1. 1. Curled Metal Inc Submitted to Prof Gururaj Kidiyoor Group I1
2. 2. Product launch plan Plan for the launch of Curled Metal Inc.s new product: CMI cushion Pads Selecting a pricing strategy Setting price for CMI pads Positioning the product Chalking out a promotional strategy for CMI pads
3. 3. Positioning Points of Difference Cost overall cost is low. Efficient more piles driven per set, energy used efficiently Ease easy to handle as temperature within 250 F Safe no hazardous material Savings Point of Parity Time Saving Reduces time for changeover
4. 4. Preliminary price estimation SP 207.54 (0.35)SP = 0.45 SP Therefore, Selling Price = $ 1037 From Kendrick Foundation: Cost of conventional pads = $ 4320 Cost of CMI pads = $ 6226.2 From, Corey Constructions: Cost of conventional pads = $ 5400 Cost of CMI pads = $ 5185
5. 5. Demand Estimation Annual demand estimated = 290 to 390 m feet Average no. of coventional pads required = 300m/ 20= 15m Average no. of CMI pads required= 300m/ 1666 = 180072 Annual capacity at 250/ month = 250 * 12 = 3000 Market penetration with 3000 units = 1.6% (assuming market demand as 180072)
6. 6. Revising the price 1 CMI = 100 Conventional pads At $1037 distributor margin is more than conventional pads Price is reduced maintaining the contribution and decreasing the distributor margin At $875, the distributor margin is 319 and contribution is 40 % (approx) Distributor margin is more than $315 to provide them the incentive to push the product to leasing contractors
7. 7. Breakeven Sales Permanent Tooling Variable Cost Material (A) 46.92 Labor (B) 34.92 Fixed Factory OH @360% Labor (C) 125.7 Total manufacturing cost/unit (M = A+B+C) 207.54 Additional investment 150000 Price calculated (D) $875.00 Distributer margin (E) 36.5% Distributers earning (F = D*E) $319.38 Price at which it is sold to disributer (G = D-F) $555.63 Fixed cost 150000 Contrribution @ 45% of Selling price (H = G - M) $348.09 Break-even Sales 431 Total Capacity 3000 This can be achieved in 3 months as the demand is very high Even if 36 products are sold per month the Break-even sales is achieved
8. 8. Promotion Direct Channels To deal with the contractors who own pile hammers Employ sales people who directly approach contractors and convey the benefits Advertisement Effective advertisement in business magazines to target undecided market Distribution network With increased margins, distributors will have incentive to push CMI pad sales
9. 9. Suggestions CMI should look for increase in market share with the new product Once patent is approved, CMI can look to rapidly increase the market share In long term, CMI can expand its manufacturing capacity