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CURLED METAL

INC.

GROUP
8

ANKITA SINGHAL ANKUSH PHUTELA DEEP


SHETH
SAURABH SINGHAL SHIVIKA SETHI SRISTI

B2B
MARKETING

Case Overview
COMPANY OVERVIEW

PRODUCT OVERVIEW

Curved Metal Inc. manufactures &


sells products that use certain kind
of metal as raw material
Sales in 2007: $55 million
(declining)
Rose to fame with an innovative
product Slip-Seal, widely popular
among auto-makers
Developed a new product

PROBLEM STATEMENT

Decide upon a pricing strategy for


the new pads
Analyze the market potential for
curled metal cushion pads
Implications of price on companys
strategic & marketing objectives for
the product

CURLED METAL

B2B
MARKETING

Product: Curled Metal Cushion Pad


Raw material supplied by outside
vendors
Used by building contractors in the
hammering process: driving piles
(support structures like beams) in
ground
Transmit energy from hammer to
the pile and prevent damage due
to shock
Though a critical component in the
process, usually ignored by the
contractors
Uses curled-metal technology
Any size can be produced from the
same band of raw material
Coated with poly-vinyl chloride

History of Cushion Pads


HARDWOOD CUSHION PADS

MICARTA SLABS

Adequate cushioning for driving

Alternate aluminum plate & micarta

process

slab

X Poor availability & performance

Better resilience than wood

X Had to be replaced frequently

X Expensive labour for frequent

X High chances of getting ignited

replacing

X Wood easily loses resilience

X Very high temperature (600 700 F )

INCREMENTAL BENEFITS OF CMI


PADS
X CUSHION
Shorter product
life (> Hardwood

Manufacturing process of cushion pads allows


Slabs) any diameter to be produced
from the same band of curled metal
Life of CMI cushion pads is at least 10 times more than conventional pads
CMI pads drove piles 33% faster; Driving efficiency highly increased
Safe to use and contains no hazardous material
Average temperature of conventional pads: 600 700 F and of CMI pads: <250
F
CMI pads weigh less than conventional pads and have outstanding resilience

CURLED METAL

B2B
MARKETING

Pricing of CMI Cushion Pads


KENDRI
Conventional CK CMI Pads
Piles required | Feet per pile

COREY
Conventional

CMI Pads

300 | 50

300 | 50

300 | 40

300 | 40

15000

15000

12000

12000

Feet driven per hour

150

200

160

200

Hours of driving feet

100

75

75

60

Inclusion for delays *

67 + 7

50

50 + 17

40

Total hours per job

174

125

142

100

Cost per hour ($)

714

714

714

714

124236

89250

101388

71400

Cost per set of pads ($) [EVC]

150

37986

120

35988

No. of sets required | Pads per


set

20 | 24

1|6

50 | 12

1|5

6.25

6330

10

7200

3000

37986

6000

35988

Total feet per job

Total cost excluding pads ($)

Cost per pad ($) [EVC]


Total cost of pads ($)

Total cost of job ($) [LCC]

CURLED METAL

127236

B2B
MARKETING

* Includes time for changing pads


Values based on
reported performance
&
127236
107388
107388
life

Pricing of CMI Cushion Pads


KENDRI
Conventional CK CMI Pads
Piles required | Feet per pile

COREY
Conventional

CMI Pads

300 | 50

300 | 50

300 | 40

300 | 40

15000

15000

12000

12000

Feet driven per hour

150

180

160

192

Hours of driving feet

100

84

85

70

Inclusion for delays *

67 + 7

57

57 + 17

47

Total hours per job

174

141

159

117

Cost per hour ($)

714

714

714

714

124236

100674

113526

83538

Cost per set of pads ($) [EVC]

150

13281

120

7197.6

No. of sets required | Pads per


set

20 | 24

2|6

50 | 12

2|5

6.25

2215

10

3560

3000

26562

6000

35988

Total feet per job

Total cost excluding pads ($)

Cost per pad ($) [EVC]


Total cost of pads ($)

Total cost of job ($) [LCC]

CURLED METAL

127236

B2B
MARKETING

* Includes time for changing pads


Values based119526
on estimated performance
127236
119526
& life

Pricing of CMI Cushion Pads


VALUE ANALYSIS
$330
$
4550

$
5885
$
6330

EVC

Suppliers
Competitiv
e
Advantage

$890

$445

$445

Suppliers
Cost

CURLED METAL

Price
$890

B2B
MARKETING

Customer
Inducemen
t

Distributor
s
Margin
Suppliers
Margin

$
2330
$
3000
$
2000

$
1555
Price
$2000

$
2555

Price
$3000

* 50% Distributor Margin, 50% Supplier


Margin
Values based on reported performance &
life
Cost estimates using existing equipment

