The Myth of the Black Tax and a Reimagining of Consumer Behavior in 2021
The foam plate, also called the “paper plate”; A staple in American households, restaurants, and schools around the world.
In one of our better known initiatives, we find common use items then produce them. This way, we have more control on the spend associated with said commodity. We then hire community partners throughout the process. This way, we provide a normal fast-moving commodity communally with tangible economic outcomes. Essentially, the people are closer to producing what they use.
The foam plate likely does not have a huge profit margin unit per unit but could create significance based on scale. At about $0.01 at the lowest price per foam plate, a package of 24 foam plates could be less than $0.5 with packaging. So, maybe a margin of $0.2 profit per unit sold. It would take 500,000 units to make $100,000 based on the $0.2 margin per unit.
Surely, with so many American families using disposable dining ware we could expect to sale at least 500,000 units per month. I am even, confident with the correct marketing, competitive pricing, and ease of distribution this could be achieved.
The question becomes what if we get to the end of the sourcing phase and our price is higher than common competitors'? If that is the case and we decide to move ahead, will Black and pro-Black none black consumers be willing to pay an additional $0.50-$0.75 per 24 foam plate set?
This is where we must shift consumer behavior. Consumer behavior in the sense of targeting customer who are extremely price sensitive and motivating them to purchase. Such a shift is a two-way street. Meaning, for consumers to participate in paying a higher price for essentially the same product, they may have greater demands and deeper critiques of the organization itself. For example, they may perceive what we as planners know are base start-up costs as greed. While all along, we as the manufacturers/suppliers of such foam plates have simply not yet achieved a flip in price based on economies of scale. This miscommunication of sorts is an issue that consumers must be aware of to avoid improperly contextualizing a higher starting list price. However, we also must not dismiss consumer critique as unwarranted ignorance. When, and more importantly, how a price drop can be achieved is the consumer's right. Especially in a community based economic effort such as an initiative such Container's 2020 etc.... Otherwise, without such transparency, consumers are paying more for the same item which likely will result in purchasing fatigue then rejection. I believe revealing goals to customers of a start up will reduce such fatigue and hold the manufacturer/supplier accountable to reach goal.
If we take on this project we must be willing to scale by reinvesting to bring prices down competitively with or below competitors. This way, we can capture those who may be extremely price sensitive.
I can not make a comment on disposable dining-ware without making a social responsibility statement. We must also ask ourselves, is this even worth the investment? Much of the world is moving away from disposable dining-ware in exchange for not only reusable but quick biodegrading reusable dishware and cutlery. Foam plates still reign supreme in many homes in the United States where people do not want so much work of cleaning dishes after eating three meals plus snacks in a family household.
What does this have to do with the myth of the Black tax?
Well, we can not deny that in US history there have been numerous occasions where Black consumers have been purposely made to pay higher rates for the same or even less qualified products and services of their non-black peers
I think this foam plate case illustrates an issue that many black consumers complain about when price is much higher than competitive of similar goods. Conversely, many black startups complain that consumers complain that their prices are too high and feel that consumers should be willing to purchase anyway for the perceived social and economic benefits that would come with more intracommunity dollar circulation.
Here, I want to tie in how the myth of the black tax also seems to be at work here because Black consumers seem to be more price-sensitive than startups generally can handle. However, I disagree. I think that we can cut a fine line into when something is too expensive to invest in vs something that we can make competitive in the market for sure. This way consumers do not feel slighted and if they do it is clear that loyalty will be rewarded with competitive pricing as fast as possible which may mean the manufacturer/distributor had to have less margin for a few inventory turns until economies of scale is reached, and price can drop.
The takeaway: This could definitely work but consumers will be expecting a price drop and some consumers at worst, will not pay $1.75 for something they can buy for $1.00. The only way this could work is by creating loyalty which will then create an association with the higher price being worth it because of the loyalty to communal growth. It is imperative that once economies of scale is reached that price is reduced. In the end, we should offer a new more sustainable commodity and begin to phase this product out which will then begin the more daunting task of challenging and changing consumer behavior totally which leaves two alternatives.
People wash dishes more and lack the convenience of disposable plates
We launch a better biodegradable disposable plate
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