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CASE ANALYSIS

CURLED METAL INC ENGG PRODUCTS DIVISION





















Group #4
MONIKA SAKKARWAL (13PGP031)
NAUREEN FATIMA (13PGP034)
P.ALAKANANDA (13PGP037)
PANDURANG PANDILWAR (13PGP038)
PRIYANKA PITTALA (13PGP041)







CRITICAL ANALYSIS OF CASE

There has been a decline of sales in the year 2007 of around 9%
Also, there has been decline in net income per share

For reference:-


They have now developed a new product (curled metal pile driver pads)
that, in field tests, delivers customer benefits that are many times CMI's
manufacturing costs.
Joseph Fernandez and Rajiv Sanwal of CMI's Engineered Products Division
are responsible for formulating a strategy for the new product.
A key issue is the price to charge for the pads. The case raises issues of
analyzing market potential, aligning price with business strategy, and the
implications of a price on development and execution of integrated
strategic options.

SWOT ANALYSIS



MARKETING STRATEGIES

Promotion to educate prospective customers and raise awareness
about the cost benefit analysis.
Seminar: to make people aware
Potential buyers:
o Independent Pile driving contractors
o Pile hammer distributing/renting companies Give free first set of pads
Sales Representative:: To educate customers about cost saving of CMI pads and
potential dangers of asbestos
Building and Promoting brand name
o Important in promoting the diffusion of the product in marketplace
Word of mouth: Key influencers to endorse the product
Pile hammer manufacturers
o To influence recommendations
Advertisement [Magazine/Newspaper/TV ads]
o Effective advertisement in business magazines to target undecided market
imitations from
competititors
struggle to find
responsible contractors
to use the product
no manufacturers currently
dominating the market
construction personnel are
still wary about the product
Decreasing Sales
Unprecendeted Market
No established channels
of distributions
Experience in curved
metal technology
Can make any size with
same raw material
S W
T O
o Publish test results in magazine & Newspaper
WTP AND NET PROFIT ANALYSIS

Potential Market Demand (1 Year) Range 290 Million to 390 Million Feet of piles
driven
1 set of Curled Metal pads would drive approx. 10000 feet
Potential market for CMI sets Ranges between = 29000 to 39000
1 set requires (4 initially installed pads + 2 added later) 6 CMI pads.
Potential market for CMI Pads = 174000 to 234000 (Avg. 204000) pads annually.
Although there is a demand of 174000 to 234000 pads annually, the estimated
volume of cushion pads is 250 per month i.e. 250 * 12 = 3000 per year
Considering only 11.5 inch cushion pad selling

Estimates per pad
with existing
equipment
Estimated with purchase of $150,000
of permanent tooling
Sizes (Inches) 11.5 11.5
Total Manufacturing Cost 444.36 207.55
Total Cost for 3000 pads 1333080.00 622656.00
Price @ 40% 622.10 290.57
Total Revenue @ 40% for 3000 units 1866312.00 871718.40
Net Profit @ 40% 533232.00 249062.40
Price @ 50% 666.54 311.33
Total Revenue @ 50% for 3000 units 1999620.00 933984.00
Net Profit @ 50% 666540.00 311328.00
WTP Considering Labor hrs saved per pad 1195.20 1195.20
Total Revenue by WTP with time saved
benefits
3585600.00 3585600.00
Net Profit with time saved benefits 2252520.00 2962944.00

** Detailed calculation of WTP and Net Profit for all sizes of cushion pads is
explained in attached excel sheet.
CMI.xlsx

WHY THERE IS A DIFFERENCE BETWEEN WTP AND REAL PRICE

Relatively new product in the market and will take some time to establish
trust factor.
CMI wish to take conservative way so as to decrease risks.
Presence of various players like, Pile Hammer Manufacturers, Architectural
engineers, soil consultants etc would play a huge role in influencing end
users.
CMIs strategy is to capture highest market share.
There is no brand recognition in the industry.
Unprecedented market.
No established channels of distribution.