Lieber Light Case Study

Short Brief of:

Lieber Light

MKT 5023 – Fall 2010

Marketing Management

Dr. David Johnsen

November 9, 2010

I. Major Issue / Problem

The major issue / problem: Should Lieber Light price their product at a level that just covers the cost in order to stay competitive or let Vancouver Light have the customers who want to buy on the basis of price and risk losing market leadership.

II. Alternative Courses of Action

A. Compete with Vancouver Light by cutting the price.

1. Advantages:

a. Lieber Light will hold on to market leadership and keep the business of the large homebuilders.

b. Lieber Light could possibly run competition out of business by controlling the market and taking advantage of their established reputation.

2. Disadvantages:

a. Lieber Light runs the risk of running themselves out of business because of the small profit they will make on each unit.

b. Lieber Light might initiate a price war and they are not prepared to go any lower on the current price that Vancouver Light is offering. Vancouver Light has smaller production costs than Lieber Light.

B. Let Vancouver Light make a profit from the customers who want to buy on the basis of price and rely on the customers who value service, need immediate supply, and have dealt with Lieber Light for years.

1. Advantages:

a. Lieber Light does not risk going out of business and continues to make profit on the smaller shipments.

b. Lieber Light avoids a possible price war with Vancouver Light and can maintain its high contribution margin.

2. Disadvantages:

a. Vancouver Light continues to threaten Lieber Light’s market share and could possibly go after the small businesses.

b. Lieber Light suffers a profit loss due to the loss of True Home and Chieftain Home...