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.

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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 now would think of another company where to buy what he needs before going back to the company that raised the prices. This will lead to less profit, therefore more costs, and maybe a thorough need to raise prices in order not to go out of business.

As a conclusion, I wouldn’t have raised the price from $3 to $4 in the first place, but as the error has been done, know the biggest and most challenging part is not to go back to an original price of $3, but is to regain trust from customers. A lot of effort must be done to create strong relationships with the customers and try to win back their shares, and why not even more so to eliminate the competition from the market. Once Beauregard Textile Company will be the fist choice; prices may raise step by step, so to proceed in the expanding program. This would be my intention if I were to work in the company.

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Beauregard Textile Company. (2016, Nov 05). Retrieved from https://graduateway.com/beauregard-textile-company/