance standards, which are measured monthly though a comprehensive ”dealer scorecard.” CarsDirect connect is being rolled out to major metro markets across in the USA version of the service, designed specialty to meet Texas motor vehicles regulations, is also being offered in the state of Taxes. Reynolds and Reynolds will provide technology
integration, dealer training and operational support for the new collaborative
endeavor. According to Bob Brisco, CEO, CarsDirect.com: Carsdirect selected
Reynolds and Reynolds as its business partner because they have the industry
knowledge, sophisticated infrastructure and customer service mindset that
dealers and customers will appreciate,” "With 40 percent of all vehicle
volume in the U.S. already funneled through Reynolds and Reynolds systems, as
well as the company's history in successfully managing complex online
transactions, there was no better choice." This
new direct-to-dealer service gives CarsDirect.com's dealer partners a superior
opportunity to grow their businesses, with higher quality leads than they can
obtain elsewhere and unique advertising opportunities to reach consumers in
their area who are ready to buy. CarsDirect Connect will back each qualified
dealer lead with a customer profile that includes details like financing
preferences and trade-in information. CarsDirect.com
has already begun introducing CarsDirect Connect in more than ten major markets
and is receiving enthusiastic feedback from dealers and consumers alike.
Customers have lauded the pilot program as "hassle-free," described
dealers as "a pleasure to work with," and termed prices
"great." The
launch of CarsDirect Connect builds on our successful business model,"
Brisco added. "We continue to have strong traffic and sales increases and
serve over two million unique visitors each month. Our car buying website is
clearly the dominant, independent brand for buying cars online." The industry or value chain work: Autobytel.com
and Carsdirect.com launched businesses offering consumers the chance to
purchase cars online. They ignored the fact that franchised auto dealers in
certain U.S. states have a legally protected right to control car sales. Given
this competitive constraint, the online models could only work through
cooperation with dealers, thus undermining the economics of any new
"direct" players. It's critical to develop insights from the outside in, with an understanding of what customers want and are willing to pay for. It's equally essential to remain vigilant to marketplace and customer changes that could undermine the current business design Objective and Issues; CarsDirect.com
has tailored its Used Car channel to meet the needs of both ready-to-buy
consumers and shoppers who are still researching the best vehicle for their
needs. Visitors to CarsDirect.com can take advantage of valuable research tools
or proceed straight to the Used Car buying channel with its 400,000 vehicle
listings and expert dealer advice.
For used car shoppers who are still deciding what type of vehicle might
best match their budget, CarsDirect.com provides a speedy route to identifying
all the possible choices. For example, with one click of the mouse,
CarsDirect.com delivers a comprehensive report that includes the various
vehicle makes, models and model years that match a customer's price range For
shoppers researching a specific vehicle, CarsDirect.com offers immediate access
to a free, comprehensive pricing report. The report includes a range of current
market prices for the desired make and models for a more accurate view of
real-world market conditions. Building
on the success of CarsDirect.com's alliance with Bank One, the new service adds
additional premier lenders AmeriCredit, Chase Manhattan, Union Bank of
California and WFS Financial and features a breakthrough decision engine for
instant pre-approval and choice of multiple loan or lease offers. The
relationship Bank One has experienced with CarsDirect.com over the past year
has increased our education and understanding of how consumers use the Internet
to acquire and finance their automotive vehicles, This expansion of the
CarsDirect.com lending network is an exciting development because it rounds out
the CarsDirect.com offerings and builds on what Bank One and CarsDirect.com
have offered together. CarsDirect.com
has teamed up with Fair, IsaacÒ (NYSE: FIC), a global provider of customer
analytics and decision technology, to develop the decision technology platform
for the multi-lender system.
