Case - Curled Metal Inc

Team: The Trailblazers Krishna Murari(1501019) Ankith Passi (1501069) Aroop Sanyal (1501074) Harmeet Singh (1501080)

Case Analysis: Curled Metal Inc Background Curled Metal Inc. (CMI) customizes components for chemical process filtration and other highly technical application. The company had grown significantly in sales from $750000 in 1991 to $55 million by 2007.The management believed that one of their products, the curled metal cushion pads had more potential than any other product they have ever introduced. However, CMI faced challenges in 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 enter 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.

Issues to be addressed CMI needs to address several key issues for their new metal pads. First, they must decide on a pricing strategy and ultimately a price for the new metal pads. Second, the company must develop strategic and marketing objectives and must decide which channels to market the pads based on the selected pricing strategy.

Analysis & Recommendations Pricing Strategy a) Pricing objective: CMI should emphasize on maximizing quantity and profit margin (the corporate management expects a contribution margin of 40%-50%). b) Pricing Strategy: CMI should consider setting the price at the production cost plus a certain profit. c) Price Calculation: Kendrick Foundation Company

Corey Construction

Average

Parameter

No. of sets required Kendrick cost per set Total pad cost

Conventional Pads

CMI Pads

Conventional Pads

20

1

50

150

Not charged

120

3000

-

6000

CMI Pads 1 Not charged -

Conventional Pads

CMI Pads

35

1

135

-

4725

-

Considering a contribution margin of atleast 50%, the price can be set around $2300 to $3000 per set. Positioning CMI can focus on the following points of difference and points of parity for making their positioning strategy.

Team: The Trailblazers Krishna Murari(1501019) Ankith Passi (1501069) Aroop Sanyal (1501074) Harmeet Singh (1501080) a) Point of Difference :  Efficient – CMI pads are highly efficient as piles driven per set of pads is 6 for conventional pads whereas it is 300 for CMI pads. Also, lesser energy dissipation through heat adds to the efficiency.  Ease – Easy to handle as temperature never went above 250F so pads could be handled immediately with protective gloves. Also saves on downtime, compared with conventional pads, while waiting for the pads to cool down.  Safe – No hazardous material used. b) Points of Parity :  Time Saving - As CMI Pads lasted the entire job, it eliminated downtime required for change. Time required to change sets in Kendrick Foundation’s case: Conventional pads= 20 * 20 min = 400 minutes; CMI pads = 1 * 4 min = 4 minutes Time required to change sets in Corey Construction’s case: Conventional pads= 50 * 20 min = 1000 minutes; CMI pads = 1 * 4 min = 4 minutes. Distribution Strategy CMI can consider two distribution strategies. One during the early stage of the product and the other after the market develops for the product. 1) Early Stage: a. Take advantage of existing distribution network. b. Sell to hardware stores and wholesalers to cover small contractors. 2) After the market develops: a. They can create own distribution network which would help them focus on contributing to high quantity and demand. b. Reach architectural and consulting engineers as they can influence the purchasing decisions. Marketing Strategy 

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CMI should focus on promotions to educate customers and create awareness about the benefits of using their product. They can use seminars like “Pile Talks” to make people aware of the product and its benefits. Use sales representatives to educate customer about the cost savings of CMI pads and potential dangers of asbestos. Use word of mouth as key influencer to endorse the product. For this they can consider taking help from the pile hammer manufacturer as they can be good influencer for recommending the products to customers. Also, Professor Stephen McCormack who had established a department at Pennsylvania A&M University can be considered as potential influencer as he was a respected authority on theoretical aspects of pile driving. Advertise in business magazines to target the undecided market and also publish the test results in magazines and newspaper to demonstrate the benefits of using CMI pads.