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CHARLIE'S CUSTOM CUTS

Carlos Pereira Quijano MGMT 4141V International Marketing Walden University Professor Eileen Wibbeke Novemeber 2009

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TITLE INTRODUCTION MARKET ANALYSIS 4 CONSUMER BUYING PATTERNS 5 PORTERS FIVE FORCES MODEL COMPETITIVE SWOT ANALYSIS REFERENCES

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Charlie's Custom Cuts

Introduction
Charlie's Custom Cuts will be the prominent car repair and auto shop for luxury vehicles in Cancun, Mxico. It will be owned by Carlos Pereira Jr a young entrepreneur recently graduated from Walden Universitys School of Business who has worked in the family car repair business for over 10 years. Having owned a car repair shop in Cancun for over 30 years, the Pereira family is well known and respected in the neighborhood. The differentiator for Charlie's Custom Cuts will be Carlos and the Pereira name. It is believed that people will come to the shop not only to have their cars repaired, customized, cleaned and detailed, but also as a social outing to meet up with and chat with Carlos and all the other customers who share a passion for luxury vehicles. Additionally, the garage will provide excellent service, efficiently and expertly repairing, customizing and cleaning customer's cars so that they will be repetitive users of the services we offer. The auto repair shop will be based in Cancun, Mexico. This area has a number of benefits in terms of the market that it will provide for the business. Over 40% of households in the immediate neighborhood earn over $70,000 dollars annually and own sports cars and other luxury vehicles.

Charlie's Custom Cuts will have 25% market share of the luxury auto repair business in the Cancun Center neighborhood by the end of year three, and it aims to convert a larger percentage of people away from agency car services, which treat vehicles like just another vehicle. Charlie's Custom Cuts treats each car in a unique delicate and customized way, always keeping in mind that each vehicle represents a lifetime dream for each owner.

Charlie's Custom Cuts is entering their first year of operation. Carlos believes that a comprehensive marketing strategy will be key to the success of the business. Charlie's Custom Cuts offers premium auto repair, customization (painting and detailing) and washing services provided by a well-known local family and a team of auto care and mechanics experts. The basic market need is a premium and luxury car repair and customization service that is way more detailed and experienced and fitted to each individual customer need, always maintaining world-class quality standards.

Market Analysis
Charlie's Custom Cuts possess good information about the market and knows a great deal about the target customers. This information will be leveraged to better understand who is served, their specific needs, and how the staff at Charlie's Custom Cuts can better communicate with them. The car services and repair business has been around for a long time and has proved to be a strong and well-developed industry. There is lots of competition out there, mainly because the most of them still offer the same range of products and services in a very similar way. This is how the idea of creating Charlie's Custom Cuts was first thought of. We focused on the need to provide a higher standard in car repair services and change the way people relate to their cars, all while focusing primarily on customer satisfaction. Our specialty is to serve high-end vehicles and luxury cars no matter what brand or model. Our expertise allows it. Our target markets are businesses and Individuals owning sports, luxury and high-end vehicles in Cancun and the citys surroundings. Geographic The immediate geographic target is the city of Cancun, Mexico. A 25-mile radius is in need of the services, however, 70% of the business will be from a seven-mile radius. The total targeted population is just over 50,000, which represent the high-income population of the city of a total of 526,701, known to own l luxury and high-end cars. Demographic

5 Male to Female Ratio : 70%: 30%. The reason for this difference in the male to female ratio is generally explained by the fact that men typically care more about their cars besides the fact that they usually have greater income than women. Also, men are more likely to spend money on their cars with accessories and customizing services and are more likely to buy a sports or luxury car as a reward for some accomplishment as a treat for themselves. Women tend to view cars more like an object of utility. Using this line of reasoning, women are more likely to go to low-end and basic car repair services firms, as they are less concerned about preserving their vehicle and are more concerned about budget.

Market Needs Charlie's Custom Cuts will provide the market with a premium, luxury, sports and high-end car repair and customization services for the Cancun community. We seek to fulfill the following benefits that are i important to the customers:

Exemplary customer service: The target customers have money and are used to having excellent customer service. They will not regularly attend Charlie's Custom Cuts unless they receive e excellent service. World-Class Top Quality Services: The target market value a higher q quality repair and finish jobs for their high-end cars. Convenience: The hours of operation as well as the time needed to provide the service must be convenient and fast respectively, to g gain and maintain market share.

Consumer Buying Patterns

The garage repair business as a whole is fragmented. There are a few major dealerships in each area, with a larger number of small garage repair shops, like Charlie's Custom Cuts. Dealers target customers who buy new and used cars from them. Small garages rely on word of mouth

