7/7/2016

TEAM 5- VICTORIOUS SECRET

CURLED METAL INC.

Curled Metal Inc. forayed into an unknown product category through the creation of a new

Influencers
Pile
hammer
manufacturer
Pile hammer distributors
Consulting engineers
Engineering
contractors
Pile
driving
contractors
Soil consultant

Importance
High

Attitude
Indifferent

High
High
High

Discouraging
Supportive
Supportive

High

Supportive

Low

Supportive

type of CMI Pad which was superior to any other product in the market in terms of
performance and benefits. CMI has consistently maintained a dominant market share in
the Slip Seal category segment, but finding a new source of revenue was of primary
importance to the firm to offset risk and consolidate the firms future. The CMI Pad offered
such a rare opportunity to improve their performance and standing in the market. The
various decisions to be taken, in order to move forward with the new product is as follows:
Influencer Strategy
The company needs to adopt a B2I (Business to Influencer) Strategy,to ensure that the
product awareness is improved and target consumers willingness to purchase the product
is increased. The company needs to tie-up with Pile Hammer Manufacturers, Consulting
Engineers to raise awareness about the new pads and directly market products to
Engineering Contractor Firms & Independent Pile Driver Contractors to increase traction of
the product.

PoDs
Cost-efficient
Efficiency
Energy Saving
Safety

Time Saving

Description
Overall cost is low; Highly cost effective as compared to the
conventional pads
More piles driven per set
Energy is not dissipated as heat (33% better performance)
Easy to handle as temperature within 250 F as compared to
conventional pads, energy saved from being more heat resistance can
be used somewhere else
Reduces time for changeover of pads significantly

Points of Difference
Analysis of Product Benefits to Target Consumers
As per the analysis for the comparative performance tests from Kendrick and Corey, there
was a significant savings of $1.19/foot and $1.01/foot respectively as derived using the
industry standard of $714/ hour rates for calculating the overall savings due to time

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TEAM 5- VICTORIOUS SECRET

savings generated as a result of using the CMI Pads. This allows us to gauge the impact of
this product and perceived value for the customer.

Recommendations :
Pricing
The manufacturing process to be used should be utilizing the method with the $150,000
investment in the processing tool. This was evaluated due to the overall cost of recovery
in terms of direct labor &overhead charged due to direct labor. This translates into $237 of
savings per unit (11.5 inch variant) which can easily recover the initial investment with an
annual production of 6000 units of the pads. The overall cost can be calculated by taking
the cost of each individual unit as a function of the initial investment ($25 per unit for
6000 units) and variable cost ($207.54 per unit), adding up to a total of
$232.54.Following a Cost-Plus Strategy, we would be pricing at $350 per pad
approximately with 50% markup. This pricing strategy would allow the company to get
high market share in a relatively small time frame. Additionally, a price-skimming
strategy due to initial low volumes would also allow the company to reap early
benefits to improve its production capacity linearly with increasing demands, pricing it
above similar competitors at $1500 per pad.However, due to the low importance
attributed to the product category in the market, it would be wiser to opt for
the Cost-Plus Strategy.
Marketing Strategy:
Positioning : A new industry standard thats environment friendly,safe ,significantly
reduces the time, saves cost for the pile-driving process.
Target : Independent Construction Companies and Independent Pile-driving contractors.
CMI will focus on 11 1/2 pads and initially target independent construction companies and
independent pile-driving contractors. These are most price sensitive and accessible. This
move will provide CMI time to learn the market and perfect its production line in
preparation for supplying larger project developers in the future.The table below gives an
estimate of the current market potential for the product.

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Market Size Analysis

Upper Limit of Annual
39,00,00,
Work per job
000
Lower Limit of Annual
29,00,00,
Work per job
000
Average Annual Work per
34,00,00,
job
000
Curled Metal Pads useful
life (in feet)
10000
Market Size (number of
pads)
204000
Competitors : CMI had a number of small competitors who were substantially smaller
than CMI and none had by far show a strong interest or competence in technical,market or
product development.However, due to low entry barriers to the technology used and the
product being unpatented,it was susceptible to imitation by other manufacturers.Hence
the product required significant brand clout. The following could be the various branding
activites.

Develop a brand logo symbolic of the attributes the product and a positioning
statement.
Distributors,construction supply houses and rentals could be used to create Point-ofsale promotion via posters depicting the cost,time and energy savings via
comparative analysis with the conventional pads.
Organize regional meets of contructors to interface them with the influencers where
the product and benefit accrued can be demonstrated.
Generate trial by giving the first set of cushion pads free as a sample along with a
detailed brochure about the product.

The following activities can help prevent/delay the imitation by capturing market share
and reducing prices via Economies of scale thereby raising the barriers to entry for
competitors.

Enter into long term contracts with major contractors who can give significant
volume sales
Since WOM was not prevalent in the industry,we can initiate a referral program by
offering discounts for referring the product to other contractors.
The company could also lobby the labour unions to push for higher safety standards
and abandon the hazardous used pads and adopt CMI.Given no other substitute
with similar standards,it would trigger an instant shift to the product thereby
increasing immediate sales.It could also use a distinctive symbol/hologram to
differentiate the product in terms of safety and environmental standards relative to
the competitors.

Sales and distribution

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Distributor channel : As they carried a narrower line of merchandise focusing on this

channel gives significant scope for branding/promotion. Sign up Construction oriented
manufacturers representatives who visit distributors to generate awareness both to
customers and the distributors thereby triggering sales .Induce trial at these channels by
giving first set free. Given significantly cost savings on product , increase the dollar profit
margin thereby ensuring channel dominancy and repeat purchases. Eventually,with
significant branding,we can focus distribution via the cluttered channel of construction
supply houses.
Rentals : Target the existing network of rental outlets and dump/block the channel via
direct selling to the outlets.Eventually,we can get into long-term contracts for these
outlets resulting in significant capturing of the channel.
Online channel : Based on reach and cost savings from the channel, this could be a
viable option in reaching the target segment directly.Given the product is one of its kind,it
has huge potential to expand markets and online channel will help in geographical
expansion of the market.

Promotions Strategy

The utilization of the PileTalk platform to launch the new product and create
awareness among the whos who of the construction business. This would increase
consumer adoption of the product.
Getting Professor McCormack of Pennsylvania A&M University to ratify the
performance of the product and increase its acceptance into the industry through
association and recommendation.
Leveraging the B2I model in order to improve the awareness and adoption of the
new product