what is carmax's marketing strategy?

Answer 1

CarMax's strategy is to make do with lower margins.

For example, you can make the same profit whether your sell an item for $100 or $50, you just have to sell more of the lower price item.

If the COST of the item is $40, then the PROFIT or MARGIN is $60 if you sell @$100/ea and only $10 if you sell at $50/ea.

However, if you sell an item at $50 when your competitors are selling at $100, you will be able to sell MUCH more than your competitors if you can get the word out to enough people. Thus, if you are willing to MAKE DO WITH A LOWER MARGIN and can still make a profit or make up the difference in volume, then you have a good business plan, and that is the essense of the CarMax Strategy.

CarMax strategy works best when you have a high-volume business, economies of scale, and sharply honed management methods. A broad selection of merchandise also helps to mitigate changes in demand for any one product. Economies of scale and sharply honed management allow you to operate more efficiently, thus your COST might actually be $30 instead of $40, what it costs your less efficient competitors. Because your costs are lower, you can sell for less, and your competitors could never match your lowest price without going out of business.

The term CarMax originates with CarMax, Inc., a used car company, founded by the senior execs at Circuit City who thought they could leverage what they learned in retailing electronics to revolutionize the used car industry in a similar way that they did with electronics (e.g., lower margin, higher volume). The company was initially unprofitable, but eventually became very successful and other companies copied their business plan.

You can learn more about CarMax Inc. and its business plan in detail at the link below.

Answer 2

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Answer 3

Carmax Business Strategy

Answer 4

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Answer 5

Sounds interested

Answer 6

Know the unknown. People want to be sure that they are buying a decent car.

Answer 7

Buy low, sell high, full page ads

Answer 8

thanks everyone for answering.