6 and get most new customers because of emergency car care needs. Word of mouth is important in the car repair business, since people are very wary of garages, due to their lack of knowledge of cars and engines. Charlie's Custom Cuts leads the local competition in regards to word of mouth, having been in business for over three decades under the same ownership. Competition from dealerships is becoming stiffer. Car design is becoming more and more specialized, as car manufacturers aim to encourage owners of their vehicles to have services carried out at their franchised dealerships. However, small garages like Charlie's Custom Cuts have a price advantage over dealership, usually charging 50-70% less per hour for repair work. We face around 100 auto repair and auto parts competitors in the local area. Only a quarter of these competitors offer both auto repair services and auto parts inventories. Among these, only a few are major national chains. The remainders are small privately owned establishments. Charlie's Custom Cuts will compete well by focusing on convenience and offering a high level of customer service. Additionally, its honest reputation will be a major factor in repeat business and building a large base of regular, loyal customers. Primary competitors are engaged principally in the retail sale of automotive parts, tires and accessories, automotive maintenance and service and the installation of parts. Larger competitors have adopted the "supercenter" store model, a freestanding, "one-stop" shopping automotive warehouse that features state-of-the-art service bays. These "supercenters" carry thousands of stock-keeping units and serve the automotive aftermarket needs of the "do-it-yourself," the "do-it-for-me" or automotive service, tire and "buy-for-resale" customer sectors. Large competitors' stores typically carry the same basic product line, with variations based on the number and type of cars registered in the different markets. A full complement of inventory at a typical supercenter includes an average of approximately 25,000 items. Automotive product lines usually include: Tires. Batteries. New and remanufactured parts for domestic and imported cars, including: Suspension parts. Ignition parts.

7 Exhaust systems. Engines and engine parts. Oil and air filters, belts, hoses, and air conditioning parts. Lighting. Wiper blades. brake parts. Chemicals, including oil, antifreeze, polishes, additives, cleansers and paints. Mobile electronics, including sound systems, alarms, and remote vehicle starters. Car accessories, including seat covers, floor mats, and exterior accessories. Hand tools, including sockets, wrenches, ratchets, paint and body tools, jacks and lift equipment, automotive specialty tools and test gauges. A selection of truck, van, and sport utility vehicle accessories.

Many competitors have adopted point-of-sale systems in their stores, which gathers sales and gross profit data by a stock-keeping unit from each store on a daily basis. This information is then used to help formulate pricing, marketing and merchandising strategies. Electronic parts catalogs are available in many competitor stores along electronic commercial invoicing systems that offer commercial parts delivery. Additionally, a number of competitors have electronic work order systems available amongst their various service centers. This type of system creates a service history for each vehicle, provides customers with a comprehensive sales document, and enables the service center to maintain a service customer database. Charlie's Custom Cuts will have all these qualities and still remain an independent privately owned garage. Customers will still prefer our services because of quality and cost advantages known since the opening of the first garage.

Porters Five Forces Model

Our company is not an isolated unit in the world and performs within a market full of other competitors. To be able to evaluate our position on market and to act accordingly we use the Porter's Five Forces Model. This model helps us define and realize our business and its surroundings and identify threats and opportunities to focus on. We review this model

8 periodically to obtain up-to-date data in this global and turbulent environment. The Porter Model consists of 5 elements, which together comprises the environment our business operate in. These elements are: suppliers, customers, new entrants, existing competition and the product itself. By assessing every one of these elements we get the whole picture of our company within the market and the rating helps us target the key areas. We use the scale of 0-5 to evaluate the power of each element where 0 means no power and 5 very high power. The analysis of the Five Forces clearly implies that existing competition and new possible entrants represent the main threats to Charlies Custom Cuts. We should therefore focus on those areas to prevent losing our market share and customers while maintaining delivery of high-quality services. We should try to diversify our services and differentiate the product to bring additional value to customers; we should discover new trends in the business to attract new clients; we should work on relationship with our customers and try to build a loyalty toward our company. We also should not forget about the other areas as the differences are not so large and their omitting could result in increased power and new threat. That is also the reason for repetitive evaluation and careful observation of the market to be able to react to changes in time.

Competitive SWOT Analysis

Auto mechanics generally repair and maintain automotive vehicles such as passenger cars, trucks, vans and trailers. Repairs are usually of a mechanical nature and more recently, electrical repairs have become standard due to the widespread use of electronic technology in automobiles. Auto mechanics often work on their own account or for small companies, generally known as automotive repair shops, garages and car care centers. The primary activities of companies in this industry are:

9 Automotive engine repair and replacement shops General automotive repair shops Truck repair shops Automotive exhaust system repair and replacement shops Muffler repair and replacement shops Automotive transmission repair shops Automotive brake repair shops Automotive electric repair shops Automotive wheel alignment shops Automotive radiator repair shops

Strengths Good relationships with many perspective customers in the target market. Strong family name recognition in the community. Well-trained and experienced employees. Weaknesses The need for outside investors or credit from a bank. The learning curve associated with entering a virgin market. The need to have a fairly constant volume of business to support the necessary service staff. Threats Future/ potential competition from a franchised firm. A slump in the economy, reducing discretionary spending. The perception that there is not a difference in quality between Charlie's Custom Cuts and car agency services. Charlie's Custom Cuts will succeed by offering its customers high quality, rapid, and convenient auto repair service. Additionally, we will succeed by ensuring a full range of auto parts inventory and rapid shipping capability of major auto parts.

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References
Mullins, J.W,. Walker, Jr., O.C. & Boyd, Jr., H. W. (2008). Marketing Management: a strategic decision-making approach. New York: McGraw-Hill/Irwin. (6th ed). http://www.apple.com/ http://www.bitpipe.com http://www.cisco.com/ http://www.opportunitywales.co.uk http://www.wikipedia.org/ http://www.cipd.co.uk/NR/rdonlyres/493588D2-1BB3-43A8-9D343916C5FC868C/0/mandivers0305.pdf http://hrweb.berkeley.edu/guide/diversity.htm http://www.npd-solutions.com/orgstructure.html http://www.entrepreneur.com/businessideas/984.html