1. Introduction
The purpose of this report is to evaluate the 1958 marketing plan proposed by Fred McNicholas, owner of the McNicholas Automobile Sales Company, which he hoped would:
a) Better utilize the time of his team of new car salesmen, and
b) Focus more on selling to women, which he felt would pay dividends in increased new car sales.
This report evaluates the McNicholas Marketing Plan as outlined and provides a view on its viability and practicality, including my recommendations on whether it should be put into practice and my conclusions as the final section of this document.
2. Significance
The proposed Marketing Plan arose out of the conviction by Fred McNicholas that women were becoming more influential in the husband’s decision-making process regarding the purchase of a new car. McNicholas felt that his new car salesman were under-utilized at certain times and in certain months; also that because margins were tight and discounts often had to be offered to make the sales, then volumes had to be increased.
Research conducted in compiling this report showed that 1958 was a recessionary year in the U.S., especially in the auto industry sector. For that reason the sources used and cited in the included Works Cited page relate to that recession, which without doubt played a major part in the downturn in auto sales experienced in 1958.
3. Evaluation
According to “The American Automobile Frenzy of The 1950’s” (1998) – an article published as a Discussion Paper by the University of Oxford – 1958 was in the era when the U.S. car manufacturers were furiously competing to attract buyers, resorting to tactics such as increasing engine power, adding luxury model options, building in exaggerated styling features like tailfins, and shortening model life cycles (i.e. bringing out updated models more frequently). However, competition forced manufacturers into offering very similar cars to each other, making sales more difficult, especially since 1958 was a recessionary year in the U.S. economy.
According to an article “We’ve Been Here Before, We’ll Be Here Again | The 1958 Recession & Grassroots Economic Stimulation Package” by Patrick (April 2009), one DeSoto dealership in St Louis even tried hosting a 64-hour “sell-a-thon” to reverse falling sales. It’s increasingly apparent that sales of new cars were hard to come by in 1958.
Cherry (2009) claims that the U.S. manufacturers new models “looked like they were trying too hard”, with the much-vaunted new Edsel model becoming somewhat of a joke when it appeared in the showrooms. Cherry further recounts that in general the 1958 designs of many cars were completely revamped for 1959, and that both 1957 and 1959 models are more highly prized than 1958 cars.
So, from this research it is clear that 1958 was a very difficult year for car sales in general and more especially for new cars. This puts the motivation for the Fred McNicholas drive for increased sales into better perspective.
However, was his Marketing Plan focused in the right direction? Looking at the sales figures of 1,012 new cars for his dealership in 1958, it would appear that the gross margin per new car sold was only around $300. It would also appear that based on a 6-day business week, there were on average just over three new cars sold per working day. If that is indeed the case, then employing four full-time new car salesmen plus additional part-time sales personnel utilized during busy times seems excessive and unnecessary. Perhaps employing less full-time staff and using more part-time staff during predicted busier times would be more cost-effective overall. Overheads would thus be reduced, at the same time as keeping the salesmen busy for a higher proportion of their working day. Since March (for example) was known to be a generally inactive month, that would be a good time to reduce staff levels to a minimum, e.g. by not calling on part-time staff and/or by encouraging full-time staff to take annual vacations at that time.
Another tactic that could be employed to increase sales would be to offer a “free” accessory with each new car sale, effectively bringing a better net return per sale than discounting the new price of the car itself.
4. Recommendations
Having studied the particular situation prevailing with the McNicholas Automobile Sales Company and the more general 1958 recessionary situation, including a steep downturn in auto sales, I would recommend the following actions:
a) Analyze the new car sales statistics over the previous six months, then – based on those figures – reduce the number of full-time salesmen to (say) two, using part-time staff to take up any slack. This measure to be put in hand immediately, subject to any restrictions dictated by employment legislation. Taking this step alone should improve profitability by reducing overhead costs.
b) Implement the Marketing Plan proposed by Fred McNicholas, but on a reduced basis; i.e. with the proviso that the planned unannounced home visits to wives be carried out only when there are no potential customers requiring attention in the showroom and when at least one salesman remains present there while the home visit is undertaken by another salesman. Also to offer “free” accessories instead of discounts.
5. Conclusions
If my recommendations were to be adopted, Fred McNicholas would find that he could still implement his proposed Marketing Plan, albeit on a possibly reduced scale (perhaps targeted towards only the more likely prospects), but would also be trading with less overhead costs incurred from a reduced number of full-time employees, thereby increasing net profitability overall, even if any increase in new car sales was small.
Works Cited
Cherry, Jim. 1958: America's other recession and the cars that inspired it. Autos & Motorcycles. (December 2009). Web. 22 April 2012.
Davis, Mike. Used Car Sales as Harbinger of the Market. (July 24 2009). The Detroit Bureau. Web. 22 April 2012.
Offer, Avner. The American Automobile Frenzy of The 1950’s. (1998). University of Oxford. Discussion Papers in Economic and Social History. Number 11, December 1996. Web. 22 April 2012.
Patrick, Jon. We’ve Been Here Before, We’ll Be Here Again | The 1958 Recession & Grassroots Economic Stimulation Package. (April 2009). Web 22 April 2012.
