Read Case 8 – United By Blue On Page 842 Of The Textbook

Read Case 8 – United by Blue on page 842 of the textbook

Read Case 8 – United by Blue on page 842 of the textbook. Answer the following questions: What risks does United By Blue face if Linton raises the prices of its t-shirts? What risks does the company face if it fails to raise its t-shirt prices? Should Linton abandon United By Blue’s mission as an active, eco-friendly apparel company to lower the cost of the company’s t-shirts? What are risks of taking this approach? Should United By Blue raise the wholesale price of its t-shirts from $14.50 to $16.50? Explain. If Linton decides to raise the price of United By Blue’s t-shirts, what steps should he take to communicate the price increases to the company’s retailers and its final customers? Write a 1-2 page paper detailing the above questions, and be sure to cite your references.

Paper For Above instruction

Introduction

The case of United By Blue, a brand committed to eco-friendly practices, presents critical strategic considerations regarding pricing policies. Linton, the company’s leader, faces the dilemma of whether to raise wholesale prices, specifically from $14.50 to $16.50, and how these decisions might impact the company's mission, profitability, and stakeholder relationships. This paper explores the risks associated with increasing and maintaining current pricing levels, the implications of compromising its eco-friendly mission for cost reduction, and effective communication strategies should a price hike be implemented.

Risks of Raising T-Shirt Prices

Raising the wholesale price of T-shirts can lead to several risks. Primarily, higher prices might diminish the product’s competitiveness in the market, potentially decreasing demand among retailers and end consumers (Kotler & Keller, 2016). Retailers may be reluctant to stock higher-priced products, fearing they will lose sales, which could result in reduced shelf space and visibility for United By Blue. Moreover, increased prices could alienate environmentally conscious customers who value the company's mission and might perceive the price increase as a deviation from its core values (Carrigan & Attalla, 2001).

Furthermore, a price increase may trigger downward pressure on sales volume, potentially decreasing overall revenue if the demand is elastic. Conversely, if prices remain unchanged, the company risks profit margins eroding due to rising costs or failing to support sustainable initiatives sustainably.

Risks of Not Raising Prices

If United By Blue does not increase its prices, the company might face financial constraints, limiting its capacity to invest in sustainable materials, ethical labor practices, and environmental initiatives vital to its identity. Persistently low prices could lead to a "race to the bottom," where profit margins are squeezed, undermining long-term sustainability (Porter & Kramer, 2011). Additionally, failure to raise prices might limit the company's ability to scale, innovate, and remain competitive against larger, less eco-focused apparel brands that benefit from economies of scale and aggressive pricing.

Balancing Mission and Profitability

Deciding whether Linton should abandon United By Blue’s ecological mission to lower costs involves significant risks. Diluting the company's ecological commitments—such as using sustainable fabrics or fair labor practices—could compromise brand integrity, alienate loyal customers, and undermine its reputation (Sen et al., 2006). While reducing costs might temporarily boost margins, it risks eroding the brand’s perceived authenticity and long-term customer loyalty, which are critical for sustainable growth.

However, an alternative approach would involve innovative cost-saving strategies that align with the company's environmental values—such as streamlining supply chains, negotiating better terms with suppliers, or investing in eco-efficient manufacturing processes. These strategies could help reduce costs without compromising its mission, preserving brand integrity.

Raising Wholesale Prices from $14.50 to $16.50

Raising the wholesale price from $14.50 to $16.50 could bolster profit margins, enabling sustainability initiatives and potential reinvestment in growth. This moderate increase might be justifiable if supported by market analysis indicating that demand elasticity is manageable at this level (Nagle & Müller, 2018).

To implement this price change effectively, transparent communication is essential. Linton should inform retailers well in advance, providing data to support the price increase, emphasizing the importance of maintaining product quality and sustainability standards. When communicating with final customers, the company could highlight the added value of the eco-friendly elements and social responsibility initiatives, thereby fostering understanding and acceptance (Lemon & Verhoef, 2016).

Conclusion

United By Blue’s strategic pricing decisions must balance profitability with its ecological mission. While raising prices involves risks of reduced demand and alienation, it is crucial for sustaining the company's sustainability commitments and long-term growth. Clear communication strategies can mitigate some risks by fostering transparency and emphasizing value propositions. Ultimately, the company’s success hinges on aligning its pricing, operational efficiency, and branding efforts within its mission-oriented framework.

References

• Carrigan, M., & Attalla, A. (2001). The forgettable consumer: Addressing the ethical sensitivity of consumers. Journal of Business Ethics, 29(1), 65-73.
• Kotler, P., & Keller, K. L. (2016). Marketing Management (15th ed.). Pearson.
• Lemon, K. N., & Verhoef, P. C. (2016). Understanding customer experience throughout the customer journey. Journal of Marketing, 80(6), 69-96.
• Nagle, T., & Müller, G. (2018). The Strategy and Tactics of Pricing: A Guide to Growing More Profitably. Routledge.
• Porter, M. E., & Kramer, M. R. (2011). Creating shared value. Harvard Business Review, 89(1/2), 62-77.
• Sen, S., Bhattacharya, C. B., & Korschun, D. (2006). The role of corporate social responsibility in strengthening multiple stakeholder relationships. Journal of the Academy of Marketing Science, 34(2), 158-166.