Based on Fair, Isaac's market leading LiquidCreditTM offering, the CarsDirect.com loan/lease
decision engine represents a genuine innovation in online auto financing
because of the level of technology integration between each lender and
CarsDirect.com. The LiquidCredit technology, which is powered by Fair, Isaac's
"gold standard" analytics and decision technology, will allow
CarsDirect.com to simplify and accelerate the loan or lease application and
evaluation process. After
selecting a vehicle, CarsDirect's customers fill out a simple, free online
credit application. Using the decision engine, CarsDirect.com then qualifies a
customer and determines matching financing programs within seconds. Once a
program is chosen, obtaining final approval can take as little as 45 seconds. CarsDirect`s commitment to provide
customers with the best selection of financing and leasing options online is
just the latest way that CarsDirect.com is evolving the car buying experience
into one that offers more options and services across the board, from a
multi-brand selection of cars to this new multi-lender consortium. Today's
Internet savvy consumer demands choice and great value and CarsDirect have
developed this system in response to that need. CarsDirect.com has also created a
comprehensive, automated multi-lender service that gives customers unparalleled
options to finance or lease vehicles online. The CarsDirect.com multi-lender
service is supported by leading financial institutions AmeriCredit, Bank One,
Chase Manhattan, and WFS Financial and features a breakthrough finance decision
engine for instant pre-approval from lenders and choice of multiple loan or
lease offers. Technology provider Path
Communications, Inc., has teamed up with CarsDirect.com, a leading direct
online automotive provider, to integrate a customized Computer Telephony
Integration (CTI) system into the CarsDirect.com site. The new CTI system from
Path will enhance CarsDirect.com's award-winning customer service by providing
intelligent routing of telephone calls, resulting in faster, more efficient
service and greater customer satisfaction. The CTI system is now in deployment
with more than 100 CarsDirect.com Customer Service Advisors. With the new CTI system, callers
to the CarsDirect.com customer service line can enter a unique customer number
previously assigned by CarsDirect.com. This number will allow the CTI system to
route the call to the Service Advisor who previously helped the caller, while
also loading the caller's service history directly to the Service Advisor's
computer screen. By immediately knowing the caller's previous interactions with
CarsDirect.com, the Service Advisor can personalize the transaction and provide
assistance in a timely manner. Questions and Answers;
There are mutual benefits between customer
and Carsdirect. CarsDirect helps the customers what they need or demand. Not
only does CarsDirect sell the car but also contribute customers to find
different opportunities to buy a car.(Financial helping, convenient services
etc..) The obvious B2C e-commerce model in the car industry, the online sale of vehicles directly from manufacturers to consumers, is ruled out by laws that prohibit such disinter mediated transactions. As a result, most B2C business models in car sales are currently in the area of (1) information services, (2) referral services, and (3) aggregate buying services. There are currently two types of buying services, those run by associations of dealers (such as greenlight.com) and those run my brokers that offer cars at prices that might require subsidies in case negotiations with manufacturers yield prices higher than the ones agreed upon with buyers (an example would be carsdirect.com). 2. Outline CarsDirect`s marketing strategy.
What problems do you see with its strategy? Outlines the broad marketing logic by which
the business unit hopes to achieve its marketing objectives and the specifics
of target, positioning and marketing expenditure levels. It outlines specific
strategies for each marketing mix element and explains how each responds to the
threats, opportunities and critical issues spelled out earlier in the
plan. Although a car is a product that does not seem to lend itself to online purchasing because of the "tire-kicking"-expectation (similar to the "touch&feel"-expectation in textiles and apparel), data reveals that a majority of Internet users have used the web in conjunction with purchasing a car. In 1998, $18 billion in car sales involved the Internet and a 1999 survey revealed that almost a third of US car dealers use the web for commercial purposes. The key to understanding these figures in spite of the product characteristics is that there are many car-related services that can easily be provided through the Internet, such as model information, price comparisons, trouble shooting, service scheduling or online "town hall meetings." Third parties who commonly offer services far superior in quality than those offered by the actual manufacturers provide many of these services. The purpose of Prof. Zettelmeyer’s presentation was to outline the impact e-commerce has had in the area of car sales, to outline legal obstacles to particular models of e-commerce in car sales and to present his research design for an upcoming study of car pricing as affected by Internet referral sites. Consumers referred by referral sites pay on average lower prices than ordinary consumers. Why? Zettelmeyer offered three competing hypotheses ·
Price discrimination – the Internet allows dealers to price discriminately as dealers
know that web-referred customers are likely to be the most price sensitive.
