1. X-5 Case
I.
Summary of Facts
A. Market – Automobile industry
1. Company history
a. Carl and Mary Lou established company in 1945
b. Employing disabled individuals
c. Providing a friendly work environment
d. Strong employee loyalty
2. Target market
a. Moderate income
b. Working class segment
3. Economic market - Monopolistic Competition
B. Product
1. Pre-owned vehicles
a. Used automobiles
b. Used pickup trucks
2. Replacement vehicles for customer satisfaction issues
3. Benefits
a. Core - Reliable vehicles
b. Customer service satisfaction
c. Low-mileage vehicles
d. Purchases include a 30 day limited warranty
e. Vehicle can be exchanged for credit towards another vehicle during first 10 days
4. PLC - Maturity Stage
C. Price
1. $3,999 to $15,999 automobiles and pickup trucks
2. $502,646,400 in consolidated sales for 2005
3. $543,000,000 projected for sales in 2006
4. $500 commission for $5000 retail car value
5. Elasticity - Relatively elastic to relatively inelastic
D. Promotion
1. Personal selling
2. Advertising: Direct mail, Cable, Radio, Radio, Outdoor, Yellow Pages, and Shoppers
3. Reliable's sales promotion: Sales for Presidents' Day, Easter, Memorial Day, 4th of July,
Labor Day, Thanksgiving,
4. Individual dealership sales promotion: St. Patrick's Day, Cinco de Mayo, Harvest Day and
county fairs
5. Charitable causes: Carl Foundation, Meals on Wheels, and Community Services
6. Expansibility - Relatively Expansible
E. Place
1. Couple met at Downtown Oldsmobile in Los Angeles, California
2. Honest Carl's Car dealership
3. Dealership chains in the United States
4. Channel: Manufacturers - Dealership - Agents - Consumer/Users
F. Other
1. Formation of Reliable Cars, Inc.
a. Company was changed in 1971

2. 2
II.
III.
b. Targeted moderate income, working class
c. Dealerships were remodeled
d. Extensive employee training
2. Reliable sold to Keen Investments, Inc.
a. Established in 2004
b. New York based financial conglomerate
c. Martha Macedo of Compton Group replaced CEO Mary Lou
d. Mary Lou received 10 year employment contract
3. The Dark Side
a. Severely criticized by consumer groups and community activists
b. Ostensible price gouging and deceptive selling practices
c. Authorities conducted over 1,000 audits but no evidence
4. Pricing
a. Established through a negotiated selling process
b. Vehicle pricing initially bear an asking price of blue book value plus ten percent
c. Sales finance contracts are written for the maximum rate
d. High rates are rarely concern for customers
Problem/Opportunity
A. Primary – The societal image of Reliable Cars, Inc.
B. Secondary
1. High finance rates
2. Ten percent on automobile vehicles
3. Marketing efforts
4. The F & I products
Recommended Action
A. Primary – Improve the image with proper public relations and marketing efforts
B. Secondary
1. Provide lower finance rates to benefit customers
2. Maintain the percent to increase margins
3. Use social media marketing and billboard advertisements
4. Present customers with detailed information regarding the products