Regal Electrogas

895 Words4 Pages
Mr. Asad Ali is the sole proprietor of Regal Electronics. Regal Electronics manufactures several products, one being dessert coolers. For several years, Ali has established his dessert cooler brand to be a high quality product in the mid-level price range. In 1987, the government announced additional taxes that would drive up the price of dessert coolers (and other products). Ambassador, a higher-end competitor of Regal, increased their prices and the lower-end competitors followed. When the tax decision was unexpectedly reversed, Ali was raised with the issue of maintaining the somewhat new price increase (of 65 Rs) or dropping prices down to the original cost of the cooler, 1000 Rs. Ali is faced with the difficult assessment of how…show more content…
Worst case scenario, Ambassador will drop their prices to the original cost of 2200 Rs/ unit. Given Ambassador’s position as industry leader, I would think this in highly unlikely, they have no reason to drop their price. Again, people will pay for their name. Assuming Ambassador keeps their price increase of 100Rs, I would expect most if not all of the competitors to keep theirs also. This price gap between Regal and the 4 (excluding Ambassador) more expensive manufacturers many be enough of a price difference for customers to seriously consider and purchase the Regal brand. There is a small chance that the bottom manufacturers’ prices will fluctuate over 100Rs, if they do, there is a better chance that the prices will be high enough for these customers to make the jump up to Regal. Ali aimed to increase the volume of coolers to 1,500 units a year over the next two to three years (Regal Electrogas: Price leader or price follower, 2008, p. 3). His long term goal was to have the market share, and he saw cash flow as the primary constraint . Depending on the results of the price increase, Ali may have some extra monies laying around to assist in the company growth. Going forward, I would highly recommend that Ali revamp his marketing strategy; he should start by taking the following steps: 1. Find the cost with the risk adjusted benefits for dessert coolers, how much can consumers spend without
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