The case we discussed in class was based on two skylight companies, Lieber Light & Vancouver Light.
Lieber Light had 70% of the skylight market share. However, as Lieber failed to supply skylights to Canada, Vancouver Light was founded. Vancouver Light was able to manufacture skylights at a lower cost, and hence sell their products at a cheaper price. This decrease in price resulted in many of Lieber’s customers turning to Vancouver. However, the factor of customer loyalty helped Lieber, as some clients stayed with Lieber even with the higher priced skylights.
Here’s an extract from the case. What this shows is that some decisions are made based on emotions, and these decisions could harm the company. If Carney didn’t step in to interfere with the decision, and Chu’s decision was carried out, Lieber could lose a lot of revenue and that could lead to a loss in profit.
“Tamara Chu was becoming quite heated about Vancouver Light by this time. “Let’s cut the price a further 10% to $130 and drive those Canadians right out of the market! That Jennifer McLaren started with those big builders and now she’s after the whole market. We’ll show her what competition really is!”
But Carney was shocked: “You mean we’ll drive her and us out of business at the same time! We’ll both lose money on every unit we sell. What has our sales force been doing all these years if not building customer loyalty for our product?”
Word Count: 245
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