Curled Metal Case

1. CURLED METAL INC.-ENGINEERED PRODUCTS DIVISION
Group 4
Gaurav Anand – 15PGP148
Saurabh Kumar – 15PGP046
Naveen Kumar - 15PGP019
Emani Kamalaja – 15PGP077
Rucha Mirashi – 15PGP103
Saad khan – 15PGP131

2. What should a customer be willing to pay for one of the Curled Metal Incorporated’s (CMI) new cushion
pads? Prepare a specific monetary estimate of customer value for 11.5-inch cushion pad?
Step 1: Type of competitive advantage: Discrete Choice model having differentiation in form of product
innovation
• Identifying the interaction between the channel of supply chain
 Pile hammer manufacturer - moderately significant in terms of interaction
 Architectural/consulting engineer - highly significant in terms of interaction
 Soil Consultants - Low significant in terms of interaction
 Pile hammer distributing companies - Low significant in terms of interaction
 Engineering/constructing contractors - highly significant in terms of interaction
 Independent pile-driving contractors – very highly significant in terms of interaction
 Prof. Stephen McCormack - very highly significant in terms of interaction
• How this interaction contributes to the competitive advantage
Step 2: Scope on which competitive advantage is realized:
• Value Chain
• Product/customer
• Geography

3. Step 3: Competitive Advantage:
Monetary estimate of customer value for 11.5-inch cushion pad:
Case 1: Kendrick Foundation Company:
Particulars Conventional CMI
No. of pads per set 24 6
No.of sets required 20 1
Total Pads required 480 6
Piles driven per set 15 300
Total piles driven 300 300
Feet driven per hour 150 200
Total Feet to be driven (given 50 feet per
pile) 15000 15000
Total working hours 100 75
Time required for change per set (hrs) 0.333333333 0.066667
Total time required for change 6.666666667 0.066667
Combined time 106.6666667 75.06667
Cost per set 150 NA
Total Cost 3000 NA
Cost per hour 28.125 NA
Hour saved 31.6
Cost saved 888.75
Hour saved 31.6
Cost saved 888.75
Maximum cost per CMI
pad customer is willing
to pay:
=3000/6 = $500

4. Case 2: Corey Construction:
Particulars Conventional CMI
No. of pads per set 12 5
No.of sets required 50 1
Total Pads required 600 5
Piles driven per set 6 300
Total piles driven 300 300
Feet driven per hour 160 200
Total Feet to be driven (given 40 feet
pile) 12000 12000
Total working hours 75 60
Time required for change per set (hrs) 0.333333333 0.066667
Total time required for change 16.66666667 0.066667
Combined time 91.66666667 60.06667
Cost per set 120 NA
Total Cost 6000 NA
Cost per hour 65.45454545 NA
Hour saved 31.6
Cost saved 2068.363
Hour saved 31.6
Cost saved 2068.363
Maximum cost per CMI pad
customer is willing to pay:
=6000/5 = $1200
Average Maximum cost per CMI pad customer is willing to pay =
(500+1200)/2 = $850

5. Additional Observation and Suggestion (Value Creation and Distribution):
Manufacturing cost = $444.36
Estimated volume = 250 cushion pad per month
Manufacturing cost per pad per month = $444.36/250 = $1.77 per pad per month
Cost per pad (by distributor i.e. Selling Price of distributor) = $9
Contribution margin after all manufacturing cost = 40% to 50% = 45%
Actual selling price of the manufacturer = $1.77(1+0.45) = $2.5665
Distributor profit margin = 30 to 40% = 35%
Selling price of the channel just before distributor= Selling price of distributor –
Distributor Margin = $9(1-0.35) = $5.85
Thus there is a scope of expansion
of $9-$2.5665 = 6.4335

6. How big is the potential market for this product, and what should be CMI’s strategic and marketing
objectives in introducing this product?
• Total requirement = 290 – 390 million feet of piles to be driven
• One set of curled metal pads – 10,000 feet
• (One set of curled metal pads = 4 initially installed, plus two added)
• Market requirement = 29,000 – 39,000 sets of curled metal pads i.e. 174,000 – 234,000 curled metal pads
• Market value = $147.9m – $198.9m (@$850 per pad)
• No manufacturer dominated this market and most pads are unbranded basically manufactured by small
job shops.
• As per the Transactional Utility Theory:
Total Utility of Product = Transaction Utility + Utility of Product
• Initial Strategy – Push Based Model (anticipate the needs) – By giving incentive to channel partners till
brand is established and Curled becomes the focal company in the supply chain.
• Final Strategy – Pull Based Model (reactive to the customer demand)
Low

7. Thank You