Curled Metal Inc. Case Analysis Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Curled Metal Inc. Case Analysis Case Solution

Case Overview

Curled Metal Inc. is the manufacturer and seller of certain types of metals. It also sells raw materials for metals to the external vendors. CMI has aimed to launch a new product, which can cause a significant impact on the firm.The Group Manager: Rajiv Sanwal and VP, Joseph Fernandez are looking for best pricing strategy and marketing channel for a new product. The case highlights that CMI is facing a decline in its sales since 2007 (income statement), although, the product slip-seal was successful for the company, but the firm was not confident enough to retain the market share of up to 80%. As a result, CMI already diversified its product from heavy reliance to auto industry. Curled Metal Inc. pads have several differentiation which makes them different from the products being offered by its competitors. Joseph Fernandez and Rajiv have the knowledge that the new product cushion pad will be considered as a necessity, which can benefit the pile driving industry. CMI conducted a field test in which cushion pads resulted in more customer related benefits to the company than the manufacturing cost. If the new product is placed with the utilization of the correct strategy then it might increase the company’s sales, which has declined due its existing products.

Problem statement

To sustain its growth; CMI is launching a new product to increase its revenues and sales. The company can use the help of possible influencers toattract its customers towards purchasing the cushion pads, and there is number of entities who can take part in the distribution of the new product. The company is facing problems in decision making of the new product’s pricing strategy. The company has to evaluate its current marketing strategy for the product, to gain a steady growth in addition to a distribution channel for the new product. So, CMI needs to take steps to plan for marketing, distribution and pricing strategy in order to reach at its aimed success level.

Product Review

Cushion pads are used by the contractors,and it is the part of driving piles’ process. The cushion pad quality is that it transmit the energy from the hammers to the piles. It can prevent the damage which can occur due to the shock. Its main quality is that it transfers the force from the pad without creating heat. The product uses the curled metal technology, and through same band, any size can be produced. Cushion pad is covered with the poly-vinyl chloride, and it can reduce the chance of getting injured.

Analysis

When we compare the products that are conventional and CMI pads with each other; CMI cushion pads are more comfortable and safe than the conventional products. As per the analysis of performance; it is evaluated that cushion pads drive more efficiency in comparison to other pads. It increases 30% efficiency of the driving piles. The demand for conventional pads is also evaluated to have a decreased demand, leading towards a lower profit margin as compared to CMI pads. The manufacturing cost of conventional products is higher than CMI pads, and CMI can incur the less cost, i.e. about 3.67 per foot, and the total price is 157. The price is estimated at the 10% profit margin, and the customers are willing to pay this cost as it is lower than the cost of conventional pads.

The companies like Kendra and Corey charge 10% profit margin, and the price for Kendra is 196,while for Corey its 157. So, the cost of manufacturing is less in Corey than in Kendra. The economic value of customer is almost same in both the products of both the companies, but in conventional pads; it is much better than the CMI pads. (Exhibit 1)

The estimated existing value with equipment is significantly greater in both high end and low end,but, the capitalization market value is same for the overall market, i.e. 3413. So conclusively, using the manufacturing procedure under the new equipment will maximize the growth of the company, and it will also contribute to the profit margin. (Exhibit 2)

The market

Based on the assumption it is concluded that the maximum number of cushion pads will be requested by the market on an annual basis. There is a great potential of market for cushion pads product. The new product cushion pads can drive 10,000 feet of CMI pads, and previously, it was just driving 250 to 300 million. The total CMI per pads feet will be required from range 29000 to 39000, monthly. And its estimated market share is 20%alongside the largest market to capture. (Exhibit 3)

Pricing Analysis

The price analysis is done on the basis of 11.5 inch pad size. The prices vary for single pads as the range is $5 to $12. The CMI’s price is lower in comparison to the conventional pads. As the sales of CMI Conventional pads is decreasing from several years, so charging a higher price will definitely decrease its sales further. CMI should charge an approximate price of $2000 to $3000 per pad. This is the skimming pricing strategy that when the company acquires the customers and the market share,then it should lower its price. The price of product 11.5 inch pad should be increased to gain the profit. (Exhibit 4)

Market Segmentation

Curled Metal Company should first identify its potential customers and then segment its market accordingly. The company should recognize the needs and wants of its customers. It should segment its customers according to their purchasing power and their habits of spending on product. According to the value proposition; the segmentation can be done, as the customers of hammer manufacturing can be easily targeted, and sales to the direct contractors can provide value proposition to the customers.

The market of cushion pads can be segmented into three categories, based on the behavioral factor:

Ownership of equipment: Customers who own the equipment related to metal pads can be targeted, and those can also be targeted who rent such equipment.
Procurement: The customers who go through the procurement process and operate internationally, and work as procurement team, and source the equipment locally, can be targeted.
Scope and size of work:People who do heavy construction works can be targeted. They have good bargaining power as they have large projects to work on, and they can become regular customers.
Price sensitivity: The customers who prefer high quality do not consider the price, but few customers are very price sensitive. The renting companies are very price sensitive as they buy the cheaper parts, while the huge contractors add more value and they are very particular about the quality and efficiency of the product.

So, the CMI should targets the large contractors, rental companies as well as small contractors............................

Curled Metal Inc. Case Analysis Case Solution

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