Cumberland Metals Case free essay sample

We recommend Cumberland Metal Industries capitalize on their evolving position as a leader in the curled metal industry and effectively launch their new curled metal cushion pads to be positioned as the â€Å"new industry standard† in the pile driving market. In order to successfully launch this product, we first and foremost recommend that CMI acquire a patent to prevent this product from being copied and imitated, thus avoiding the entry of competitors. The associated value and advantages of CMI’s metal cushion pads are evident from the results of the two comparative performance tests by Colerick and Fazio. CMI pads drove piles 33 percent faster than asbestos per hour and lasted the entire job while also eliminating the downtime required for changeover compared to asbestos, resulting in significant savings for the contractors. Additionally, the health dangers associated with using asbestos pads is a growing concern, making CMI pads that much more attractive. The pile driving industry has paid little to no attention to cushion pads and no manufacture has dominated the business thus far, making the entry of the CMI metal pads featured as a work-saving tool both ideal and crucial in setting the new cushion pad industry standard. We recommend that CMI utilize a value-based pricing strategy to introduce the 11 ? inch metal pad and price it at $299. 00 per pad. The value and efficiency of the metal pad will be the driving force behind this price strategy and will offer the customer a savings of up to 33 percent. A major fixed cost that CMI needs to consider is the 360 percent of labor to account for engineering that is required to create the pads at the 9000 year production level. There will be added value shown to the customer by not having to invest in asbestos protection gear and avoiding future liability suits. 3 We encourage CMI to secure a partnership with the leading domestic pile hammer manufacturer, Vulcan Iron Works of New Orleans, for multiple reasons. First, it is imperative that CMI cultivate a relationship with the manufacturer whose pile hammer had become the standard used by architectural engineers specifying equipment for jobs. Second, it is clear that CMI has a limited supply of product available for sale in the first year. Knowing that the manufacturer will not purchase a large volume of cushion pads makes this a mutually beneficial relationship at this time. By designating a percentage of the available product to be sold to Vulcan, CMI will reach a highly influential distributor, who will play a key role in initial efforts of driving CMI’s metal cushion brand as the â€Å"new industry standard. 4 Additionally, by partnering and being â€Å"top of mind† with Vulcan, CMI will have greater access to key industry publications such as The Louisiana Contractor. It is likely that Vulcan executives and management have strong local connections with editors and writers at this magazine, and Vulcan likely contributes advertising dollars and â€Å"expert advice† to the publication. By offering Vulcan an efficient and valuable product, Vulcan can spread the word to industry professionals about the new CMI metal pads and the associated benefits. CMI can utilize public relations efforts to pitch the new products value, efficiency and health safety to editors for editorial coverage. Through CMI’s partnership with Vulcan, they can reach a greater number of key influencers such as engineers, architects and contractors who trust Vulcan’s product recommendations and advice. 5 We also suggest further pursuing a relationship with Professor R. Stephen McCormack of Pennsylvania Aamp;M University. He is a well-known and respected academia, proficient in the study of pile driving and will only help CMI and the metal cushion pads to become the industry standard and most recognized pile driving pad to date. We recommend assigning the remaining products to be sold to independent pile-driving contractors under a lease agreement and/or a usage guarantee because they are the frontline buying influence and CMI’s most profitable customers.. We encourage CMI to identify the top contractors and dispatch sales representatives to educate these companies on the benefits of the new CMI metal cushion pad in comparison to what is currently being offered in the market (asbestos pads). The sales representatives can use the results from the Colerick and Fazio tests to demonstrate the advantages of switching to CMI metal pads. Allowing them to test the product before paying will only improve brand reputation and overcome price objections. We know they are very interested in making money, thus we can assume they are interested in saving as much time and money as possible throughout each pile driving job. Contractors bid on job contracts by estimating the amount of time it would take to drive the specified piles the distance required, and by utilizing the new CMI metal pads and simultaneously minimizing the associated time per job, these contractors can win more jobs and produce more efficient work overall. Once independent pile-driving companies such as Colerick and Fazio try the product and see the unique value and advantages that CMI pads offer, they can promote the product through word of mouth and by exemplary job execution which will in turn help aid in making CMI pads the new industry standard and most well-known pile-driving pad brand. Knowing that some independent contractors will be apprehensive in switching to CMI metal cushion pads due to cost and lack of information on the value added benefits, we recommend establishing a lease agreement and/or guarantee. This agreement would require the contractor to pay 10 percent upon delivery of pads and the remaining balance after they have tested the product. The guarantee would include an option for the contractors to return the pads at no additional cost should they not perform to their desired specifications. Realizing that rental companies will be a key distributor once the CMI metal pad brand is established, in addition to being the new industry standard, we recommend CMI deploy sales representatives to visit rental companies within the first year. The primary objective being to educate them on the CMI metal cushion pad product advantages and added values compared to asbestos pads. This will create excitement and deliver the appropriate information so that rental co mpanies will be able to have a better understanding of the latest trend in the pile hammer industry.