Burger King Case Study

CAN DETROIT MAKE THE CARS CUSTOMERS WANT? Burger King lets you "have it your way. Your local car dealer is usually not quite so customer friendly. A typical ready‐to‐buy car shopper may walk into the dealership with an idea of how much he or she wants to spend and which features the car should inc1ude for that price. Many dealers will order a customized vehicle for a customer, but such an order usually adds six to eight weeks to the transaction. The customer who wants to buy on the spot must choose from cars on the lot that the manufacturer has already configured, priced, and shipped. Despite manufacturer incentives and rebates to entice customers to purchase, dealers often have a glut of new cars sitting in their lots for months at a time that no one wants to buy. The swollen inventory and slow turnaround hurt dealers because they must borrow money to pay for the cars the manufacturers ship. AutoNation, the largest chain of car dealers in the United States, is no exception. With near1y $18 billion in annual revenue, AutoNation is the leading seller of automobiles in the country. The company has 244 dealerships in 16 states and sells four percent of all new cars sold in the United States. But it, too, has excessive inventory that it can't easily sell. …show more content…
With the growth of chains like AutoNation, the dealers have gained more power in the relationship. For years, AutoNation's CEO Michael J. Jackson has pressured the Big Three to cut back on production and focus on building cars that customers actually want. AutoNation already has experience working with data on the habits of car buyers and the most popular configurations of all makes of vehicles. The work started when the company put forth a major effort to consolidate the customer lists from its hundreds of dealerships. AutoNation uses proprietary analytic software as well as assistance from DME, a marketing firm with expertise in creating customized direct mail campaigns. The chain has divided customers into 62 groups that receive mailings that have been customized for each group with relevant sales pitches and service specials. Service revenues in particular have received a boost from this sort of targeted marketing. AutoNation's goal for its data is to offer products and services that its customers want rather than sifting through its data to find customers that might want the products it already has. AutoNation is trying to apply these principles of market intelligence to auto manufacturing. By mining consumer data, Jackson can not only determine the models that are in greatest demand, he can also pinpoint the configurations of each vehicle among thousands of possible variations that are most popular with buyers. That way,