Cmi Case Study

Topics: Price, Mathematics, Perception Pages: 2 (423 words) Published: February 24, 2013
First of all, the company should apply a patent for this new cushion pad. Since it is not a very advanced technology, if it goes public without having a patent, competitors must copy this technology. Therefore, the company should get the patent as soon as possible to ensure that it will be the only supplier of this technology and hence make the maximum profit. After that, to price this product, the company should apply the concept of perceived value to customers and make sure customers perceive the value.

A set of statistics taken from the Colerick Test:

| |Asbestos pad |Cushion Pad | |Feet driven per hour |150 |200 | |Piles driven per set of pads |15 |300 | |Number of pads per set |24 |6 | |Number of sets required |20 |1 | |Number of set changes |20 |1 | |Time required for change per set |20 mins. |4 mins. | |Colerick cost per set |$50 |Not charged |

Basic Calculation

The price of an 11.5 inch asbestos pad is $3.
During the Colerick Test, Colerick cost is $50*20=$1000, since 6 sets of new pad are used. $1000/6 = $166.67 can be assumed for the cost of each set of new pad. The job required 300 55-foot piles driven 50 feet into the ground. Albestos pads took 20 minutes to do so and 20*20 = 400 extra minutes for change. Meanwhile, the new pads only took 15 minutes and 4 minutes for change. Therefore, (420-19)/60 = 6.68 hours were saved....
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