Curled Metal Inc.

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is an attractive opportunity for Curled Metals especially since they plan on introducing a product into the market that exceeds their current competitors. CMI is currently producing with a maximum capacity of 3000 pads a year, so this presents an opportunity for them to innovate and purchase additional equipment to increase their production capabilities. CMI expects to sell their product at a much greater price than $9 a pad due to savings from the additional value added. Current cushion pads in the market are of average quality with poor performance. Due to CMI’s innovative product offerings we believe that they can capture a large percentage of the market size while charging a premium price.

Strategic Objectives

In order to create the ideal strategic plan, CMI needs to focus on what their pricing alternatives will be. In order to maintain dominance in the market and to establish a bigger market share, CMI needs to price the product in a way that will bring high profit margins for the company. Another strategy that needs to be discussed is the way the product will be distributed and the investment it will require in order to be launched into the market. CMI pads need to be strategically priced in order to maintain the brand reputation for this new innovative product. Promoting and positioning their pads in respect with the convenient pads will be crucial. CMI needs to position their pads as new, relevant, and something that will benefit the industry. Due to differentiation among competitors, CMI’s pads will need to be patented in order to keep new entrants at bay.

Marketing Objectives

CMI pads will be new to the market thus the company needs to use the push method in order to generate awareness of their product with its distributors. By doing this, CMI will bring their product and show it to their distributors in order for them to generate an opinion and potentially sell it. The push method will let the distributors know that CMI is considering them in selling their new product thus creating trust and a relationship. Another method will be the pull method, which CMI can use as an educational preview of their product. By doing this customers will see the product in action. Another objective CMI needs to achieve is to convince their influencers to get on board with their pads and distribute it. Promoting with different type of magazines or print advertisements such as the Oklahoma Contractor will generate awareness and word of mouth. The last objective should be to contact Professor McCormack in order for him to endorse their product. Professor McCormack will be the best influencer because he has his own department to study pile driving and is a respected authority on its theoretical aspects, engineering/construction firms and many architectural consultants support his work, and lastly his endorsement might enhance industry acceptance.

Pricing Recommendation

Distributor Price

We recommend CMI use value-added pricing over cost-plus pricing for its new construction pads. Cost-plus pricing will not take into account the additional costs customers can save by using CMI pads. The prices shown in alternative 2 are also the maximum price that customers would be willing to pay for CMI pads. Although the company should positions itself as a manufacturer of premium products, for a new product to be priced so high may be problematic for CMI, especially since this product is completely new and may need time for people to adopt the new technology. Therefore, we recommend a markup of 70% on the cost of manufacturing the pads after investing in new permanent tooling, which will ultimately price CMI pads at approximately $692 per pad and $4151 per set. The breakeven units at that price point will require CMI to sell at least 864 pads per year leaving them with a total break even revenue of $597,888. In order to break even CMI should capture 28% of the total market share. It is important to keep in mind that with the new equipment, CMI will be able to increase their maximum production capabilities overtime allowing them to reduce their costs and increase long-term revenue.

Retail Pricing

For distributors, CMI should recommend a suggested retail price (SRP) that gives distributors approximately 30% margin on CMI pads. The typical margin given to distributors fall within 30-40%; therefore, CMI will be recommending a margin that is on the lower end. However, for distributors that carry and sell sets of CMI pads, the dollar profit will be greater in comparison to conventional pads. Additionally, a 30% distributor margin fits not only the typical margin range but is also supported by how much time on average someone would save using the new product. CMI pad users save 22 hours on average compared to conventional pad users, which is approximately 23% in additional time saved on one project. Distributors will also be able to promote the safety benefits (the lower temperature during pad changes and lack of hazardous materials) to customers, which is a distinct differentiating factor for the product. At a 30% margin for distributors, the retailers selling price is about $5930 per set and $988 per pad.

Marketing Plan

Marketing Focus

During the scope of the marketing plan implementation, CMI’s pricing policy of having a premium price must always be reflected. Since that price point makes CMI a unique differentiator against unbranded and lower quality products, it will be important to withhold it and not be deterred from changing into a lower level pricing strategy. Marketing also has to constantly focus on the importance of using the CMI pads as a ways to to improve time efficiency (cut time waste) as a work saving tool. Safety is another driver in marketing, as CMI cushion pads provide a solution to the safety of workers. These main points of difference from CMI’s competitors allows CMI to provide beneficial cost savings to customers.

Marketing Communications

One portion of the recommended marketing plan is to utilize endorsement through Professor McCormick. As stated in previous marketing objectives, McCormick is a subject matter expert that can easily point out the quality and excellence in CMI pads, that will significantly help improve the brand marketing and promotion. CMI would ask him to publish an article or hold a conference in explaining the benefits of our pads and will thus in turn help reach our main target audience of high level engineers and “Soil Consultants.”CMI will also be dispensing