https://youtu.be/xRrunX5u-gk

MGSM820 MARKETING MANAGEMENT (CBD TUESDAY CLASS) TEAM MARKETING PLAN

GROUP 7 DANIEL FARLEY 41673360

STEWART FLECKNOE-BROWN 30385385 GLYN CRYER 44812396

CAMILO MOLINA 44037600

Canstar Blue published its auto-servicing ratings for 2015, it commented on what many Australians suspect about car servicing – more than 80 per cent of those polled were wary of being ripped off when getting their car serviced.

There is no sign that mechanic rip-offs are diminishing. The NSW Department of Fair Trading has recorded 2,240 complaints about automotive services from January 2015 to date.

Have you ever gone to an auto repair shop for an oil change, only to have the mechanic say your car needs a new transmission? - Seasoned auto mechanics are warning consumers to be well-versed in how a car works to avoid being ripped off at the auto repair shop.

When Fairfax asked a number of industry stakeholders about the issues with auto servicing and mechanics, the list of potential rip-offs was lengthy and wide-ranging.

CREATING THE GARAGE OF THE FUTURE

https://youtu.be/xRrunX5u-gk

WHAT’S THE PROBLEM - CONSUMER FRUSTRATION

MARKET SUMMARY - WHAT’S THE OPPORTUNITY

3 1 ABS 2 IbisWorld 3ABS & Company data

Australia has one of the

highest per capita rates of car ownership in the world

18m+ registered vehicles on Australian Roads (growing at 2.4% pa1)

$20b + combined revenue2 Automotive parts & servicing is one of the most significant industries in the country

>80% of vehicles are outside of warranty3

New car sales represent

less than 6.5% of vehicles on the road & this measure is dropping1

Average vehicle age in Australia is

10.1 years & is increasing1

Retail ! 50% of Australians shop online

making up roughly 6.5% of retail spend

! 16 out of the 20 largest online retailers in Australia are pure play online retailers (SmartCompany Top 20 in 2015)

Automotive ! Vehicle ownership is growing

(over 1.2m vehicles sold per annum)

! 4x4, SUV, & Pick-up vehicle markets are experiencing significant growth (16% growth in SUV sales to 35% of the market in 2015)2

AGENDA

OVERVIEW Daniel Farley

Spares Box Offering

Daniel Farley

Situation Analysis

Stewart F-Brown

Strategy & Tactics

Camilo Molina

Market Segments Glyn Cryer

Success Metrics

Glyn Cryer

Financials Daniel Farley

THE SPARES BOX OFFERING

Amazing experience

Complete transparency

High trust

Full accountability

! World class online retail user friendly platform ! Largest Auto parts store in the country ! Multi- faceted tech capability (Tablet / smartphone / PC compatible) ! Delivers a complete end to end experience

! Spares Box Fitment Intelligence “which part fits & at what cost"

! Service Offering - enable real-time reporting of job repair status (Service vans trialling)

! All part / service pricing is published online ! Integration with part fitment and delivery to

home / mechanic

! Technology enables the benchmarking of price for labour and parts

! “Price my Quote” service

WH

ERE

IS S

PAR

ES B

OX

NO

W?

Phase 1 is fundamental to the wider disruption strategy; ! Supply chain in place to build structural pricing competitive advantage ! Software & technology stack to deliver solutions to customers ! Digital & traditional marketing channels established ! Systems established & kaizen improvement processes in place ! Enterprise ERP system in place & operational

SPARES BOX HAS SHOWN INITIAL SUCCESS

! 100,000 parts sold ! 12,000 vehicle models covered ! 3,500,000 web views ! Spares Box is the only local

business to solve “what part fits my car”

1 Do it YOURSELF 2 Do it FOR ME

1 On Board Diagnostics (OBD)

1. PARTS SUPPLY • Sophisticated and efficient supply

chain with structural cost advantage

• JIT parts delivery • Access to 500,000 parts • In-house expertise

EVO

LUTI

ON

RO

AD

MA

PPhase 2 of the industry disruption is to bring service to the parts solution and disrupt the service & repair industry

