Jiffy Lube business model and operations

Environmental Aspects

Demographics

Competition

Marketing

Tactics

Product

Price

Promotion

Organization

Jiffy Lube was founded in 1979, by W.J. 'James' Hindman. The company was built around an innovative 10-minute oil change service that grew like wildfire. In 1980, there were 10 service centers in operation. A short ten years later there were more than 1,000 Jiffy Lube service centers giving fast, reliable, courteous oil changes to customers around the country (MacAyeal, 2004).

At that time, Jiffy Lube was acquired by Pennzoil. Eight years later, Pennzoil merged with Quaker State and Jiffy Lube's major competitor Q-Lube. The Q-Lubes would be renamed Jiffy Lubes, and in 2002, Royal Dutch/Shell acquired the Jiffy Lube brand.

Today, there are more than 2,200 Jiffy Lube service centers in North America providing oil changes and a variety of other automotive maintenance services. These are both corporate owned and franchised facilities. Approximately 20% of Jiffy Lube's facilities are corporate owned. The largest franchisee is Lucor (MacAyeal, 2004).

The demographics that Jiffy Lube seeks to take advantage of includes the ever-increasing number of motor vehicles on the road in North America, in particular, the United States.

In addition, society is changing as well. As life becomes more and more hectic for the average American driver, leisure time is valued even more. For this reason, consumers are looking for ways to save time in addition to saving money. Jiffy Lube has designed its services to offer these two features as their primary benefit to consumers.

Jiffy Lube has done a superior job of positioning itself as a time and money saver. Customers see Jiffy Lube as a valuable service provider that not provides professional automotive maintenance service all while saving time and money.

Although Jiffy Lube's competition resides in other quick service oil change facilities, other organizations are competitors too. These competitors include do-it-yourselfers who are willing to take on routine maintenance tasks. In addition, full-service mechanics also are stiff competitors in the industry. And, lastly, new car dealerships offering service packages as part of their purchase agreements does impact Jiffy Lube's business. In order to compete, Jiffy Lube has to emphasize its service differentiations in the quick and cost efficient service offerings.

Jiffy Lube's strategies of low cost leadership and product differentiation fit in perfectly to counteract these threats. It is enhanced by their continued growth strategies as Jiffy Lube further builds their business and intensifies their current positioning. However, they may be missing out on taking full advantage of a powerful market segment, that of commercial and fleet vehicles. Couple this with possible unique partnerships, such as that with gas stations or fast food chains, and Jiffy Lube still has incredible growth potential in their industry.

Environmental Aspects

2.1 Demographics

Demographics are an incredibly important marketing aspect that affects Jiffy Lube strategies as well as their potential for profitability. In particular, the number of vehicles in operation in the United States is of considerable importance to Jiffy Lube. Luckily for Jiffy Lube, the number of automobiles in the United States has been on the increase since the turn of the 20th century.

According to Lewis Lord (1999), "at the start of the century (...) America had only 8,000 cars" (p. 48). That number quickly soared as the horseless carriage was introduced across the nation. By 1996, Americans had over 206 million automobiles and trucks on the road ("State motor-vehicle registrations - 1996," 2004). Not satiated, the American consumer's love for the automobile continues to grow.

Five years later, the number of motor vehicles on American roads grew by almost 13%, to an astounding 232 million vehicles in 2001 ("State motor-vehicle registrations - 2001," 2004).

This continuous growth in automobiles has been a boon to Jiffy Lube. More automobiles mean, in the most simplistic terms, more potential customers with more vehicles to service. In addition, the changing nature of consumers has had a powerful positive effect on Jiffy Lube's growth and profitability.

In today's world, time is the most valuable commodity a person has. American society has become dependent on fast food, high speed Internet service, and expressways, all in hope of garnering a few extra precious moments to spend on the all too limited leisure activities. Jiffy Lube's time saving automobile service centers is a perfect answer to today's consumers' needs. Whether they take advantage of the Jiffy Lube Signature Service Oil Change, or the plethora of other maintenance services ranging from air conditioning evacuation and recharge service to wiper blade replacement service, consumers will find themselves in and out quickly and courteously.

Jiffy Lube has truly benefited from these two important demographic changes, and has been able to successfully take advantage of these opportunities. They have increased their numbers of service centers to meet the increasing needs of consumers, and to ensure that they are offering the most time efficient service in the industry.

