Curled Metal Inc.

Case Study
GROUP 5
Arnav Gera
A020
Ashish Jain
D019
Harshit Upreti
D065
Jay Doshi
D013
Maitri Shah
D049
Pratik Jain
C024
Priyadarshi Mishra
D041

Question 1
What should a customer be willing to pay
for one of Curled Metal Incorporateds
(CMI) new cushion pads? What factors are
relevant in calculating willingness to pay in
this situation?

Factors to be considered

Average Cost per hour Saving for Equipment , labor and

overhead

Higher Efficiency of CMI product

Longer lifetime of CMI over conventional

Downtime : If we also factor in the amount of time

it takes to change conventional sets, it contributes
3
significantly to overall cost.
4

Influencing power of the renting companies

Greater the efficiency , lesser their revenue

Question 2
What price should CMI set for one of its
new cushion pads? Why?

Manufacture costs vary from $444 to

$1920 for the larger sizes, thus price
needs to be balanced accordingly

Cost of Single
conventional
pad= $6 - $9

Pad type

No. of
Changes X
time per
changes

Time reqd

Conventional

20 X 20 mins

400 mins

CMI

1 X 4 mins

4 mins

Pad type

Total Feet /
Feet driven
per hour

Total time

Conventional

15000 /150

100 hours

CMI

15000/200

75 hours

Total value of savings =

$3400
Value based Price =
$3400

CMI can charge ~$1500-2000 per

pad This pricing can be justified if
we are able to position the product
properly
CMI can charge ~$1000 if it wishes
to achieve a high market share

Market Based Price =

$10

Question
How big 3is the potential market for

this product, and what should be

CMIs strategic and marketing
objectives in introducing this
product?

Market Potential
Total requirement = 290 390 million

feet of piles to be driven

One set of curled metal pads 10,000
feet
(One set of curled metal pads = 4
initially installed, plus two added)
Market requirement = 29,000 39,000
sets of curled metal pads
i.e. 174,000 234,000 curled metal pads
Market value = $121.8m $163.8m

(@$700 per pad)

Strategic and Marketing objectives

4. On page 1 of the case, CMI vice president

Joseph Fernandez says, The way we price this
could have
Question
4. a significant impact on everything
else we do. An integrated strategic option
specifies the basic type of advantage a
company will pursue (e.g., differentiation? low
cost? other?), relevant decisions about
customer and product scope, and key choices
throughout the companys value chain.
Develop an integrated strategic option for CMI
an option that specifies your price but also
specifies the many other choices facing CMI in
formulating a strategy for its new cushion
pads (e.g., in marketing, sales, distribution,
production, finance, and other functions).

Launch of CMI Pads

Pricing Strategy
Price objectives: maximize quantity and

profit margin.
Price methods:
Cost-plus pricing set the price at the

production cost plus a certain profit

margin.
Value Based Pricing

Demand Estimation
Annual

estimated demand = 290 to 390 million units (data as assumed by Sanwal)

In Kendrick Foundations case, feet driven = 15000 ft. No. of conventional pads used = 480
Avg depth the piles driven/ pad = 15000/ 480 = 31 ft
In Corey Constructions case, feet driven = 16000 ft. No. of conventional pads used = 600
Avg depth the piles driven/ pad = 16000/ 600 = 26.67 ft
Taking

the average number of feet the conventional pad lasts as 28 feet, (average of above
2 values)
Avg number of conventional pads required = 300m/ 28 = 10.7 million annually (approx)

Data

as assumed by Sanwal in the case, a set of 6 pads lasts for 10000 feet.
Therefore, the average depth the CMI lasts for = 10000/6 = 1666 feet
Avg number of CMI pads required at 290m= 290m/ 1666 = 174000 annually (lower limit)
At 390m = 390/1666 = 234000 annually (upper limit)

Annual

capacity of the plant = 250 * 12 = 3000

Market penetration achieved at 3000 units = 3000/ 174000= 1.7%
At 234000= 1.28%
(The value 174000 and 234000 was arrived at assuming all the demand comes for CMI
pads)

Positioning
Points of Difference
Cost overall cost is low.
Efficient more piles driven per set, energy used

efficiently
Ease easy to handle as temperature within 250 F
Safe no hazardous material
Savings

Point of Parity
Time Saving Reduces time for changeover

Distribution
Early Stage

After the market develops

Takeadvantageof

Create our own distribution

network.

theexisting distribution
networks:
Equipment Supply Houses
Hammer Distribution

Reach architecturaland
consulting engineers.

Rental Companies

Direct channels as:

Contribute high quantity and demand (50% of
estimated market share)
CMI has more control on education and
monitoring
Sell to hardware stores and wholesalers to cover
small contractors

Marketing Strategy
Promotion to educate customers and awareness

about the benefits

Seminar: Piletalks to make people aware
Potential buyers:

Independent Pile driving contractors

Pile hammer distributing/renting companies
Give free first set of pads

Sales Representative:
To educate customers about cost saving of CMI pads and

potential dangers of asbestos

Creating brand name
Important in promoting the diffusion of the product in
marketplace

Marketing Strategy
Word of mouth: Key influencers to endorse the product
Pile hammer manufacturers
To influence recommendations
Professor Stephen McCormack would have a significant impact
Department to study pile driving and was a respected
authority
Advertisement [Magazine/Newspaper/TV ads]
Effective advertisement in business magazines to target
undecided market
Publish test results in magazine & Newspaper

Thank you