Curled Metal - Case Study

3429 Words Jan 3rd, 2013 14 Pages
Pricing Policies
Case Study: Curled Metal Inc.

Executive Summary
Situation analysis: CMI is looking to diversify its portfolio. It wants to introduce a new high performing cushion pad into the pile-driving market. CMI will initially target small engineering/construction and independent pile-driving contractors. CMI will have the first-to-market advantage, as there are currently no direct competitors for metal pads. In terms of channels, CMI would distribute its pads through manufacturing representative.
Main problem: CMI’s primary issue is figuring how price of their new product.
Alternative solutions: We studied four different alternatives: cost +, EVC, price differentiation and contingency pricing.
Chosen solution: Following a
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Potential channels included: Heavy supply houses and heavy equipment distributors - provided access to a wide market but also absorbed additional profit margins. More importantly, they were unlikely to hold the enthusiasm needed to actively promote CMI’s pads and educate the market. Manufacturer’s reps – were commission-based transaction-driven salespeople. Reps held strong industry connections and offered access to a wide market without increasing labor costs. On the other hand they held low brand loyalty and could be discouraged by complex time consuming transactions requiring market education. CMI was also considering In-house direct sales force – they would have offered strong brand loyalty, product knowledge and professionalism but also take longer to gain market coverage and demand large expenditure on labor and training. CMI eventually decided to sign manufacturing reps who sold their pads to various distributors and supply houses.
II. Main Problem
CMI faced several challenges. Despite developing a superior new pad, it was far more expensive compared to its alternatives and essentially formed a new product category. Therefore, much information regarding market potential (e.g. size, profits, share) was lacking and CMI needed to establish a marketing strategy that would maximize the potential for a successful penetration. CMI

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