The additional adjustments that are being contemplated include opening additional stores, in more suburban areas, as well as offering new services to compliment their existing line up. Jiffy Lube believes that although the population density of urban areas has been very beneficial to their locations, in offering a large number of customers, consumers in more suburban areas, that have to commute to work, would be particularly interested in their time saving services. In addition, by adding services to their current roster, they will be able to provide even more value to their customers, making their facilities truly one-stop service centers.

Customers

Customers see Jiffy Lube as an affordable, reliable, and time saving automobile service provider. Competition, such as local automobile service centers and other chains are often viewed as more expensive and not as quick to service. The one advantage a local, full service mechanic may have is the ability to make major repairs to a vehicle. However, oftentimes consumers are leery of such places for routine services, as they fear that the business will recommend unneeded repairs in order to pad the bill. As Jiffy Lube only provides routine maintenance services, consumers know that any repairs that are recommended are factual, as Jiffy Lube will not profit from the repairs being made.

Jiffy Lube has a clear understanding of their customer's wants and needs, which is the primary reason why they've been so successful. They have created a unique market segment of solely providing routine maintenance services in a quick and cost efficient manner. The bulk of their competition resides in full service automotive shops.

Competition

The top three competitors, according to Hoover's (2004) are: ChevronTexaco, Pep Boys, and Valvoline, however, Jiffy Lube receives more intense competition from privately owned small full service mechanics, as well as do-it-yourselfers.

Market shares are currently trending away from do-it-yourselfers, as many people are valuing their leisure time more and more. This is good news for Jiffy Lube. However, many new car dealerships are offering free oil change and other routine services with the purchase of new vehicles, as a way to differentiate themselves in their intensive industry. This means that many new vehicle owners do not need to pay to have their car serviced.

To counteract this trend, Jiffy Lube has reaffirmed its primary strength in the speed and ease a customer can have service performed on their vehicle. While a consumer waits, they can have their vehicle serviced without an appointment. At dealerships, and other full service repair shops, appointments are often required and they may require possession of the vehicle for an entire day. This is Jiffy Lube's competitors' primary weakness. They simply are not organized to provide the high efficiency service that Jiffy Lube can.

3.0 Marketing

3.1 Objectives

Jiffy Lube has clearly defined marketing objectives. Their goal is to garner valuable market share from their competitors, while providing the highest level of speedy customer service possible. This is inline with their customer mission statement of, "At Jiffy Lube, we're dedicated to preserving the health and value of your vehicle."

Customer satisfaction, although subjective, is measurable and attainable. This is discerned via customer feedback cards, allowing the consumer to rate their experience at Jiffy Lube. Increased market share is also quantifiable and can be seen in increased sales revenue and increased number of services performed. These objectives are a strong driving force in the company and appear to be very effective, and as such should not be modified.

Strategies

There are several strategies that Jiffy Lube is employing to reach their objective. If one was to consider their strategies in light of Michael Porter's Three Generic Strategies, it becomes clear that Jiffy Lube is using cost leadership as its means of securing a competitive advantage. This is accomplished as their services are offered at some of the lowest prices in the industry.

In addition, they have tried to differentiate their offering, by offering a variety of maintenance services, not simply oil changes, making them a one-stop routine car service provider. They further differentiate their product by making their service time as quick as possible. This is especially valuable to busy customers, and is the main reason why vehicle owners choose Jiffy Lube.

Their innovation strategies would be categorized as innovators in the industry. Jiffy Lube was the first chain of fast service car maintenance stations. This innovation continues with their wide range of services they now offer. Rather than resting on their laurels, Jiffy Lube continues to seek out new opportunities by expanding their services and their product offerings.

Their growth strategies include diversification and intensification. As mentioned previously, Jiffy Lube has continued to expand the services and products they offer their customers. They are constantly vigilant in seeking out new opportunities that will compliment their existing business. In addition, they seek to intensify their market positioning with new corporate owned stores and new franchises being opened each year.

Jiffy Lube's aggressiveness strategy could be classified as a builder and a prospector. Although they have a secure position in the lead of their industry, they are not content, and as such, look to continue to build their business units. Jiffy Lube is constantly prospecting for new products and services to add to their line up. Their goal is to take advantage of these new opportunities before their competitors, further securing and creating new competitive advantages.

In light of their internal strengths and weaknesses, these strategies are very effective. They utilize Jiffy Lube's ability to service customers quickly and cost effectively, while acknowledging that there are simply areas that they cannot compete in, such as full-service mechanical repairs. In addition, these strategies also seek to take advantage of any emerging opportunities, while continuing to grow their business in such a way that wards off threats. Jiffy Lube definitely is able to implement these strategies with their given resources.

