Cumberland Metal Industries is one of the leading industries in the curled metal products industry and it is the largest manufacturer of the curled metal products in the whole country. The company is facing many issues with regard to the marketing of its products. There are several marketing decision that need to be made by the management of the company, starting with the price of the curled metal pads. The company needs to determine the best pricing method and then price the metal pads of the company.
CMI faced a pricing and channel marketing decision for metal pile cushions utilized during pile driving. However, CMI has to take into account several barriers to entry into this market.
The primary barrier is that most companies viewed role of pads as a necessary accessory or tangent item instead of viewing them as a potentially value adding or cost reducing part of pile driving. In order to penetrate the market, CMI has to alter the point of view of pile driving pads for the opinion leaders, engineering firms, and contractors involved in the decision process.
There is several stakeholders to consider, first CMI that need a new successful product to the continued success of the company. There are also several secondary stakeholders in the pile driving industry.
The workers who drive piles are also stakeholders since the current pads may be hazardous to their health due to heat related injuries and weight.
Projected Attitude Importance Who? Key Issues CMI needs to consider several marketing decisions. First, they must determine a method for pricing and ultimately a price for the new metal pads.
Second, the company must decide which channels to market the pads based on the selected pricing strategy. Third, CMI must determine how much to invest in manufacturing equipment by estimating market penetration and considering the costs and benefits of investing in pad producing equipment.
The market Based on Sanwal's assumption we can estimate the maximum number of set of metal pads requested annually by the market.
Since the feet of piles driven amounted to between and million and the new CMI set of pads would drive 10, feet, we can easily calculate that the market should be in a range of 29, to 39, sets per year. Several Pad features and pricing decisions will be discussed and analyzed in this section.
First, the safety and heat properties of the cushions will be analyzed and compared to current pads. Second, efficiency characteristics will be analyzed and compared.
Third, two methods of calculating the best price in order to match the price to the value added for the customer will be discussed. Finally, an analysis of the different marketing channels and marketing strategy will be presented.
Safety The new metal pads are much safer than conventional pads. Workers often had to handle super heated pads and risked the possibility of being severely burned.
Also micarta pads are much heavier than metal pads, thus increasing the risk of back and other weight related injuries. Conversely, CMI pads are significantly reduced the possibility of heat related injury, and are much lighter than the others pads. Efficiency CMI pads also provide several efficiency advantages over others pads.
It is these efficiency benefits that provide a strong argument for cost reduction to contractors and should influence purchasing decisions and market penetration. In order to determine value to the customer for the increased efficiency, it is best to reduce all cost calculations to a cost-per-foot basis.
It further asserts that pile drivers average feet per hour. This calculation considers only the average cost related with equipment rental, labor and overhead costs. To obtain the real cost per foot driven we have also to consider the time spent to change the set of pads, in this case the labor requested a total of 20 changes and every change took 20 minutes for a total time of minutes.
We also know that it was a labor for a total of 15, feet driven with a mean of feet per hour. Than the total time for the job, not considering delays and moving, can be estimated in minutes, equal to Therefore the real cost per foot driven can be estimated at: Hence the cost-per-foot saved by decreasing the down time to exchange pads is negligible compared to the cost-per-foot savings actuated by the increase in driving efficiency.
Further, it took 20 sets of pads to place piles of 55 feet. This can be compared to the CMI pad manufacturing costs showed in the following table, notice that this calculation in based on the assumption that a set of metal pads can drive 10, feet.
Existing New Equipment New Equipment New Equipment Equipment without cost of depreciation of depreciation of investment machinery in 1 years machinery in 2 years Total variable 7,99 cents 4,91 cents 7,91 cents 6,41 cents Total manufacturing 26,66 cents 12,45 cents 15,45 cents 13,95 cents cost It is important to note that the manufacturing costs are less or align to the actual costs of pads per foot.Case Study: Curled Metal Inc.
Cumberland Metal Industries: Engineered Products Division, Overview: Cumberland Metal Industries (CMI) is one of the largest manufacturers of curled metal products in the U.S. The company started the business by making highly technical applications, but soon changed from selling the finished .
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