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Curled Metal Inc. Case Analysis Case Solution & Answer

Curled Metal Inc. Case Analysis

Customer value Proposition

The customer value proposition of new product provided by the Curled Metal Company are quality and reliability, which give more advantage to the customers than the conventional pads do. New product is time saving, safer and increases the efficiency of driving piles. It prevents from the hammer shocks and can be easily handled. The other value proposition of CMI pads is that it reduces the risk throughout the process and increases the functionality. It can withstand any kind of temperature, and it has copper and stainless covering steel. These pads are fully recyclable and do not contain any harmful materials, which protects from harm during the driving process.

Strategic Objectives

  • To ensure the correct product pricing and target market to position the new product, to achieve the highest profit margin.
  • Ensure the best distribution strategy of the new product.
  • Proper advertisement and positioning of new product in the cushion pads market.
  • Protect the product’s IPR and file the patent.

Objectives of Marketing

  • Endorse the brand by the influencers, such as: architecture and consulting engineers.
  • Target the independent contractors.
  • Promote the brand in well-known magazines like Oklahoma Contractor and on social media channels.
  • Utilize proper marketing channels

Marketing channels

There are numerous marketing channels for Curled Metal Inc. to market its cushion pads. The company can make a team which can sell the product to the customers directly, and it can also go through the distributors. This can be done up to break-even level, till the break-even level is achieved and the customers get awareness regarding the product. The service solution providers (SSP) can be implemented to pile the distributors of hammer and renting companies. SSP can targets the audience much easily on geographical basis. In future, when the product becomes commoditized; the company can then sell the products through the hammer outlet and other contractor outlets.

Cushion Pads Pricing

As per the corporation management; CMI looks at 40%-50% contribution margin of selling price. There are two options that can be considered for CMI pads’ pricing strategy.

Cost-Plus Pricing

In the case exhibit 6, there is a projected cost of manufacturing that is based on CMI investment in the new product. This shows that the price per pad of CMI will differ if it utilizes the equipment (cost of equipment is 150000), and the manufacturing cost per pad is $444. With the contribution margin of 57%; the price is 500. If CMI wants to purchase the new equipment permanently, it will incur the cost of $150000 and its manufacturing cost will be 248. This pricing strategy targets the margins that the firm wants to incorporate, which will drive it the company to penetrate the market and boost its sales. In cost-pricing method,a lower price will be charged while keeping the external factors under consideration.

Value added pricing

This pricing methodology elaborates the additional cost gained by the customers (e.g. saving energy, raw material saving, labor cost reduced). Through this pricing strategy; the hidden cost will be acquired. The end customer gain the additional value, which will justify the higher cost that they pay. If CMI opts this pricing strategy, thenit will save 34 hours of its customers. CMI average saving is based on 12 hours with an average of 996 minutes. The total saving of the product for end customer is $4488 ($132 per labor cost). The buyer value for the product is $9822 (value added $4488 plus $5334) and per pad is $1637. CMI should perceive this option because it is very lucrative for the company, through which it can gain the additional savings from customers by offering theproduct which can be capitalized.

Recommendations

CMI’s cushion pads are new products in the market which are innovative and unique for the customers. It gives the CMI an opportunity to lead the market with high-quality product and to be independent in its pricing strategy. CMI should start with 50% margin in the market for first two years, to adjust the margin accordingly, as economies of scales are high with lower production cost. When the margins are higher,it translates tohigher prices for the end-users and distributors, which will set the CMI as a high quality product provider in the market.

Pricing Recommendation

Firstly, CMI should change its customers’ perception by showing them that pad is the part of pile driving and its pricing is based on price-per-foot instead of price-per-pad.

The recommendation for CMI is that it should go with the value-adding pricing, and invest into new equipment, which cost $150,000 and reduce the projected cost. It should set the margin from 50% to 60% for all the product’s sizes, and sell the product per set at $6000.

Recommendation for Channel

CMI should use the push method to market its product through distributors. A pull approach can also be used to educate the contractors, engineers and distributors about the product’s efficiency and its usage. The market has an opportunity to push the customers towards the safety products and make a labor union to push them to the higher safety standards. This can prove to be an effective strategy which will help the company in penetrating the market.

Recommendation for Promotion

CMI should communicate the features of cushion product to its customers. It should promote the product’s value proposition to the influencers and potential customers. The company should utilize conferences, events, trade shows in the industry,to communicate the product’s advantages to other customers. Professional magazines can be used to advertise the cushion pads, and brand endorsement can also be very helpful. CMI’s operational performance can be endorsed, which will help the company in being accepted in the industry. Professor Stephen who tested the cushion pads, seems to be very enthusiastic about the product, so the company should ask him to write an article on the product, which must give insights to the customers. CMI can also arrange seminars and talk shows related to “pile talk” in different cities, in order to grab the more attention and customer base. The company should hire sales representatives, who should be able to educate the customers about the benefits of products and help the company in creating its brand image in the  market………………………

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