A Study of Servqual by Esso Sungai Jati Klang, Selangor, Malaysia to Compete With Local Competition

A Study of Servqual by Esso Sungai Jati Klang, Selangor, Malaysia to Compete With Local Competition

Background

Market definition is a key element for competition policy enforcement, and also for retailing regulations. Although the use of estimation and simulation techniques allows to study market power directly without imposing any market definition, defining markets and studying the degree of concentration will remain as an important policy tool for long (Brenkers and Verboven, 2005). Estimation and simulation are still depending too much in the assumptions regarding the demand and supply primitives, and also on the equilibrium condition chosen. Estimations and simulation of market power will be used together with more traditional market definition and concentration analysis for the time to come.

The competition among petrol stations is a paradigmatic case of competition in local markets. It has the common characteristics of competition among retail outlets. There is a growing interest in defining local markets using isochrones of equal distance time to study rivalry can competition in retailing (Baker, 1999). They key issue in the study of local competition is to analyse how large isochrones should be to drive competitors in.

We conclude that geographic information systems can be very successfully used to define more precisely relevant geographic markets. Applying the test to petrol stations, we find that smaller isochrones drive enough competitors in. Local market power is larger than usually thought in competition and retail regulation cases.

Objectives of the Study

The purpose of this research is to suggest the ways in which Servqual by Esso Sungai Jati Klang, Selangor, Malaysia can compete with Local Competition.

Research Questions

1.Why is the petrol market so prone to price competition? If consumers are so price sensitive to petrol prices, why do customers respond to sales promotions that must push up the cost of petrol in order to pay for 'free' gifts?

2.Why is Servqual so keen on avoiding price competition while other competitors feel keen to cut prices?

3.If consumers believe 'petrol is petrol', how and why is Servqual able to charge more than other oil companies for their product and how do you think they achieve a market share out of proportion to their number of petrol stations?

4.Debate Mike's preference for diversification or spending on the refurbishment of petrol station rather than improving the product itself.

5.Suggest alternative courses of action for Servqual to respond to the increasing impact of ...