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Curled Metals Case

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  • October 2012
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Curled Metal Inc.—Finding the Perfect Price
Brief Description of Company and the Situation
Curled Metal Inc. (CMI) specializes in selling metal-based products to various markets. With over $55 million in annual sales (FY 2007, Exhibit A), they’ve managed to capture 80% of the automobile industry’s market share by developing and selling a highly specialized product, Slip Seal, designed just for auto manufacturers. They’ve seen a recent slip in sales (a loss of nearly 10% from 2006 to 2007, Exhibit 2), and the pressure is on them to diversify their product line and decrease dependence on the auto industry. They’ve recently developed a new product that aims to revolutionize the pile-driving industry. The introduction of the CMI Cushion Pad has the ability to change the entire industry for its consumers; some of its more prominent features include the capabilities to significantly lower labor and equipment costs, decrease the total amount of pads being used (effectively eliminating waste), and reduce environmental safety concerns amongst the workforce due to the non-toxicity of the pads’ material. CMI has recently conducted two field testings of its Cushion Pads, with incredible results: the new product performed better than expected at both test sites (Kendrick Foundation Company and Corey Construction). Kendrick was so pleased with the Cushion Pads that they’ve asked CMI to quote prices. CMI is now faced with identifying the best price for this product. CMI Cushion Pads Pricing Considerations:

In pricing their Cushion Pads, CMI faces a number of challenges that must be analyzed in order to determine the best possible price. The most pressing issue is the uniqueness of this product and CMI’s newness to this market; while there is no doubt that this product holds a high value for its customers, a large portion of that value is due to a reduction in labor and equipment costs. Customers may not be willing to pay more for pads without industry backing,...