Penzoil Quaker State

Key Issues, Competition and Target Market

There are a number of important issues involved within the motor oil market. One of major concern to PQS is the overly apathetic and ignorant mindset of the average consumer regarding frequency of changing motor oil. This is largely due to consumer perceptions of product innovations and technological auto advances. Furthermore, there is little-to-no brand loyalty in both the consumer and installer segments. The lack of coordination and general unwillingness of installers to "get on board" with participation in PQS's programs is a further problem. In addition, industry growth is levelling off and has been in decline since 1999. Finally, there is a high degree of consumer loyalty to new car dealerships for LOF service.

PQS operates within a highly competitive and saturated market. It has four main competitors, each with individual strengths and strategies. Competition varies from brands that focus on achieving success through strong marketing campaigns and aggressive advertising, like Castrol and Canadian Tire's Motomaster, to brands that neglect advertising and focus on supplying oil to numerous automobile manufacturers, such as Petro Canada and Imperial Oil.

PQS's target market includes both end-users and installers. The company targets end users engaging in Do-It-Yourself oil changes, as well as recipients of Do-It-For-Me oil changes. It is crucial for PQS brands to be the choice of installers because they often carry only a single brand of oil in bulk, which they use unless otherwise requested. In terms of consumer behaviour, consumers lack loyalty and are generally disinterested in and uneducated about the LOF purchase process. Furthermore, many consumers perceive the need to use new car retailers for their oil service due to the misconceptions that other choices will void their warranties.

Analysis of Marketing Communication Options

Given PQS's position within the market and the competitive nature of the industry, "staying the course" is an unattractive option as it would lead to being deserted by QMS, and hence the loss of both the roadside assistance and warranty programs. Case exhibits 5 and 7 illustrate that although there is growth in program participation, the increase is occurring at a decreasing rate, which further negates this option.

Although discontinuing the aforementioned programs would free up $180, 000 to be used in other realms, such a liquidation is unlikely to accomplish their promotional goals. The brand may be seriously damaged, resulting in reduced brand equity by means of a reduced level of brand differentiation and perceived value. Additionally, consumers who have benefited from these programs may feel betrayed by PQS and thus take their motor oil business elsewhere. Since PQS's major promotional goals focus on customer relationship management, discontinuing its only activities that attempt to achieve this would be counterintuitive.

Simply improving the programs also threatens PQS's success. Without the full commitment of the sales force to push the programs, the activities would surely continue to under-perform. Furthermore, paying the sales force a monetary incentive for their attention to the programs could prove to be costly to PQS. At $0.05 per roadside card and $0.10 per engine warranty registered in addition to the QMS fees, this ongoing cost incurred could total $390, 615 versus the one time cost of $100, 000 required to develop the One-to-One program.

Considering that the programs were proven to be very effective at driving the desired consumer behaviours when utilized, the more efficient and universally applicable One-to-One program is the best option. One-to-One reminds consumers of their LOF needs and leads them to seek PQS products in order to secure their roadside assistance and engine warranties. The program therefore accomplishes PQS's promotional goals.

Marketing Communications Plan Recommendation

The One-to-One promotional program works with PQS's existing core brand values of dependability, endurance, superior performance, and protection. For the effective implementation of PQS's One-to-One program, focus will be put on the values of dependability and protection. This enables PQS to connect with customers in a differentiating manner, as opposed to focusing on product quality and performance, things that have not seemed to resonate with the typical consumer. This will further create perception of PQS as a brand that cares about its customers long after the LOF service.

In order to best communicate the program's intent, PQS will use a combination of rational,