Big Drive Auto

Milestone 1: Business Recommendations

Albert Jasso, Kysha Romney, Lakiesha Thomas,

Rosewitha Shelton, Robert Jones, Melissa Daniels

ECO/561

November 1, 2010

Dr. Jerry King

Introduction

Big Drive Auto is a national dealership providing several services to its customers and covering multiple manufactures. These services include vehicle repair, parts, preventive maintenance, and tire replacements. Big Drive Auto is a one stop for automotive services. The company has recorded data over the last 10 years in an effort to better serve its customers and increase sales. With the collected data, Big Drive Auto can review price points, make price strategy recommendations, create non-price barriers to entry, and differentiate products.

Big Drive Sales Data From 1998 - 2007

Vehicles Unit Sales: sales from 1998 to 1999 went up and then went down the following year with an increase every year thereafter.

Motor Oil, Coolant, and Tires: sales show increase from 1998 to 2000 with a decrease in sales for the next four years with an increase thereafter.

Service Revenue: there was a consistent increase in sales over the years.

Index of Sales Prices

Index of Sales Prices for Vehicles: there was a consistent fluctuation in prices throughout the years

Index of Sales Prices for Motor Oil, Coolant, and Tires: there was a fluctuation in prices

Index of Sales Prices for Auto and Truck Services: prices continued to increase throughout the years.

In the year 2000 prices were consistent with each service at a price of 100

Pricing Recommendation

Big Drive Auto is a vehicle dealership with numerous locations in multiple states. They both sell and service automobiles, and sell aftermarket parts for automotive repairs, motor oil, coolant, and replacement tires. It appears that the business uses the cost plus pricing strategy. This strategy is the most common strategy used to determine fixed and variable cost for a product or service. Once the cost associated...