MONASH TRANSIT: Detour

A Case Study Presentation

In partial fulfillment of the requirement under the subject

Principles of Marketing

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I. The Case Study Narrative

Monash transit, compared to its competitors, carries the biggest number of

passengers annually for bus companies plying the Manila-Tuguegarao and the

Aparri-Dagupan routes. The company began its operations in 1980 primarily

servicing the Manila-Tuguegarao route and eventually added the Aparri-

Dagupan route to its service by 1990. The business performed well until its

competitors started a price war, particularly bus companies plying the Aparri-

Dagupan route which started to cut their fares by 10% , while the smallest

competitor was even charging at 15% lower. As a result, the company

experienced a drop of 20% from their revenues for January 2008. With the status

quo, the company’s general manager Ms. Cecilia Agpalasin, is considering the

dropping of the Aparri-Dagupan service in favor of a new line covering Manila-

Lucena. To come up with the best option, Ms. Cecilia called her staff to a meeting

where they were informed by the manager of Aparri-Dagupan route that the

competitors cannot sustain their operations if ever Monash will also cut its fares,

and figured that it will only take about three months and the competitors will close

shop for they have smaller resources than Monash.

II. Problem Of The Case

The major problem of the Monash Transit is the fluctuation of revenues

for January 2008.

III. Cause of the Problem

The possible cause of the Monash Transit fluctuation of revenues by January

2008 is the:

1. Price war

Competitors of Monash Transit start a price war by reducing their

fares by 10% and

even charging at 15% lower. The market preferred those bus companies offering

a lower fares resulting to affect the profit objective of the company.

IV.Potential Effect/s of the Problem of the Company

Fluctuation of Monash transit reveneus for January 2008 will greatly affect

the overall operation of the company. If Monash Transit will not cope up with the

competition set by the price war of its competitors, the company market

percentage will decrease and eventually result to losses.

V. Potential Solution to the Problem

With the major problem having been identified, the proponent have

recognized some possible solutions to the problem affecting the operations

specifically the revenues of Monash Transit. The following are the suggested

alternatives:

1. Market Penetration
 As the price war started by Monash Transit competitors, adapting to

the price set by the competition will help the company to cover its losses.

2. Reduce Number of Buses for Aparri-Dagupan Line

Since Monash transit assigned ten buses to Aparri-Dagupan line it will

be more favorable to the company to reduce the number of buses for the

said line and providing only number of buses that could cater to the

anticipated number of passengers that still preferred to have Monash

Transit service. The company will then reduce the cost of operation.

VI. Identified Major Solution

Among the two identified potential solutions that will help to solve the major

problem of Monash Transit, the Market Penetration is the major solution to the

fluctuation of the company revenues.

Monash Transit must set price at the level of its competitors for them to

survive the price war. Considering that the competitors have smaller resources

than Monash, they cannot sustain their operations and stiff competitiion will only

take about three months until to regain the market and stabilize the operation of

Monash Transit.

VII. Applications of Marketing Strategies and Concepts

Revenue of Monash Transit specifically the Aparri-Dagupan line started to

fluctuate at the month of January 2008 due to the price war set by its competitors.
To solve the said major problem, the company must also cut its fare thereby

emphasizing the price variable of its marketing mix.

To make the price variable work, the company must adapt to the pricing

strategy known as Market Penetration as a marketing strategy, which means

setting the price at the bottom of the realistic price range to penetrate the market

as rapidly as possible. In the penetration process, Monash Transit could set price

using the competition based approach specifically the going-rate pricing which

is to set the prices on what the price charged by its competitors.

VIII. Conclusion

Monash Transit started operations in 1980 intially servicing the Manila-

Tuguegarao route followed by the Aparri-Dagupan route. The lines are profiatble

but lately competitors tried to start a price war which resulted to dropped its

revenues by 20% for January 2008.

The company can solve the problem identified by penetrating the market

and able to go through with the competition environment since there is already

a decrease on the number of their market and setting a price guided by

competition based approach specifically the going-rate pricing where the

company adapts a price based on the competitor’s prices. The price strategy is

a good solution in order to regain its market and stabilize the operation of the

company. It will help also the Monash transit to survive the competition brought

by the price war initiated by its competitors.

 As stated in the case, the price war will only take about three months and

the competitors will close shop if Monash Transit will also cut its fares and its

considerable advanateg in terms on its resources.

In entrepreneurship perspective, the 20% revenue dropped brought by a

srong competition is not justifiable to be a ground for dropping the operation of

Aparri-Dagupan lines. Hence, it can be a good opportunity sometimes to

recalibrate the situation by devising a fresh and new strategies in able to survive

the competition.