Textile company
Beauregard Textile Company:
When in 1990 Calloway and Clarence Beal raised the price of the Triaxx-30 was to reflect the same increase in the costs. This is good example of our global economic situation. Costs are rising therefore also the price at which products or services are sold have to keep up. A second purpose was to make money and the rights amount of funds for a long-term plan of expansion.
What the firm did mainly wrong was they predicted a decrease in demand for the T-30 fabric as the price would increase from $3 to $4, but this wasn’t the case, customers reveled to be price-sensitive therefore started to look elsewhere and purchased from substitute firms.
The two owners of the company, in my opinion, have done the wrong choice to increase their price, and they should cut the price to go back at the acceptable $3 for the customers. As a result of pricing the fabric at $4, they lost market shares, therefore loyal customers, and probably have strengthened the competitor unwillingly by passing their customers on the other side of the market. By pricing the fabric at $3, instead, they will match the price of their biggest competitor (C and P), and they will have to start from zero to gain back their old customers. Moreover they know that the competitor can’t go under the $3 because the costs of production are comparable to theirs and that Calhoun & Pritchard is in a tight financial situation, and gaining back their original shares and new customers, they could overtake their competitor and make them shut down. At that point when there would be no more completion in the market they could price at $4, but only when customers don’t have an alternative. Losing so much in terms of shares and customers, affects also the image of the company. People may start to feel in a bad way towards Beauregard Textile Company because of their increase of price. This affected relationship with the customers will also have repercussions on other sales. A customer
When in 1990 Calloway and Clarence Beal raised the price of the Triaxx-30 was to reflect the same increase in the costs. This is good example of our global economic situation. Costs are rising therefore also the price at which products or services are sold have to keep up. A second purpose was to make money and the rights amount of funds for a long-term plan of expansion.
What the firm did mainly wrong was they predicted a decrease in demand for the T-30 fabric as the price would increase from $3 to $4, but this wasn’t the case, customers reveled to be price-sensitive therefore started to look elsewhere and purchased from substitute firms.
The two owners of the company, in my opinion, have done the wrong choice to increase their price, and they should cut the price to go back at the acceptable $3 for the customers. As a result of pricing the fabric at $4, they lost market shares, therefore loyal customers, and probably have strengthened the competitor unwillingly by passing their customers on the other side of the market. By pricing the fabric at $3, instead, they will match the price of their biggest competitor (C and P), and they will have to start from zero to gain back their old customers. Moreover they know that the competitor can’t go under the $3 because the costs of production are comparable to theirs and that Calhoun & Pritchard is in a tight financial situation, and gaining back their original shares and new customers, they could overtake their competitor and make them shut down. At that point when there would be no more completion in the market they could price at $4, but only when customers don’t have an alternative. Losing so much in terms of shares and customers, affects also the image of the company. People may start to feel in a bad way towards Beauregard Textile Company because of their increase of price. This affected relationship with the customers will also have repercussions on other sales. A customer