2. TECHNOLOGY SOLUTION • Complex software & technology

stack to deliver solutions to customers

• In-house expertise

3. MARKETING • Digital & traditional marketing

channels established • In-house expertise

4. LOGISTICS • Sydney logistics hub operational • Systems established & kaizen

improvement processes in place • Enterprise ERP system in place &

operational • In-house expertise

5. SERVICE VANS • Service solution planned • Service concept trialled & tested with

fixed location service centres • In-house mechanic developed

processes and systems

6. OBD TECHNOLOGY1

• OBD Platform partner in place • Ongoing strategy development in

place • Well placed for first mover roll out of

OBD technology • In-house expertise

CHANNEL LENGTHCustomers

Spares Box.com.au eBay

Integrated Enterprise Resource Planning (ERP) & freight systems

Wholesale Distribution

Manufacturer

Customer Channels ! Expanding international customer

base. Current markets serviced Australian & New Zealand

! Able to adjust channel length on a per order basis

Infrastructure Channels ! Highly scalable system linked to

global parts catalogues ! Multi carrier solution to ship

domestic + international ! Supply chain in place ! Trade data can be accessed

from macro to individual transactions

Fitment Intelligence

Consolidation hub

CO

MPE

TITO

R A

NA

LYSI

S

Valu

e C

hain

Parts Manufacturer

Parts Wholesaler

Parts and Components

Distributor

“Trade” Parts Installer

End Vehicle Owner

Vehicle Manufacturer

(Passenger and Light Commercial)

Parts Manufacturer (Branded, Genuine,

Private Label) Wholesaler and Distributor

Trade Distributors

Retail Distributors

OEM Dealer Workshops

Chain Workshops

10,000 Independent Workshops

Do-it-for-me (DIFM)

Do-it-yourself (DIY)

Obs

erva

tions

! No player has a sophisticated web presence

! No vertically integrated players

! Fragmented industry, large players circa 5% market share

! Spares Box business model would benefit from expansion

PHASE 1: eCommerce Business PHASE 2: Van Servicing

Traditional Workshop

Customer (TWC)

! Only SuperCheap Auto have a transactional online presence

! Estimated annual parts industry revenue ~$13b: trade $6 billion, retail $5b

! Trade and retail distributors have channel conflict

! Spares Box simpler chain facilitates trust

• 1st mover advantage with unique customer experience • Strong supplier chain logistics and established relationships • User friendly website and content • Transparency for customer - Comparison functionality and

real testimonials • Dynamic pricing and delivery service • Breadth of inventory and selection • Complimentary product and service suggestions for up-sell

and cross sell • Lower operational costs than traditional bricks & mortar • Customer accessibility - technology mobile, tablet and PC • Global shipping and logistics partners • Australian owned and operated - GST + trust

• Low brand awareness • Lack of marketing and supplier pull • Distribution channels - delivery optionality constraints / price • Specialised product and size constraints • Costs of logistics and third party management • Online security and data control - Paypal / Afterpay • Power of suppliers • No entrenched relationship with existing authoritative

market movers

• Develop in car technology to capture diagnostics and data

• Target new market segments in servicing and part implementation

• Product and service bundling • Global market footprint opportunities • Responsive site across all technological devices -

customised customer / directed marketing • Cross selling and up-selling across products and service • Brand acknowledgement as best in industry for

transparency and user experience • Logistics channel control from wholesalers to retail • Partnerships for distribution and marketing

• Sophisticated online investment / presence by traditional bricks & mortar

• Supplier shutting down channels from traditional industry player pressure (buying power)

• Longer servicing and warranty periods for new cars • Low barriers to entry for competitors - ebay shops / gumtree

(product dumping) • Wholesalers going direct to retail for specific product • B2B channels limit retail product accessibility • Regulation change around 2nd hand / not new car servicing

and registration requirements • Unsophisticated resellers online

SWO

T A

NA

LYSI

S

• Suppliers • Channel / delivery

partners • Mechanics

(tentatively)

KEY PARTNERS KEY ACTIVITIES VALUE PROPOSITION

CUSTOMER RELATIONSHIPS

CUSTOMER SEGMENTS

KEY RESOURCES CHANNELS

COST STRUCTURE REVENUE STREAMS

• Receive, process and deliver orders

• Grow and mine customer insights

• Provide installation/advice

• Beat retail prices • Trusted maintenance

partner • Cool product • Time efficient

ordering / delivery • Administrative ease

and access to margin (mechanics)

