Curled Metal Inc

Submitted to
Prof Gururaj Kidiyoor
Group I1
 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
 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
 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
 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)
 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
 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
 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
 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