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Case Study

Bhanton Towels: The pricing dilemma of an exporter

By Dominique Turpin, Maria Theresa Manalac, Shweta Pandey and Sandeep Puri

6 pages

July 2022

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Reference: IMD-7-2393

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.

Learning Objective

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

Keywords

Pricing, Pricing Strategy, Customer Management, Business to Business, Marketing, Strategy

Settings

South-Eastern Asia, Philippines
Bhanton Towels, Manufacturing, Textile
2022

Type

Field Research (Disguised)

Available Languages

English

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Summary

In the 2010s, card processing – Mastercard’s flagship service – started showing signs of commodification as new, nimble players (typically, fintech startups thriving on digital) entered the payment processing space, and customer preferences evolved beyond plastic cards and traditional contact payments. To re-energize its central position and its ability to capture value, Mastercard – as the incumbent – had to make bold decisions. The case details Mastercard’s approach to conceptualizing and building a global platform ecosystem that upholds the principles and design elements of modularity (i.e. interoperability and scalability) and optionality. Today, Mastercard's services, based on application programming interfaces (APIs), integrate with a variety of platforms and offer flexibility to businesses that require customized payment solutions. All along, the company has accommodated a high level of internal disruption. The case also explores the nature of Mastercard’s systematic collaboration with fintechs – players that often started out as competitors in specific parts of Mastercard’s value chain. It describes the company’s engagement with fintechs as fostering collaboration and co-creation and facilitating access; in other words, opening doors and sharing tools with partners. The case presents observations and quotes by CEO Michael Miebach, whose career trajectory at Mastercard – spanning Africa & Middle East experience, fintech partnerships, product management and the CEO role – sheds additional light on the philosophy and values that have driven the company’s transformation to a technology powerhouse and self-described original fintech.

Reference IMD-7-2455

Organization Mastercard

Industry Finance and Insurance, Financial Services

Available Languages English

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