used and our prices.We evaluated each option by asking some strategic questions: Does the plan adopted make Arctic Power a stronger, more profitable brand than it was previously? Are the revenues from expansion in new markets greater than the promotion and other costs associated with such expansion? Does the option help the bottom line? We rejected continuing on Arctic Powers current course because the costs associated with expanding into western Canada were far greater than the increase in revenues. Furthermore, our competitors, particularly Tide, responded strongly to our efforts with promotions of their own, causing Arctic Power to further reduce prices and profitability. In the unlikely event that Arctic Power could reduce its promotional efforts to the levels before the expansion into western Canada, it would take four years for the revenues from the increased sales to offset the increased promotion costs.If continuing on Arctic Powers present course is a bad idea, then a national campaign as a premium detergent is an even worse idea. A national effort would provoke an all-out war with Tide, and Arctic Power does not have the resources to go head to head with Tide on a national basis. Such a course could even doom Arctic Power as an entity.Our ChoiceWe decided the best course of action for Arctic Power was to target the growing cold water market and to become Canadas leading choice as a second detergent. While the option we chose is not as glamorous as competing to be Canadas number one premium laundry detergent, it is the most sustainable. An added benefit is we can lower the number of active ingredients used, allowing Arctic Power to:Lower production costs and prices.Retain profitability in the face of competitors promotions.Reduce Arctic Powers use of consumer promotions due to their overall price reduction strategy.Our marketing strategy would consist of a national television advertising campaign to emphasize the benefits of co...