• Establish accounts • Maintain with web

promotion • Car records service • Create confidence

• Motoring enthusiasts • Savvy online shoppers • Distrustful, wary

buyers • Mechanics

• Technology platforms – eBay store, Magento, proprietary website

• Customer data • Staff expertise

• Website • eBay • Mechanics • Call Centre • Delivery vans

• Bulk wholesale buying • Technology platform • Pick and pack inventory management

• Product sales • Mechanic referrals

BUSINESS MODEL CANVAS

Emerging trends in the surrounding market

• Creating new consumer habits • Expectations are shifting • Entirely new potential customer

profiles result

MARKET CONSIDERATIONS

1. Mavenism

• Purchaser savvy through widely-available comparison info, evident in Ebay stores; sensitivity to retail mark-ups is an opening for an online player

2. Car share

• Significant B2B opportunity with price-sensitive car share operators

4. Active leisure

• Car as tool for adventure, sports, road trips – emphasise safety, comfort, accessories

5. Medium-density housing

• Not everyone who wants to and knows how to do things to their car has a place to do it – big role for Spares Box fitment solutions, and B2B sales to mechanics

6. Meet-ups

• Hobby enthusiasm has always been a part of car life – Spares Box needs to compete with and replicate the in-person retail experience – delivery to a defined place – the Spares Box Meetup

3. Repair-not-replace / artisanal / maker culture

• Possible open position for Spares Box; anti-obsolescence, wary of consumer overkill, love of quality – cars have never been No.1 cool for these guys…

7. Long-tail

• Customised and unique solutions – emphasises Spares Box’s data-driven serving and personalisation mechanisms, including timed follow-up

SEGMENT PROFILES

LUMBERSEXUAL

! Repairers, celebrate quality and ingenuity ! Not necessarily price driven, cars are not

their coolest thing ! A Metro-sexual who has the need to hold

on to some outdoor based rugged-ness & claim on handyman knowledge

! Knows more about craft beer than engine oil

”Oh yeah, cars… do you like my beard?”

AVERAGE JOE

! Women and men with little knowledge of or interest in cars,

! Need transport for functionality to work / family commitments

! Reasonable price and with trustworthy service

”Which side is my fuel cap on?’

TOKYO DRIFTER

! Hard core enthusiasts with a high level of specialist knowledge

! Enjoy spending money on cars for image and hobbies

! Time is no constraint ! Car club members ! Current Spares Box (and other) Ebay store

customers

“My GTR is my life”

MONDEO MAN

! Some knowledge, can and will do own basic repairs & maintenance

! Price-savvy, ! Can hold their own with the mechanic

and online purchasing

"I could change the oil, but the footy’s on”

‘MAKE MY CAR DOPE'

DESIRE

‘MAKE MY CAR WORK'

PRODUCT APPETITE

NECESSITY

FELT NEEDS

MARKET SEGMENTS

HIGH

LOW

SAVVY

MECHANIC RELIANCE

HOPEFUL

PRICE KNOWLEDGE

Average Joe

Lumbersexual

Mondeo Man

Tokyo Drifter

Tokyo Drifter

Mondeo Man

Lumbersexual

Average Joe

‘Get it at Spares Box'

SEEN IT IN STORE?

NEED SOMETHING SPECIAL?

WHAT ABOUT MY MECHANIC?

1 2

• COMPETITIVE PRICE • USER-FRIENDLY

TECHNOLOGY • ONGOING TRUST

RELATIONSHIP

STRATEGY• JOIN CONSIDERATION SET • BUILD TRUST • CUSTOMISE OFFER • DRIVE REPEAT BUSINESS

3 TACTICS• PERSONALISED BRAND ICON • BUILD AWARENESS WITH

BRANDED PRODUCT • CUSTOMISED ONLINE OFFER AND

ONGOING FOLLOW UP • ESTABLISH CAR-SAVVY

POSITIONING – SPONSORSHIP

4

POSITION MEETING CUSTOMER NEEDS

TACTIC: PERSONALISE THE BRAND WITH AN ORIGINAL MASCOT➢ Building trust and a promise of human / customer service to

the average Joe. Visually emphasizing; ✓ Service

✓ Reliability

✓ Integrity

✓ Authority

✓ Other desired traits according to market research ➢ Market Positioning

✓ Located on web sites, TV advertising and all company vehicles;

