La Shampoo Case Study

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Case Study
La Shampoo
14/08/2011

Senay Sumercan 23307188
Evandra Tamzil 21215553
Jimmy Adrian Yulianto 21761728
Nuttapong Sungkhawun 21431760
Fastrelia Astrelia 21763038

In 1989 La Shampoo had began a very slow descent, but the company had not really addressed the problem till about two years ago. The problem? La Shampoo’s ability to keep up to date with the demands of the market. La Shampoo failed to comply with the principle component of brand sustainability and growth; the brands need to stay relevant, and what defines relevance changes over time. La Shampoo had lost its relevance to the market, and as a result customer loyalty was declining. The failure to address the problem earlier also suggests that managerial issues were present. On a more positive note, La Shampoo still has a core group of customers that are loyal. In its efforts to increase market share and boost sales, two radically different recommendations were constructed and presented.

One recommendation put forward was Eric’s proposal to compete on price. The pros and cons of this proposition put forward are demonstrated in the table below.

Pros | Cons| Reducing the price is effective for the short term as it can provide the incentive for price sensitive customers to benefit from the price reduction and encourage purchase of La Shampoo.| Once the price has been reduced, we cannot reverse this reduction and increase the price in the future as this may lead to loss of continual sales and incur brand switching.| This approach may enable La Shampoo to buy some time, to then find a better solution for there problem. | Reducing the price may not necessarily lead to loyal customers, however encourage customers to stockpile La shampoo | Will provide a higher volume of sales. | Competing on price will diminish the perceived brand image and quality...
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