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Ambassador Torchlight Case Study Analysis

Submitted to Mr. Pankaj Jain Asst. Prof.

Submitted by Harpinder Singh


PGDM-1

PCTE

Introduction to case
Ambassador torchlights were the second largest in the market of dry cell batteries and allied products. Having a good distribution network, the company want to utilize this strength by taking over the distribution of some consumer items. They approached Central, company manufacturing blades and also having two own brands. Ambassador has the option to take over distribution of Centrals brands or go for their own brand.

Market Situation Analysis


The blade market is comprises of Stainless steel blades and Carbon steel blades. Stainless Steel blades are used mainly by the upper income groups and the Carbon steel blades are mainly used by the lower income groups. The blade market is a highly competitive market. The market leader is Sharp with a market share of 26.4% and at the second is Hatari with a market share of 19.1%.They are priced at Re. 1.8 and 1.00 per blade respectively. This price is less, in comparison to the average number of shaves per blade they offer than the other competitors. Next in the list Morning and Awake that have a market share of 11.8% and 9.1% respectively. In case of price Morning is priced at Rs 10 per pack, so it loses out on market share in the lower income groups. Awake is priced at 1.4 per blade but it loses on greater market share. It became popular in the Introduction stage but the growth stage was poor as there was low repurchase as faulty blades were found in the pack. 12.8% of the market share is held by the other carbon steel blades. Badshah has a market share of 7.3% and is the market leader in stainless steel blades. It caters to all the income levels.

Problems
Problems in the way of Ambassador Torchlight; whether to opt for their own private brand or to take over distributions of splash and awake? If they took up the distribution then under an agreement Mr. Patel has the right to terminate Ambassador Torchlight as selling agents if he is not satisfied with their performance. If they preferred to market their own brand,own should the product be poist positioned ?should they go for a carbon steel or stainless steel balde ? What segment of the population should they catrer to ?What should the pricebe ?What should be the advertising and promotionmal strategy ? and If they opted for Centrals brands Splash and Awake they needed to know why the repurchase rate was low ? What advertising and promotional strategy was called for? To know these things they have to research in the market. This could be costly for ambassadors. Brands Loyalty amongst blade users is very low. This is the big reason for low repurchase rate for Centrals brands.

Alternatives and Solution


There just two alternatives, go for own brand or take over the distribution of Centrals brands? The situation demands that they should go for their own brand rather than wasting their resources on Centrals brands. Ambassador Torchlight can follow the Market penetration strategy. They can reduce the packaging and distribution cost owing to their good distribution network. They can concentrate on the rural areas as their network is good in these areas. The Carbon Steel blades are having more Market share than Stainless Steel blade. They should go with Carbon Steel blade market. Lower income people use carbon steel blades. This is in favour of Ambassador because their rural distribution network is strong and more number of lower income customers are living in the rural areas. Ambassador Torchlight can follow the Value pricing strategy. To sustain their brand they can produce good quality and apply low cost. Their short term profits may be low but they may reap good long term profits. They can create a value about their brand among the rural masses and use other marketing-mix elements of advertising and sales force to communicate about their brand. Thus they can use the quality or price positioning. They can offer the best value for money to the buyers. They can provide more number of shaves per blade and can follow the Benefit positioning for this. And then most effectively exploit their distribution network for achieving their targets. If Ambassador can offer highly valuable features then it could take advantage of value-based pricing, than those of their competitors whose products are relatively of lower value. But for this purpose they have to ask for quality control by Central Industries.

There are some considerable benefits of Value pricing strategy for Ambassador Torchlight;

It takes into account industry structure, segmentation, competitor pricing practices, and substitutes and alternatives, all of which can make pricing more coherent and complex. Value-based pricing can be the only way to price new products or "breakthrough" products. Pricing can be based on several customer-focused methods: expert opinion, customer surveys, price experiments and analysis of past, present and expected market data and conditions.

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