✓ Targeting and communicating to new customers found via web,

TV and real world advertising;

✓ Uniform for installation and delivery drivers;

✓ Smart phone connectivity to service provider for arrival time,

progressive service updates and picture catalogue of service and

parts installed / replaced.

AVERAGE JOE LUMBERSEXUAL TOKYO DRIFTER MONDEO MAN

Examples by other companies:

➢‘Smart’, useful items that will be kept by car owners in cars

➢Bearing the name, logo and re-ordering details (web and phone)

➢Items that will last at least one service period

➢Priced so they can be sold or given away at the discretion of the marketing department

➢Chamois, Air freshener, Car cleaning tools, Phone chargers, Key rings, Tyre covers etc

➢Getting the brand out into the physical world

TACTIC: BRANDED ACCESSORIES TO BUILD AWARENESS

AVERAGE JOE LUMBERSEXUAL TOKYO DRIFTER MONDEO MAN

TACTIC: MOTORSPORTS SPONSORSHIP TO EVOKE CONNECTION

➢We have offered a sticker on Australia’s fastest drag car, driven by Jon Sting which is in negotiation currently

➢This would be seen on Fox Sports broadcast of the Winter Nationals drag racing in Brisbane, June 2016

➢Motorsports generates strong loyalty and a perception of expertise to the motoring enthusiasts segment

➢Race feature article to be placed extra web site tab and coordinate with specials and social media

AVERAGE JOE LUMBERSEXUAL TOKYO DRIFTER MONDEO MAN

➢Establish a tiered-status partner program for mechanics

➢Gives mechanics online ordering, simplified invoicing and wholsesale-plus pricing

➢Set referral fees / margin-sharing to incentivise take-up among mechanics

➢Consider a Dutch auction among mechanics to price referral fees

➢Establish volume discounts for mechanics’ business

➢Make Spares Box the go-to wholesale supplier for everything except dealer service

TACTIC: CO-OPT MECHANICS AS SALES AGENTS

AVERAGE JOE LUMBERSEXUAL TOKYO DRIFTER MONDEO MAN

SUCCESS METRICS

Forecast Marketing ExpensesChannel 2H 2016 (A$'000) 1H 2017 (A$'000) Inc. (A$'000) OFFLINE (TV, Branded Accessories etc) 275 475 200

DIGITAL (FACEBOOK, etc) 50 150 100

SEM (ADWORDS) 180 180 0

VANS / MOTOR RACING 250 550 300

Total 755 1355 600

A$

Average Spend Per Customer - Channel EffectChannel 2H 2016 (A$) 1H 2017 (A$) Increase OFFLINE (TV, Branded Accessories etc) 26 35 9

DIGITAL (FACEBOOK, etc) 18 21 3

SEM (ADWORDS) 41 48 7

VANS / MOTOR RACING 10 85 75

Total 95 189 94

A$

Rationale for marketing spend

• Drive traffic to site • Cultivate community of trust • Meet retail competition head-to-

head

Target scenario

• Average customer spend grows from current $95 to $189

• Top-of-mind alternative to retail offering

THE FUTURE

✓ Increase per-customer spend

✓ Increase brand awareness✓ Increase market share✓ Acquire repeat customers✓ Scale the business to

fortify the model✓ Become market standard

for auto parts and servicing

✓ Prepare to disrupt further with on-board diagnostics

DISRUPT – PHASE 1 DISRUPT – PHASE 2

! Deliver best in class technology to a laggard industry and create pricing transparency at scale

! Use technology and mobile mechanics to completely disrupt the service & repair sector

1 Do It Yourself 2 Do It For Me 3IbisWorld & Spares Box mgnt4 On Board Diagnostics (OBD)

4

ACKNOWLEDGEMENTS

1. 2. 3. 4. 5. 6. 7.