Fuel Pricing, Case Study Example

In the case study researched below, the pricing strategy of the company (Fred Fuller Company) has resulted in a better reputation in the eyes of customers. It also increased customer satisfaction and the market share of Fred Fuller over competitors, like Bellemore.

Pricing is one of the main elements of the marketing mix. For customers, in this case study, the lower price represented that the company respected their business and went the extra mile to provide more value for their money. Fred Fuller did not even need to engage in promotion strategy or product differentiation: the main driver for consumer choice was the price.

Guaranteed price program, however, has its risks for customers. Indeed, Bellemore could have entered the pricing competition and lowered its prices for both cash and guaranteed packages. This way, – especially if Bellemore lowered the price of cash price – it could have reversed the positive effects of Fred Fuller’s pricing strategy.

Rebate marketing was successful in this case, because the company has fulfilled its ethical responsibilities for all customers. Reducing the cash price would have resulted in the disadvantaging of guaranteed price customers and would have reduced their loyalty. However, by making sure that all customers “get a good deal”, Fred Fuller created a competitive advantage and provided customers with a fair price. Guaranteed price programs are fair as long as the conditions are clearly communicated. Some customers might find that they are more advantageous for them than cash programs.

Bellemore should think about getting its market share back that was lost over Fred Fuller’s pricing strategy. This means that they should reduce the guaranteed price to below the rate of Fred Fuller’s. This would potentially have a positive impact on the company’s reputation in the oil market, and get more long-term customers. Fred Fullers’ customers do not see the advantage of signing up for a guaranteed deal, as they get the same price for cash agreements. By adding a price advantage to having a guaranteed price deal, Bellemore would be able to guarantee a sustainable growth.

References

“MKT 500 Case Study Bellemore Heating Oil” New Hampshire University.