Cumberland Metal Industries (CMI), which was historically one of the largest manufacturers of curled metal products in the country, has developed a new product. This product is a metal cushion pad which is to be used with large crane-pile driving activities. The cushion is to prevent the shock of the hammer from damaging the pile. CMI’s cushion pad is a “one-of-a-kind” product as there is nothing similar on the market today making comparisons difficult. Upon successful tests conducted alongside Colerick Foundation Company (Colerick), CMI now seeks to launch this new product to the market. Not unlike many other companies that develop new products, CMI is struggling to set a market price to go along with a marketing strategy for the cushion pads.
CMI’s issues going forward are two-fold. First, CMI must decide how to market their product. Secondly, and perhaps more importantly, CMI must decide how they are going to price their product. With those two questions unanswered, CMI should attempt to determine what an accurate market size for curled metal pads is going to look like. The company should study current market size, existing distribution channels and existing competition for similar products. As an overview, from the perspective of industry potential and product offering this looks like an attractive opportunity.
Potential Size of Industry
Since this is a new product and market size can not yet be known, CMI’s ...
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...m Professor McCormack will be of high value to garner endorsement from consulting firm. CMI needs to do market research, estimate the price elasticity of the new pad and the demand function and then adapt the initial price to the profit maximized price.
CMI’s pads definitely will be the market leader in the industry as it is innovative with high efficiency. Getting patent for this pad will ensure the growth profitability of CMI. In this case, perceived value pricing is used as the pad has more to offer than conventional asbestos. In line with this pricing strategy, marketing mix of advertising, education and distribution play a role in ensuring the success of this product.
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