PDQuik Lube: A Case Study

The Story

Detailing a car is quite different from changing the oil. Yet, Tom Lindsay feels that he has no choice but to consider offering his lube customers a detailing service. The fast lube business is very competitive in his market and he needs an additional source of income. He is just not sure that detailing cars is the right choice for his current business.

The Challenge

Tom starts his market research by considering his target market. His first thought is that his current lube customers should welcome this new service. However, after doing a survey, Tom determines that only about 30 percent of them would be interested in the detailing service.

However, if only 30 percent of his current customers would use this new service, then possibly only 10 percent of his local market (those who own cars and SUVs that are three years old or less) would consider this service.

The Solution

With this information, some research into the type and level of competition in the local marketplace, and some projections about pricing and fixed and variable costs, Tom contacted Thema Group to develop forecasts for a three-year period, as well as breakeven analysis for the same time period.

The Results

The results were disappointing. The demand estimates developed by Thema Group were below the breakeven point for the first three years of the sales forecast and, therefore, the project was not recommended.

“Oh well”, Tom thought. “It’s better to know this now before I sink any money into the project. And, if I can find a way to increase demand, at least I know how far the sales forecasts will have to move for me to make any money.”