1. The document discusses a marketing strategy for a new cushion pad product called the CMI cushion pad that has the potential to double the company's revenue. 2. It analyzes risks from competitors, substitutes and suppliers as low, and provides a marketing strategy focusing on seminars, manufacturers' representatives, and word of mouth advertising. 3. Financial projections estimate that capturing 20% of the market with a price of $500-$1200 per pad could generate over $1.7 million to $4 million in additional monthly net sales.

1. Tien Le Dasul Lim Wai Man Leung Susan Depaz Thang Nguyen George Mason University Spring 2012 SOM 498

2. Declining sale New product Potential to double our company revenue Formulate a strategy for new product Double our revenue CMI CUSHION PAD Background

3. External threats Threat Level of Risk Solution Entry High Patent Expertise Competitors Low Product differentiation High quality Hazardous free Custom Size Substitutes Low Supplier Low Bid by price Contact agreement Buyer Low Product differentiation

4. Risk Analysis

5. Marketing Strategy For successful market of the CMI cushion pad Seminar Manufactures’ Representative Word of Mouth Advertisement

6. Marketing Strategy Seminar: introduce cushion pad for the 1 st time Potential buyers: Independent Pile driving contractors “ frontline buying influence” Pile hammer distributing/renting companies Give free first set of pads Manufacturer’s Representative : Focus training on: cost saving benefit of the pads Potential danger of the asbestos Creating brand name Important in promoting the diffusion of the product in marketplace

7. Marketing Strategy Word of mouth Pile hammer manufacturers To influence recommendations Professor Stephen McCormack Department to study pile driving and was a respected authority Advertisement [Magazine/Newspaper/TV ads] Publish our test results in magazine & Newspaper Engineering channel on TV

8. Distribution Two warehouses in each region in the country

9. In the beginning stages Take advantage of the existing distribution networks: Equipment Supply Houses Hammer Distribution Rental Companies Distribution

10. After the market develops Create our own distribution network. Reach architectural and consulting engineers. Distribution

11. Price objectives : maximize quantity and profit margin. Price methods : cost-plus pricing – set the price at the production cost plus a certain profit margin. Pricing Strategy

12. A report by Construction Engineering magazine Pricing Calculating Potential Demand for CMI Potential demand for pads monthly 17,063 Estimated percent Demand of Market 20% Potential demand for CMI pads monthly 3,413

13. Calculating CMI Price Test 1 Test 2 Conventional Pads CMI Pads Conventional Pads CMI Pads Number of pads per set 24 6 12 5 Number of set required 20 1 50 1 Cost per set 150 500 120 1200 Total 3,000 3,000 6000 6000

14. Calculating CMI Cost Corporate management expected a contribution margin after all manufacturing costs of 40% to 50% of selling price. Without new equipment Price per 11 1/2 inches pad $444 Average Potential demand for CMI pads monthly 3,413 Total cost monthly $1,516,720 Selling Price Low-end price High-end price $500 $1,200 Net sale $1,706,250 $4,095,000 Gross profit $189,530 $2,578,280 Contribution Margin 11% 63% With equipment cost $750000 Price per 11 1/2 inches pad $208 Depreciation $5 Cost per pad $213 Average Potential demand for CMI pads monthly 3,413 Total cost monthly $725,293 Selling price Low-end price High-end price $500 $1,200 Net sale $1,706,250 $4,095,000 Gross profit $980,957 $3,369,707 Contribution Margin 57% 82%

15. Price list Size (inches) 11 ½ 14 17 ½ 19 ¾ 23 30 Total manufacturing cost $207.54 $272.16 $396.96 $493.08 $581.34 $1,061.10 Change is Cost 31% 46% 24% 18% 83% Price (according to change in cost) 850 1115 1626 2019 2381 4346

16. With the new CMI pads: 20% of market demand Generate additional $34,812,600 for the net sale Conclusion

17. Thank You for Your Attention