Cumberland Metals Case Study Essay

1870 Words Jan 31st, 2013 8 Pages
The “Cumber-Coil”:
A Revolutionary Product for the Value-Conscious

SITUATION ANALYSIS
Cumberland Metals Industries developed a new type of cushion pad for pile drivers made of curled metal. The 11.5 inch “Cumber-Coil” was tested by two different companies on two different projects and was found to far exceed the performance of the existing market-dominant product, the asbestos pad. The Cumber-Coil weighed half what the asbestos pad did and boasted a 33% faster driving time, 60% reduction in heat generated, and 400% less time wasted changing pads.

The company that performed the first test was ecstatic with the results and has been pressuring CMI to sell them more Cumber-Coils. Since this is a brand new product unlike anything
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By offering a 15% discount, the cost could be comparable to the most expensive asbestos pads. With a smaller discount or with no discount at all, the price sends the message that this is a superior product worth paying more to have.

This price will be more difficult to communicate and will not readily appeal to the unsophisticated price-sensitive buyer.

CRITERIA FOR SELECTING PRICE
When trying to determine the correct price, a number of factors must be considered: the market and its segments, the size of each segment, the ability to reach each segment, what distribution channels to target, whether to vary price by segment, the usefulness of promotional offerings, and whether the goal is to skim or penetrate each market.

1. THE MARKET
There is certainly a market for this product. It is the market that is currently dominated by asbestos pad and micarta slab users, and is comprised of uneducated (about cushion pads) and price-sensitive customers. Prior to CMI’s involvement, “the pile-driving industry had paid very little attention to cushion pads.” There was no dominant manufacturer, little-to-no branding, and ambiguous distribution channels.

CMI estimated that the market amounted to between 290M and 390M feet of piles driven annually by some 19,500-26,000 hammers, some 13,000 of which were privately owned.

2. MARKET SEGMENTS
The market can be broken down into various segments: pile hammer manufacturers, construction consultants,

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