Hence, dealers tailor offers accordingly. ·
Competition – dealers compete with one another for affiliation with referral
sites due to the commonly exclusive relationships between dealers and referral
sites and offer low prices to retain the business of referred customers. · Superior information – since price margins depend on information asymmetries between dealer and consumer and the Internet is thought to dramatically increase consumers’ access to information, the Internet strengthens consumers vis-à-vis dealers in price negotiations. In sum, the Internet and e-commerce have impacted the area of car sales significantly despite the "tire-kicking"-expectation. Legal obstacles currently prevent direct sales and disinter mediation. Consequently, new business models stressing information services and new intermediation have emerged. Referral sites in particular promise to be a valuable case to study the specific mechanisms through which e-commerce is thought to change the terms of competition. 3.What marketing recommendations would you
make to CarsDirect? Specially, how can CarsDirect get more people to visit its
site and purchase cars using its service? Marketing strategy is the marketing logic whereby the company hopes
to achieve its marketing objectives. Strategic planning involves developing a
strategy for long-run survival and growth CarsDirect
should join the multi-brand online service and form an alliance to provide more
search engines users with online new or used car buying services. I think
CarsDirect.com should prepare questionnaire its homepage. At the end of ever
year, With regards to questionnaire’s evaluations, it is suppose to give a gift
(Car, travel) to winner. I do strongly support that CarsDirect.com ought to
create online cars rally on its server for teenage generation. April 16, 2002, AltaVista Company, a global
provider of search services and software, and CarsDirect.com, the multi-brand
online car buying service, have formed an alliance to provide AltaVista.com
users with a premiere online new and used car buying service. CarsDirect.com
has been named AltaVista's best-of-breed partner to exclusively power the
automotive module in the highly trafficked ‘Web Resources' section on the AltaVista.com
home page. 4. What advantages or disadvantages will
CarsDirect and its competitors face in foreign markets? It
is not easy to develop in the area of international market in different parts
of in the world. First of all, many countries in Asia or Africa do not have
enough technological infrastructure for Internet. Especially Bureaucratic
factors in a foreign country affect its credible situation and a trustworthy
position on the eyes of people live that CarsDirect and competitors can not show
selling performance enough. Monopoly Internet car companies can prepare
propaganda against CarsDirect and advantages. On the other hand, Business
sometimes has taken risk to gain much profit. Many
companies have adapted their Web sites to provide country-specific content and
services to their best potential international markets, often in the local
language. For example, in attempt to increase brand awareness in individual
European markets, Reebok has launched a multilingual European Website –available
in English, French, Italian, Spanish, Greek, and Turkish. For most part,
marketers have zeroed in on the countries or regions with the largest potential
online populations. Europe and Japan are prime targets. The
reality of the global Internet market depends on each country’s economic,
technical, cultural, political, and regional dynamics. In
addition, the global marketer may run up against governmental cultural
restrictions. France, for instance, has laws against providing encrypted
content In Germany; a vendor can’t accept payment via credit card until two
weeks after an order has been sent. 5. What ethical issues does CarsDirect face?
How should it deal with those issues? Companies
have responded social responsibility with actions ranging form supporting
worthwhile causes to writing social responsibility into the underlying mission
statements. Today, acts of good corporate citizenship abound. For example,
American Express’s Charge Against Hunger program-thorough which the company
donates 3 cents from every transaction made during the tradition holiday
season-has raised more than $20 million for hunger relief in the USA. CarsDirect
must have security systems to protect its customer against SPAM ( spammimg refers to the bulk distributions of
unsolicited, and often unwanted, email messages.) Email carries no postage
cost; this form of direct marketing has grown rapidly in the past few years.
Used properly, online direct marketing can inform consumers of products or
updates of interest to them. When abused, spammimg becomes at best an annoyance
to Internet users and at worst patently offensive-for example, adult sites that
spam to underage users. CarsDirect wants to build customer relationship and
positive brand equity will only add customer to e-mail lists with their prior
consent. Consumers thus opt- in rather than having to opt-out of the list. References
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| Wriiten by Fevzi Eryaman 2002 |
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