The case highlights the strategic choices a firm has to make between price leadership and being a price follower. Regal Electro Gas’s pricing strategy and structure was somewhere in the middle of the market competition. Most firms in the business of making dessert coolers, is targeting a similar market segment; this makes the competition very strong. Especially, in India the competition within this industry segment is very fierce as there are many firms that are selling and marketing desert coolers. In addition, there are leading brands that are competing in the market as well and they are already following price leadership strategy. Bigger firms have bigger marketing budgets so they can demand a premium price and lead the market. They also enjoy the pricing advantage ...view middle of the document...
This will result in the firm gaining a long-term competitive advantage and boost their market share, due the benefit of being late entrants.
Regal can also gain from gauging uncertainty of demand and the market’s pricing trend. They can follow the pricing norms to better position the product and by building a better brand equity in the market, which will aid in penetrating a wider target market. A Strong brand equity has some obvious and strong advantages. Especially in a densely competitive market like the dessert cooler market is in South Asia. If price competition is strong too then brand image and recognition that is associated with higher quality and durability can definitely create a very strong competitive advantage for any firm.
Although, it may seem that larger and more established firms benefit from brand equity, but the fact remains that any business can successfully promote them as a strong brand and achieve profitable goals. Tapping the appropriate customers is also the key aim for any firm to increase sales and generate brand awareness. A relatively new and smaller should always work towards generating a niche and cutting through the competition.
Brand equity is also important in enhancing the product and brand positioning which in turn impacts the market share positively. This is even more important when the market segments are cluttered so the firm can stand out and capture market share. Brand equity can also highlight the internal advantages it has on a firm’s potential business, which strengthens the core business practices and thus generating strong foundation for a long-term advantage. The brand positioning will be reflected through the brand equity they can leverage at various stages of their business growth lifecycle.