Pricing of CMI Cushion Pads


VALUE ANALYSIS
$330
$
2330
$
5498

$
6330

EVC

$
6122

$208

Suppliers
Competitiv
e
Advantage

Suppliers
Cost

CURLED METAL

$
3000

Customer
Inducemen
t
$
2000

$416

Distributor
s
Margin

$208

Suppliers
Margin

Price
$416

B2B
MARKETING

$
1792

Price $2000

$
2792

Price $3000

* 50% Distributor Margin, 50% Supplier


Margin
Values based on reported performance &
life
Cost estimates using new equipment

Pricing of CMI Cushion Pads


VALUE ANALYSIS
$435

$
1770
$
2215

EVC

Suppliers
Competitiv
e
Advantage

$890

$445

$445

Suppliers
Cost

CURLED METAL

Price
$890

B2B
MARKETING

Customer
Inducemen
t

Distributor
s
Margin

Suppliers
Margin

$45

$
1090

$635

Price
$1090
* 50% Distributor Margin, 50% Supplier
Margin
Values based on estimated performance
& life
Cost estimates using existing equipment

Market Potential
Pessimistic

Optimistic

No. of pile hammers owned

13000

13000

No. of pile hammers leased

6500

13000

19500

26000

No. of weeks used per year

25

25

No. of hours used per week

30

30

Actual average driving


(Feet/hour)

20

20

290000000

390000000

Feet driven per set of pads

10000

10000

Total CMI pads sets required

29000

39000

Total no. of pile hammers

Feet of piles driven per year

No. of pads per set

No. of pads required per year

174000

234000

No. of pads required per


month

14500

19500

Estimated market share

20%

20%

~3000

~4000

Demand Forecast of

CURLED
(Pads/month) METAL

B2B
MARKETING

Demand Forecast at 20%


market share: 3000 units per
month
Current production capacity
for CMI pads: 250 units per
month
Increment in capacity
required: 2750 units per month
Fixed cost per unit (for
additional equipment &
tooling): $875-900

Above figure assumes only one size


will be produced by the company.

Since we are considering only one


size of pads for manufacturing
(i.e. 11.5 inches), it will be safe to
assume a market share of around
20% in first two years.

Strategic and Marketing Objectives


STRATEGIC OBJECTIVES

Correct product pricing to ensure dominant market position and achieve high
profit margins.
Ensure a robust distribution and production strategy of the product.
Proper positioning of the product in the cushion pads market Advertising,
promotion
Protecting IPR of the pad by filing patents

MARKETING OBJECTIVES

To convince the important influencers to endorse CMI cushion pads.


Architectural/consulting engineers and soil consultants (expert power)
Engineering/Construction contractors
Independent pie-driving contractors
Promotion in industry magazines like Oklahoma contractor
Get Professor Stephen McCormack of Pennsylvania A&M University to officially
endorse the product

CURLED METAL

B2B
MARKETING

Integrated Strategic Option for CMI


LAUNCH OF CMI PADS
PRICE STRATEGY SELECTION

SETTING PRICES FOR CMI PADS

DISTRIBUTION AND PRODUCT USP

PROMOTIONAL STARETGY

CURLED METAL

B2B
MARKETING

Integrated Strategic Option for CMI


PRICING STRATEGY

Pricing Method Cost plus pricing (set the price at the production cost plus a
certain profit margin). Try to equally distribute the value created between
Supplier, Customer & Distributor.
Maximize the quantity sold
Maximize profit margin
Price CMI cushion pad higher than regular cushion pads because it is a worksaving tool and lasts longer
CMI should use existing equipment to manufacture cushion pads
Using existing equipment to produce cushion pads brings higher profit margin
Target contractors who have bigger complex projects and can purchase the
pads in a large scale

CURLED METAL

B2B
MARKETING

Integrated Strategic Option for CMI


PRODUCT DIFFERENTIATION

The CMI cushion pads eliminate downtime making them a work-saving tool
The CMI cushion pads contain no hazardous materials
Significant cost savings while using CMI pads
Efficient more piles driven per set, energy used efficiently
Ease easy to handle astemperature within 250F

DISTRIBUTION

Take advantage of the existing distribution networks - Equipment Supply


Houses, Hammer Distribution Rental Companies
Direct channels as:
Contribute high quantity and demand (50%of estimated market share)
Sell to hardware stores and wholesalers tocover small contractors
Create their own distribution network
Reach architectural and consulting engineers

CURLED METAL

B2B
MARKETING

Integrated Strategic Option for CMI


MARKETING STRATEGY

Promotion to educate customers and awareness aboutthe benefits


Conduct Piletalk Seminars to make people aware
Potential buyers:
Independent Pile drivingcontractors
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 conventional pads
Creating brand name - Important in promoting the diffusion of the product
in market place
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]
Advertise the product in the Oklahoma Contractor magazine
Use Professor McCormack approval to boost the brand name

THANK YOU