By Tiko Okoye
Several years back, the Lagos-based Volkswagen vehicle assembly outfit noticed with considerable apprehension that its gigantic in men and machinery as well as dominant leadership position in the low-end car market in Nigeria were being significantly imperilled by the burgeoning demand for the Kaduna-based Peugeot automotive assembly plant’s Peugeot 504 saloon car.
Volkswagen didn’t push back with a price cut as many had expected given that the Beetle’s target market is highly price-sensitive. The car assembler knew only too well the possible traps attendant with such a pricing-cutting strategy. While a lower price may buy market share, for instance, it hardly buys brand loyalty as customers would easily shift to Peugeot 504 should its price be cut lower than the Beetle’s.
Besides, there’s the more worrying probability of Peugeot having longer staying power by virtue of having deeper cash reserves, should a pricing war ensue.
