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The Company That Flourishes at a Low Economy - AutoZone Case Study

Updated: Aug 29, 2022

  • Was Written on June 07 2020 for MBA 512 Strategic Management Class at Stony Brook University


Discussion Question #1

Does AutoZone perform best in a down economy? Explain.

Yes. Stores such as AutoZone and Office Depot (last week’s case) perform better at down economy, in comparison to a high economy. “When an economic downturn lowers the demand for new vehicles (Parnell, 2017).

The reason for that is the unique characteristic of those stores, selling products allowing people to build, fix, and operate their own product. AutoZone is encouraging people to fix and repair their car, rather than going to a dealer-shop. According to Demos (2009), during the 2008 recession, AutoZone was one of the only businesses reaching a gain in sales as well as net income (5.7% gain in sales and 7.7% net income). Clearly, at times of the down economy, people are looking for ways to save. In 2009, AutoZone has also witnessed a change in demographic too, people with higher annual salaries became a target market for AutoZone. In addition, since the 2008 crisis the company received more traffic from women than before (Demos, 2009).


In 2014, when the economy stabilized and started to go up, AutoZone reported only a 2.1% sales rise compared to a 4% rise in the year before. This shows that in times of a strong economy, people prefer to buy new vehicles instead of repairing existing ones (Ajmera, 2014).


Discussion Question #2

The last decade has seen a proliferation of DIY vehicle maintenance videos on YouTube and other Internet sites. Does this affect retailers like AutoZone? Explain.

Yes, the rising popularity of DIY video trends positively affects retail stores that are selling products meant for DIY projects. The Automobile industry has witnessed a rise in DIY auto maintenance trends that save consumer money and is promoted as a fun activity. Thus, auto DIY projects strengthen AutoZone which targets DIY consumers. “AutoZone targets the do-it-yourself (DIY) consumer with cars more than seven years old” (Parnell, 2017).


Discussion Question #3

How can AutoZone differentiate itself from rivals O’Reilly Automotive and Advance Auto Parts?

When I researched people’s preferences online, I found interesting statements. People shared on the internet that they like AutoZone better than O’Reilly’s because AutoZone usually has all the parts they need in the store, unlike the competitor that usually “needs to order the parts in”. Some people said they prefer AutoZone because of their partnership with different car shows. Some testified receiving better service and more quality parts at AutoZone. Some testified that AutoZone is cheaper. More than anything, people said they prefer AutoZone because it's where “my dad used to go”, and because of the location. (Alford, 2019)

As a marketing consultant for AutoZone, I would recommend focusing on a campaign that emphasizing the experience and convenience of going to AutoZone. The “father-son” moments, the excellent service, and the findings at the store. The campaign should emphasize how the neighborhood’s AutoZone is a part of everyone’s lives. AutoZone can be a special part of one’s life and a part of everyday life, a company that brings people together.


Discussion Question #4

Is international expansion an attractive alternative for AutoZone? Why or why not?

As a Marketing major, I believe expansion is always an option, if it is done right. AutoZone team must do the research and see where DIY auto repair is highly popular, and where would people be interested in imported auto parts.



 

References

  • Ajmera, A., 2014. A Better Economy Is Bad News For Autozone. [online] Business Insider. Available at: <https://www.businessinsider.com/r-autozone-sales-disappoint-as-customers-prefer-new-cars-to-repairs-2014-9> [Accessed 6 June 2020].

  • Demos, T., 2009. The Recession Is Driving Growth At Autozone. [online] Archive.fortune.com. Available at: <https://archive.fortune.com/2009/04/02/news/companies/demos_autozone.fortune/index.htm> [Accessed 6 June 2020].

  • https://www.youtube.com/watch?v=Pbnzwepxfk8. 2020. [video] Directed by C. Alford.

  • Parnell, J., 2017. Strategic Management: Theory And Practice. 5th ed. The University of North Carolina at Pembroke: Academic Media Solutions.


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