This blogpost is regarding a classmate and friend’s blogpost (Arisha Shory)

In her blogpost, Arisha mentioned how Shell celebrated their 30th anniversary by reducing gas prices to $39.9 cents just like how it was back in 1984. This attracted a ton of customers when they announced the promotion on their Twitter page. I found her blogpost very interesting and relatable as this is a common sight back home in Malaysia. Whenever gas prices are about to go up, you would see a HUGE lineup at gas stations all over the country the day before the price increase.

One point that I strongly agree with Arisha is when she mentioned how this move by Shell is a great marketing strategy and it will definitely strengthen brand image. However, I would like to add that this is not a sustainable competitive advantage. Gas, being such a basic commodity has a very inelastic demand. This means to generate higher revenues and profits, gas companies have to increase their prices. We discussed in class about profitability and it is calculated by the equation:

Return on asset = Profit/Average total asset

This is a good move by Shell in a marketing point of view but it is not profitable. Recently, the price of gas has dropped. This price drop has already taken its toll on gas companies. If Shell would have dropped their prices even more for marketing purposes, it will kill the company with the decrease in profits.