Jerry Englebrecht has operated a successful dog grooming service for ten years. Each year his number of customers has grown. His expenses have always been quite low since he is the only employee and operates the business from his home. For many years, the number of dog owners has increased in his town, but that growth has now almost stopped. In the past two years, three other competing grooming services have opened. One is being offered by a veterinarian to serve her customers primarily. Another is part of a large chain of pet grooming stores located in a larger city 15 miles away. The newest competitor is a small partnership consisting of two people who off er grooming on a part time basis. They are open only two nights a week and on Saturdays.
Until recently, Jerry had not been too concerned about the competition. He believed he had loyal customers and had been getting inquiries from new pet owners. Recently he has noticed that fewer new people are asking about grooming services, and some of his regular customers have not returned. In talking to some of his customers, he learns that the chain store and the partnership are both offering grooming services at a much lower price than he is. Jerry does not want to lower his price because that will decrease his profits. His goal has always been to use the profits to buy a building and expand his business.
a. How can Jerry decide whether he should lower his price?
b. If Jerry wants to emphasize non price competition, what are some recommendations you would make to him in the areas of product, distribution, and promotion to increase customer satisfaction?