Essay about Conroy S Acura

2631 Words Nov 4th, 2014 11 Pages
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CONROY’S ACURA: CUSTOMER LIFETIME VALUE AND RETURN ON
MARKETING

Mike Moffat wrote this case under the supervision of Professor Kyle B. Murray solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality.

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The Acura TL was far and away
Conroy’s Acura’s highest selling car.

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Acura MDX — average sales price: $61,776

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The Acura MDX was a sport utility vehicle (SUV), which had an SUV appearance but a unibody construction typically seen in cars. Other mid-sized crossover SUVs included the Lexus RX, the BMW X5, the Infiniti RX and the Volvo XC90
Acura RL — average sales price: $79,812

The oldest model of the six sold by Conroy’s Acura, the Acura RL, competed with the Audi A6, the Lexus
GS and the Volvo S80 in the luxury sedan market.
SALES AND EXISTING MARKETING EFFORTS

The firm was currently spending $120,000 on marketing to new clients each year, split between billboards, direct mail, radio and television spots, and newspaper and community magazine advertisements. Conroy’s
Acura sold approximately 650 cars each year, spread over six car classes. On each model, the firm’s gross

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markup was approximately eight per cent of the dealer cost. After fixed expenses, such as staff salaries, rent and taxes, net profit was typically two per cent of sales revenue.
The firm also spent $10 a year to maintain each of its existing customers. The bulk of this expense came from quarterly postcards reminding drivers to change their oil and the occasional letter promoting new models and

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