Curled Metal

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הפקולטה לניהול
בית הספר למוסמכים במנהל עסקים ע"ש ליאון רקנאטי

1243.3412 - Pricing Policy
2013, Second Semester

Curled metal case

Lecturer: Dr. Meir Karlinsky
Submission date: May 5th, 2013

Executive Summary
Curled Metal Inc. (CMI) examines a new potential product: using wounded, flattened curled metal as a cushion pad for piles driving hammers.
The Decisions the company needs to take are what price should be charged for it, and how to market it to the costumers (channels).
The alternatives we've examined are: Perceived value, Differentiation and Contingency value. EVC is the offered solution, with a price tag of XXXXXXX for the 11.5 inch pad.
Suggested marketing
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• The first alternative we will focus on is the Economic Value to the Customer (EVC). Hence we have to determine the price that will make a risk-neutral customer, who considers only economic benefits, indifferent between buying either our cushion pad or the ones supplied by alternative offers. We first measure the added values of CMI’s pad compared to a conventional one, then we monetize it, and finally decide the amount we are willing to leave on the table in order to make our product more attractive to the customer. The EVC is measured on the basis of both Kendrick and Corey data (see appendix 1). Looking at Kendrick first we found that the EVC was $4.260,4 and after leaving 40% to the customer, we priced the pad at $2.556,24. Based on Corey’s figures, the EVC was $5.712,58 and after leaving 40% to the customer the price was $3.427,49 per pad.
The rationale behind leaving money on the table is to penetrate the market more successfully with an attractive price, and then educate the customer to the benefits associated with our product, hence raising gradually the price. Indeed, the real true value to the customer will differ from the EVC, at least at the beginning.
Since it is difficult to determine it (more tests would be needed to narrow the $2.556,24 – $3.427,49 range), we would select the lower of the two options,

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