Price in any market segment is always seen to be very tricky to manage given that changes in market prices have an effect on revenues and profits. Nonetheless, pricing is important as a strategic issue as it informs how best Caltex Inc. will position its products in the market. Therefore, Caltex Textile Inc. has to pay attention to how prices are likely to affect their marketing strategy and other elements of the marketing mix (Hines & Bruce, 2007). In pricing strategy, the company is to use penetration pricing, competition pricing, and cost based pricing, in order to cut a niche in the market (Hawkins & Mothersbaugh, 2009).

Given the competitive nature of the textile industry, Caltex Textile Inc. will begin by lowering its pricing though higher enough to cover for its total costs. At this point, the company will have achieved it break-even point, and the profits are zero (Hines & Bruce, 2007). ensure that the prices are greater than the variable costs. In cutting down the fixed costs, the company should ensure that all their retail points are their own buildings or when renting a place, they should consider bargaining. Alternatively, the company will also explore the option of getting a relatively cheap supplier for their raw material (Panagopoulos & Avlonitis, 2010).

 

 

 

 

L                  X                  P

 

 

Units

X- Break-even point

L-Loss

P-Profit

Lowering prices will attract consumers while, at the same time, maintaining quality and paying attention to fashion (Hines & Bruce, 2007). This illustrated by the demand curve which states that a reduction in price increases the consumer demand for products and vice versa at ceteris paribus. Additionally, the cost based pricing is to be used to take into account the production and distribution costs upon agreeing on the projected profits for the company (Hawkins & Mothersbaugh, 2009).

Demand Curve

 

 

 

1

 

 

Price           B

2

 

 

 

Quantity

Promotion

Given the dynamic nature of the industry coupled with fashion changes, Caltex Textile Inc. will use online advertising apart from the adverts in fashion magazines. The expansion in online presence is to generate more traffic towards the garments and in turn increase sales and profitability (Panagopoulos & Avlonitis, 2010). In addition, the company can establish e-shopping as part of its promotion and expansion on the internet.

Establishing the e-shopping is part of reducing the fixed costs that would be incurred in renting places given that fixed costs are constants. The e-shops ensure that the company products are available globally. The company is to exploit consumer promotion in order to boost its sales. The promotions entail giving bonuses to consumers, coupons and setting loyalty reward programs. The sales team could also be promoted by being given commissions, prizes and awards to boost their morale as they represent the face of the company.

Distribution

Distribution of the product determines how these clothes will reach the consumer. Caltex Textile Inc. will use multiple distribution channels (Hawkins & Mothersbaugh, 2009). First, the company will take advantage of internet and have its presence on the social media by creating pages on Facebook, Twitter and even posting pictures of products on Instagram. Additionally, the company website is to be used extensively for customers and dealers communication and products requests. Use of the websites and the social media platform is to affect the tastes and preferences of different consumers with a projection of a positive effect on consumers especially in the long run. Caltex Textile Inc. will also have distribution shops in different places for easy accessibility and convenience. With proper use of distribution channels, the consumption of users is likely to increase and on the demand curve it will create a shift in the curve outwards as illustrated by arrow 1 (Panagopoulos & Avlonitis, 2010).

Sales Strategy

Caltex Textile Inc. will be selling to dealers on a contract basis and other customers on the producer-consumer basis. Given that the contract costs are too high for piece-by-piece sales, the company will maximize its sales online as well as through dealers and wholesalers. The company will source through a strategic partner and ensure that any yarn that does not meet the standard range is dyed and ultimately gets the required fiber, weight and color combinations. For the orders where customers supply yarn, sample delivery will be done within three working days upon receipt of the order (Hines & Bruce, 2007).

In carrying out the sales, the company will ensure that there is real fabric texture in accordance to the consumer requirements. Additionally, the company will carry out an ultra-quick delivery of the orders for convenience and market reliability. Given the market niche and seeking to get an edge over her competitors, Caltex Textile Inc. will ensure quality products at affordable prices, relatively lower than its competitors.

References

Hawkins, D., & Mothersbaugh, D. (2009). Consumer behavior building marketing strategy. McGraw-Hill.

Hines, T., & Bruce, M. (Eds.). (2007). Fashion marketing: contemporary issues. Routledge.

Panagopoulos, N. G., & Avlonitis, G. J. (2010). Performance implications of sales strategy: The moderating effects of leadership and environment. International Journal of Research in Marketing, 27(1), 46-57.

 

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