The market segments that these strategies cover include personal use vehicle maintenance services and products. This is a considerable segment, however, another segment may hold an even greater opportunity. Commercial and fleet vehicle maintenance is a segment that seems to not be emphasized in Jiffy Lube's strategies currently. This valuable segment could mean great revenue increases if it was fully exploited. Although they do offer fleet services, this key service is simply not marketed effectively currently. As such, this would be the only suggested modification.

Tactics

There are very few clearly defined tactics for each strategy. Jiffy Lube periodically evaluates its competitors' pricing, in order to ensure that they are in a cost leadership position. They also have a team dedicated to the development and implementation of new services for their customers. This tactic is fully integrated into the corporate organization, however, the rest of the strategies do not have as clearly defined strategies. They instead are fluid, in order to take advantage of emerging opportunities.

Jiffy Lube's tactics could be more clearly in the other areas. This may have allowed them to take better advantage of the opportunity in the commercial and fleet segment.

4.0-4 Ps

Product

The current product line for Jiffy Lube is appropriate. They specialize in vehicle maintenance services, and that is what they provide. Jiffy Lube has a wide array of services including:

The Jiffy Lube Signature Service Oil Change

A/C evacuation and recharge service

Air filtration replacement service

Automatic transmission drain and fill

Automatic transmission filter and gasket replacement

Automatic transmission fluid exchange

Automatic transmission services

Battery maintenance services

Engine cooling system services

Fuel filter replacement services

Fuel system cleaning services

Gearbox services

Light bulb replacement services

Serpentine belt replacement services

Tire rotation services

Windshield repair service

Wiper blade replacement service

AutoXray on-board computer diagnostics service

Starting and charging system diagnostics service

And, state vehicle inspection ("Services," 2004)

None of these items should be discontinued as Jiffy Lube's customer has seen them all as valuable. The one service that Jiffy Lube may consider adding is that of car detailing. Although Jiffy Lube technicians typically vacuum out a vehicle after service, full detailing would be a nice compliment to their current lineup. Detailing options could range from an automated brushless, drive through car wash option, to full exterior and interior detailing, including hand waxing.

Research on adding this particular service has not been announced, however, the Jiffy Lube team is quite secretive in what services it is investigating. This is in order to get the jump on their competitors. This ability to implement new services ahead of their competition allows them a competitive advantage.

Price

One of Jiffy Lube's most powerful marketing strategies is their position as a low cost leader in the industry. Although Jiffy Lube's service is more expensive than the costs of materials for do-it-yourselfers, they are less expensive than most private full service mechanics, and even less expensive than other quick-service maintenance competitors. Jiffy Lube's pricing is evaluated quarterly to ensure that they are maintaining this competitive advantage.

Customers see Jiffy Lube's services as an incredible value. Their service is completed in a time saving manner at a cost efficient price. Quality, professional service is performed making it an even more exceptional value. Because of the volume of customers they service, Jiffy Lube is able to maintain profitability at industry norms, despite their lowering pricing. For these reasons, their pricing policy should not be changed.

Place

Distribution occurs directly to the customers at each location. Although there are thousands of Jiffy Lube service facilities, more can be added to help meet the growing numbers of vehicles being added into service each year. These facilities can be especially valuable in more suburban areas as more and more drivers commute into work each day.

Other distribution channels are not particularly suitable for Jiffy Lube, however partnerships may be of interest. Jiffy Lube may wish to partner with gas stations building new facilities together. Customers would be able to fuel their vehicle and have maintenance performed at the same time. A discount may even be given with fill up, or a discount on gasoline may be given with a service performed as a marketing strategy.

Unlikely partnerships may also be of interest. A partnership with a fast food chain may be of interest as well. A facility such as Subway, where customers could grab a bite to eat while getting their vehicle service may be seen as an added value. Again, both companies could give reciprocal discounts. And, it may give Jiffy Lube the unique feature that would cause a customer to choose them over another service provider.

Promotion

Advertising and promotion strategies are in place. Nationwide television commercials are shown on a variety of networks targeting a variety of demographics. The company also sponsors high visibility items, such as racecars, to help build brand recognition. These advertising and promotion strategies are minimally effective as the Jiffy Lube brand is quite strong. A more effective promotion may be to emphasize their services other than oil changes, and also to promote their commercial and fleet maintenance services. Currently, there is little measure of return on investment for the current strategies.