1. Curled Metal Inc Submitted to Prof Gururaj Kidiyoor Group
I1
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. 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. 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. 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. 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. 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. 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. 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