Bhanton Towels: The pricing dilemma of an exporter
In April 2022, Bhanton Towels (Bhanton), an export-oriented company in the Philippines, received an order from AliTex Enterprises (AliTex), China. One of Bhanton’s major customers in Europe had just cancelled an order for 200 metric tons (MT) of towels because of the Ukraine-Russia conflict. Since the conflict was a case of “force majeure,” the cancellation terms could not be negotiated. These two events presented Bhanton’s management with a major dilemma; the company needed additional orders to achieve its monthly production targets of 2,000 MT for May and June 2022. However, the low price requested for the order from AliTex could potentially have a long-term impact on the company’s profitability and reputation in the market. It might also affect its relationship with key accounts like Walmart in the US and IKEA and Sainsbury’s (in Europe) if they were to hear of it. AliTex offered Bhanton an opportunity to enter new markets like Australia, Canada, China and New Zealand. Could the company sell its towels at ₱190 per kg to AliTex. And if not, what was the minimum possible rate? The company was also exploring other potential sales and customer acquisition strategies to increase its monthly sales volume by 1,000 MT and reduce dependence on retail customers.
- To understand the complexity of pricing decisions and the different steps in price setting and to familiarize students with the 5Cs of pricing
- To understand the intensity of the competition and competitors’ respective strategies, and the overall socio-economic-political context
- To analyze how a company should adapt prices to meet varying circumstances and opportunities
- To understand pricing methods like mark-up pricing and target-return pricing
- To deliberate on sales and customer acquisition strategies
Bhanton Towels, Manufacturing, Textile
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