You are the marketing manager for the biggest supplier of local fresh milk and imported UHT...

 

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You are the marketing manager for the biggest supplier of local fresh milk and imported UHT milk in your county with a market share of 80% for UHT milk and 100% for local fresh milk over the past 10 years. The local fresh milk is priced at a premium as compared to the imported UHT milk. In all your advertisements you stress that consumers are supporting local farmers when they purchase the premium fresh milk product. Another company has now decided to introduce imported fresh milk to the market and they have priced their product similar to your imported UHT milk (that is much lower than your local fresh milk, 15- 20% lower). Given your size and the fact that you support local farmers you have decided to ignore the competition. You believe that the quality of your product and your support for local farmers can withstand the competition. However, after a few months you realise that you are losing market share to the competitor's product. You advise your management board that you must respond to this new competitor. Your management board agrees but only authorized you to reduce the price of the premium product so that it remains 3-5% higher than the competitor's product to signify the higher quality. A few more months pass and you continue to lose market share. You go back to your management board and they authorize you to reduce the price of the premium product so that you match the price of the competitor. The competitor's product is imported and therefore the price changes as exchange rates strengthen or weaken. So each month you review the competitor's price and adjust the price of your premium product to match that of the competitor. It has now been three years since the competitor's product came on the market and you have lost 50% of the market share but your management board maintains its decision to just match the price of the competitor's product. Required Please evaluate the way in which the management board decided to react to the competitor's product/price. How would you have decided on whether and how to react? (20 Marks) You are the marketing manager for the biggest supplier of local fresh milk and imported UHT milk in your county with a market share of 80% for UHT milk and 100% for local fresh milk over the past 10 years. The local fresh milk is priced at a premium as compared to the imported UHT milk. In all your advertisements you stress that consumers are supporting local farmers when they purchase the premium fresh milk product. Another company has now decided to introduce imported fresh milk to the market and they have priced their product similar to your imported UHT milk (that is much lower than your local fresh milk, 15- 20% lower). Given your size and the fact that you support local farmers you have decided to ignore the competition. You believe that the quality of your product and your support for local farmers can withstand the competition. However, after a few months you realise that you are losing market share to the competitor's product. You advise your management board that you must respond to this new competitor. Your management board agrees but only authorized you to reduce the price of the premium product so that it remains 3-5% higher than the competitor's product to signify the higher quality. A few more months pass and you continue to lose market share. You go back to your management board and they authorize you to reduce the price of the premium product so that you match the price of the competitor. The competitor's product is imported and therefore the price changes as exchange rates strengthen or weaken. So each month you review the competitor's price and adjust the price of your premium product to match that of the competitor. It has now been three years since the competitor's product came on the market and you have lost 50% of the market share but your management board maintains its decision to just match the price of the competitor's product. Required Please evaluate the way in which the management board decided to react to the competitor's product/price. How would you have decided on whether and how to react? (20 Marks)

Answer rating: 100% (QA)

1 Do your research to know why youre during this price competition Just because a competitor has lowered their prices doesnt necessarily mean you ought to drop yours too Maybe your competitor is not t... View the full answer