Curled Metal Inc is a Case study from HBR. The case can be analyzed from the viewpoint of market potential, the alignment of price with business strategy, and the implications of a price on the development and execution of integrated strategic options.
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Curled Metal Inc Case Study: Case Introduction
Even though Curled Metal Inc.’s new product is more reliable and long-lasting, the company’s sales have been going down. The management, on the other hand, is unsure as to how much money will be required for these pads. The pricing strategy for these pads will be analyzed in depth as part of the case study, and it will then be compared to the market.
When conducting an analysis of the case, several aspects—including market potential, current market practices, and customer willingness to pay for a product or service—should be taken into consideration. The case also provides managerial strategies for achieving premium pricing on a mass-market item by introducing new features, improving the product’s dependability, and honing its design to maximize its performance. These are all things that were done in order to achieve premium pricing. In addition to this, the importance of understanding the perceived benefits that customers receive from a product and setting a price for a product without a competitive performance benchmark will be investigated.
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Curled Metal Inc Case Study: Environment Scanning
Advantages
- 10 times longer life than conventional Pads
- Less weight than conventional Pads
- Outstanding resiliency
- Does not contain hazardous material
- CMI pads get heated up to a temperature that can be immediately handled by protective gloves
- CMI pads drive piles 33% faster
- Performance increase of 20% as compared to conventional pads
Potential Buyers- Contractors
- Kendrick Foundation Company
- Corey Company
CMI Cushion Pads Target Market
- Contractors
- 75% of contractors own their equipment
- 25% are smaller contractors who rent equipment
- Contracts are mostly awarded on a revenue-per-foot basis
Purchasing Influences
- Pile Hammer Manufacturers – Could Influence Recommendations
- Architectural/Consulting Engineers – Key Influence on purchasing decisions
- Soil Consultants – Consulted only when extraordinary conditions exist
- Pile Hammer distributing /Renting Companies – Provide pads to contractors
- Engineering/Construction Contractors – Solicit large international firms involved in big construction projects.
- Independent pile-driving Contractors – Knowledgeable about practical aspects of pile driving but not managerially sophisticated.
Curled Metal Inc: SWOT Analysis
Strengths
- Technological Prowess
- Expertise
- Flexibility of Size
Weakness
- Declining Sales
- Lack of Unique Brand Identity and Recognition
- Lack of Established Distributed channels
Opportunities
- Potential to disrupt a relatively stable industry
- Increasing product awareness due to landscape changes to safer operable conditions
Threats
- Lack of awareness about the importance of the Product
- Cheaper Alternatives and Imitations
- Front-line buying is becoming less influential
Pricing Strategy
- Objective to maximize quantity and profit margins
- Cost plus value-based pricing
Marketing Strategy
Adopting a definitive 4P
Product
Highly superior product
Reliability of the product
Price
Establish a higher willingness to pay for the customer due to superior product
Place
Direct Selling through Sales representatives
Word of Mouth – Collaborating with Construction workers
Promotion
Seminars
Advertisements (Magazines, TV Ads)
Distribution Strategy
Early stage
Supply houses, Hammer Distribution Rental Companies, Hardware stores and Wholesalers
Maturity Stage
Direct collaboration with architects, construction agencies and consultants
Product Positioning
- Superior Product
- Safer Product
- Higher reliability
- Easier to handle
- Higher longevity
- More Efficient
- Time Saving
Curled Metal Inc: Calculations for Higher WTP
Pad Changing Time Savings
| Pad Type | No of Changes | Time to Change | Total Time to Change |
| Conventional | 20 | 20 | 400 |
| Curled Metal | 1 | 4 | 4 |
| Delta | 19 | 16 | 396 Min (6.5 Man Hours) |
Feet Driven Per Hour
| Pad Type | Feet Driven Per Hour | Total Feet Driven | Hours to Complete Job |
| Conventional | 150 | 1500 | 100 |
| Curled Metal | 200 | 1500 | 75 |
| Delta | 50 | 25 |
Conventional Pad Cost
| No of Sets Reqd. | Cost per Set | Total Cost |
| 20 | 150 USD | 3000 USD |
- Job Savings in Man Hours (Pad Changing) = 132 USD*6.5 Man Hours = 858 USD
- Job Savings in Man Hours (Feet Driven) = 132 USD*25 = 3300 USD
- Willingness to Pay for Curled Metal Set = USD 7158
- Willingness to pay per Curled Metal Pad = USD 1193 (6 Per Unit)
- Selling Price of Curled Metal Pad = 740.60 (Considering Margin Contribution as 40% of Selling Price)
Reasons for the difference between WTP and Price
- A stack of 11.5-inch CMI pads weighs 75 to 77.5 pounds, whereas a conventional pad weighs 30 to 40 pounds
- Acceptability of a new product takes some time. Therefore, charging a high starting price close to WTP might not be the best option
- It is not very easy to communicate the benefits of a new product
- Conventional pad costs $ 500 per pad, whereas the Selling price of a CMI pad is
$ 740 per pad. An increment of $ 240 will be acceptable pricing for a new product.
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Samrat is a Delhi-based MBA from the Indian Institute of Management. He is a Strategy, AI, and Marketing Enthusiast and passionately writes about core and emerging topics in Management studies. Reach out to his LinkedIn for a discussion or follow his Quora Page