Assignment 1

Cumberland Metal Industries: Engineered Products Division, 1980

1. Describe and quantify the value proposition of CMI’s metal cushion pads.

Answer: A customer value proposition captures the particular set of benefits that a
supplier offers to advance the performance of the customer organization. Rather
than merely attempting to list more benefits than competitors, “best practice
suppliers base their value proposition on the few elements that matter most to
target customers, demonstrate the value of this superior performance, and
communicate it in a way that conveys a sophisticated understanding of the
customers business priorities.

The pile driving industry had paid very little attention to cushion pads before
CMI’s involvement. Everyone used them and took them for granted, but no one
attempted to promote pads. No manufacturers dominated the business. It is also
one of the important equipment in pile driving.

Points of Parity:
Time saving- Reduces the time in changing per set

Points of difference:
1. Overall cost is low
2. It is efficient as more piles can be drove per set of pads; therefore, energy is
used efficiently.
3. It is easy to handle as compared to other product; the temperature never went
above 250 degree F as the pads get heated while driving the piles.
4. It is safe to use.
2. How far CMI’s metal cushion pads are different than existing cushion pads
used in pile driving business?

Answer: CMI’s metal cushion pads are different than existing cushion pads by the
following ways:

Asbestos CMI
1. Feet driven per hour 160 200
while pile driven was
at work
2. Piles driven per set of 6 300
pads
3. Number of pads per set 12 5

4. Number of sets 50 1
required
5. Number of set changes 50 1

6. Time required for 20 mins. 4 mins.

change per set

According to the test by the Colerick Foundation Company of Baltimore,

Maryland, the above table is the difference between CMI and the other company.

3. How big is this market? What kind of opportunity is this for CMI?

Answer: The pile-driving industry had paid very little attention to cushion pads
before CMI’s involvement. Everyone used them and took them for granted, but no
one attempted to promote pads. No manufacturers dominated the business. It is
also one of the important equipment in pile driving.

Distribution of pads was also ambiguous. Hammer sales and rental outlets
provided them, heavy construction supply houses carried them, pile manufacturers
sometimes offered them, and a miscellaneous assortment of other outlets
occasionally sold them as a service. Most outlets carried pads as a necessary part of
the business, but none featured them as a work-saving tool.
Since there are no other curled metal cushion pad players in the market, it gives
CMI an independent pricing strategy looking at the projected market size without
affecting the demand. They estimated the volume to be 250 cushion pads per
month on the basis of utilized existing equipment and the other reflected the
purchase of $50,000 of permanent tooling. There is also no other branded cushion
pads, CMI has the opportunity of becoming a brand in the customer’s mind.

According to Construction Engineering magazine published in 1977 approximately

13,000 pile hammers were owned by companies directly involved in pile driving.
CMI assumed that this total of 19,500 to 26,000 hammers would operate about 25
weeks per year and that they would be used 30 hours per week because of moving
time, repairs, scheduling problems and other factors.

4. What kind of buying situation prevails while buying metal cushion pads?
Justify.

Answer: The buyers will experience Modified Rebuy. In the modified rebuy
situation, organizational decision makers feel they can derive significant benefits
by re-evaluating alternatives. The buyers have experience in satisfying the
continuing or recurring requirement, but they believe it is worthwhile to seek
additional information and perhaps to consider alternative solutions.

Several factors may trigger such a reassessment. Internal forces include the search
for quality improvements or cost reductions. A marketer offering cost, quality or
service improvements can be an external precipitating force. The modified rebuy
situation is more likely to occur when the firm is displeased with the performance
of present suppliers.

From the case we can find that if the buyers of cushion pads re-evaluate
alternatives there is only one option that is CMI cushion pads. The buyers also
have experience how a cushion pad works and if the current product is not
satisfying them they can seek for CMI cushion pads. CMI cushion pads are far
better than the current product of Asbestos in terms of quality and other factors
such as piles driven per set of pads, time required for change per set etc. Moreover,
there are also no such branded product in case of cushion pads in the present
market.

5. Enlist the participants (decision making unit) while buying metal cushion
pads. Also describe their roles. Who is decision maker?

Answer: In the B2B space professionals who directly or indirectly influence the
purchases of an industry’s target business is one of the most challenging tasks.
Engaging with the decision makers is not easy in B2B market.

The participants with their roles in buying metal cushion pads are as follows:

i. Pile hammer manufacturers: The leading domestic producer in 1979 was

Vulcan Iron Works of New Orleans, whose Model#1 had become the
standard used by architectural engineers specifying equipment for the job.
ii. Architectural/Consulting engineers: These firms were very detailed in
specifying the materials and techniques to be used on a project. They always
specified hammers and frequently mentioned pads. The CMI management
felt that, although no sales would come from these peoples, they could be the
one of the most important perchance influences.
iii. Soil Consultants: These consultants were similar to the
architectural/consulting engineers, but were consulted only on extraordinary
conditions.
iv. Pile hammer distributing/renting companies: This group was an important
influence because it provided pads to the contractors. In fact, renting
companies often included the first set of pads free. CMI management felt
that these companies would handle the cushion pads they could most easily
sell and might even hesitate to provide pads that enabled a contractor to
return equipment faster.
v. Engineering/Construction contractors: Companies like Conmaco and
Raymond International not only contracted to drive piles, but also designed
jobs, specified material and even manufactured their own equipment. If CMI
was to succeed in getting CMI pads used on bigger, complex construction
projects, CMI would have to solicit this group actively on a very
sophisticated level.
vi. Independent pile-driving contractors: These contractors represented the
‘frontline buying influence’. Their primary objective was to make money.
They were very knowledgeable about the practical aspects of pile driving,
but not very sophisticated.

The most potential influence was Professor R. Stephen McCormack of

Pennsylvania A&M University. He had established a department t to study pile
driving and had become a respected authority on its theoretical aspects. He can be
termed as a decision maker because many sophisticated engineering/construction
firms and many architectural consultants were familiar with his work and helped
support it. CMI felt that his endorsement of the operational performance of CMI
cushion pads would greatly enhance industry acceptance.