Cumberland: Pricing and Pads

Topics: Pricing, Marketing, Variable cost Pages: 7 (4428 words) Published: October 29, 2014

(1) 1.       What’s your price for the curled metal pads? Why? (3) 2.       How attractive an opportunity is this for CMI? (7) 3.       How are you going to market these pads? Describe your marketing plan. (8) 4.       What are you going to say to the Colerick Foundation?Exhibit 1: SWOT Analysis| || |Strengths| Weaknesses|CMI was one of the largest manufacturers of curled metal products in US with an 80% market share. CMI’s sales were dipping and management was not optimistic of maintaining the current market share in the long run. Cumberland had a history of using curled metal technology to develop innovative metal products like slip-seal to meet the demanding specifications. Existing cushion pads in the market seem to be meeting the need adequately and hence no specific attention was being paid to develop new and high performing products. The results of tests of the use of new metal pad had been excellent, exhibiting nearly 33% gain in efficiency and 20 times more life as compared to asbestos pads. Because of the lack of an existing market and sales and distribution channels, company faced a herculean task of convincing the channels that there indeed was a market for the new pad. Existing pads in the market came in standard diameters but CMI’s manufacturing process provided the flexibility to develop pads in any diameter using the same band of curled metal. Because of the lack of statistics on cushion pad usage, CMI did not have a clear idea of the sales mix of the various product sizes. Contractors and Subject matter Experts(Prof. R. Stephan McCormack of Pennsylvania A&M university ) had expressed great enthusiasm about the new pad. At this stage of prior to product launch and manufacturing, CMI seem to be struggling to find a responsible contractor to use the product and monitor its performance | Opportunities| Threats|No direct competition for Cumberland existed because of the lack of interest of... foot driven. This alternative is in line with the price of current used pads in the test scenario, hence competitive. The advantage of this method is it fulfills the company objective of 50% markup, is easy to calculate, and competes well with other pads. Furthermore, proceeding years will realize a greater than 50% margin since the $150,000 equipment investment will be eliminated. This approach would work best for a strategy of extensive market penetration. Since the price of the pads are the same current used, CMI needs only to convince consumers of the efficiency and safety advantages to convert them to the new pads. However, this pricing method does not consider the possibility of premium pricing due to efficiency cost savings or value added to the customer by using the CMI pads.Case PresentationCurled Metal Inc. (CMI) faced a pricing and channel marketing decision for metal pile cushions utilized during pile driving. CMI’s approach to metal pads has significant efficiency advantages over currently used pads available in the market. 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. The decisions regarding pile cushions could greatly increase the company’s revenues and profits. There are also several secondary stakeholders in the pile driving industry. Secondary stakeholders include pile hammer manufacturers, architectural consulting engineers, soil consultants, pile hammer distributing/renting companies,...Promotion strategyPatent?Curled Metal's strategic and marketing...
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