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Cumberland metal industry
Transcript of Cumberland metal industry
Pei Jun Nerissa Chia
Jaehoon Jo Company Background - Cumberland Metal Industries was one of the largest manufacturers of curled metal products in the country.
- Company's growth was large and rapid in the mid 1970s after the introduction of exhaust gas recirculation valves on US automobiles. It conquered 80% of the available market.
- Company management not interested in maintaining the market share over the long term and moved to diversify away from a total reliance on the product and industry. Market Players 1. Company: Innovator of new CMI pad.
2. Customers: Pile hammer manufacturers, Pile hammer distributing/renting companies, Engineering/Construction contractors, Independent pile-driving contractors
3. Influencers: Architectural/Consulting engineers, Soil consultants, Prof. R. Stephen McCormack
4. Competition: Since CMI pad is a new product in the industry, there is no direct competition. However, the current "market" is dominated by Asbestos pads. As such, Cumberland has to tackle the same group of customers. Market Size Estimation of approximately:
- 19,500 to 26,000 hammers
- Operating 25 weeks per year and 30 hours per week
- Total of 290 million - 390 million feet of piles driven annually (assuming 20ft per hour)
Each set of 6 CMI pads drives 10,000 feet. Thus 29,000 to 39,000 sets required, averaging at 34,000 sets.
- Total Market Size = $396(price per pad) X 6 X 34,000 = $80,784,000 Product cushion pads prevented shock of the hammer from damaging the hammer and pile hard wood asbestos curled metal hard wood asbestos allow heat to build need to be replaced frequently reach up to 600-700 degrees
after being driven 500 feet would even ignite allow heat to build need to be replaced frequently have even health issue CMI metal made of a continuous metal wire that was flattened and wound into ringlets that never exceeded 250 degrees three dimensional resiliency that could withstand almost any temperature or chemical a shock mount was created that also made for better airflow produced the Slip-Seal for exhaust systems applications fewer pads needing to be used ! improved speed by 33% with a total performance improvement of 20% Cost reduction Labor ( 3 laborers) : $21
@ $6-8 per hour each : $10
1 crane operator : $13
Overhead : $100
Total : $144 can save up to $144 per hour of work time.
and each operating shift is 40 hours.
so $144X40=$5760 is the cost per shift. Place 1) pile hammer manufacturers
2) architectural/consulting engineers
3) soil consultants
4) pile hammer distributing/renting companies
5) engineering/construction contractors
6) independent pile-driving contractors Made by JJH 3 categories consultants contractors rentals Representatives Price Corporate management expected a contribution margin after all manufacturing costs of 40% to 50% of selling price. Value-based Pricing 120 asbestos = 1 CMI $3 X 120 EA = $360 $360 + 10% mark-up = $396 Equipment Decision Making $69.18X250 EA = $17,295 $50,000/$17,295 = 2.89 months Promotion there were no efforts in promotion high-qualtity cost-saving Promotion Method professional magazine professional seminar that man Segmentation pile hammer manufacturers,
pile hammer distributing/renting companies, engineering/construction contractors,
and independent pile-driving contractors Targeting 75% of pile driving contractors already
own their own tools Eventually after tackling the 75% majority,
the 25% who rent will follow the rest of
the majority to demand the CMI pad Positioning Identify positioning concepts for each target segment, select the best, and communicate it Develop a marketing mix for each segment does not harm a person’s health