Cumberland Metals Case

Topics: Value added, Pricing, Pile driver Pages: 3 (1064 words) Published: May 16, 2013
1 We recommend Cumberland Metal Industries capitalize on their evolving position as a leader in the curled metal industry and effectively launch their new curled metal cushion pads to be positioned as the “new industry standard” in the pile driving market. In order to successfully launch this product, we first and foremost recommend that CMI acquire a patent to prevent this product from being copied and imitated, thus avoiding the entry of competitors. The associated value and advantages of CMI’s metal cushion pads are evident from the results of the two comparative performance tests by Colerick and Fazio. CMI pads drove piles 33 percent faster than asbestos per hour and lasted the entire job while also eliminating the downtime required for changeover compared to asbestos, resulting in significant savings for the contractors. Additionally, the health dangers associated with using asbestos pads is a growing concern, making CMI pads that much more attractive. The pile driving industry has paid little to no attention to cushion pads and no manufacture has dominated the business thus far, making the entry of the CMI metal pads featured as a work-saving tool both ideal and crucial in setting the new cushion pad industry standard. 2 We recommend that CMI utilize a value-based pricing strategy to introduce the 11 ½ inch metal pad and price it at $299.00 per pad. The value and efficiency of the metal pad will be the driving force behind this price strategy and will offer the customer a savings of up to 33 percent. A major fixed cost that CMI needs to consider is the 360 percent of labor to account for engineering that is required to create the pads at the 9000 year production level. There will be added value shown to the customer by not having to invest in asbestos protection gear and avoiding future liability suits. 3 We encourage CMI to secure a partnership with the leading domestic pile hammer manufacturer, Vulcan Iron Works of New Orleans, for multiple reasons....
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