Cumberland Metal Industries

Background

Cumberland Metal Industries (CMI) is a company which specialized in making curled metal products. It has developed a brand new product - metal cushion pad.

This cushion pad is an integral part of the process for driving piles. Most of the industry has been using asbestos pad for this purpose. However, the new cushion pad has been proven that it is better than asbestos pad in different aspects.

With such great advantages, it is believed that the new cushion pad can alter the original market. However, the company still needs to face few challenges. Since the cushion is entirely new to the market, it is not easy to set a price for it and also the way to market it. It is very important to have the new cushion pad set at the right price because it helps to guarantee its position and its future success.

Analysis

First of all, the company should apply a patent for this new cushion pad. Since it is not a very advanced technology, if it goes public without having a patent, competitors must copy this technology. Therefore, the company should get the patent as soon as possible to ensure that it will be the only supplier of this technology and hence make the maximum profit.

After that, to price this product, the company should apply the concept of perceived value to customers and make sure customers perceive the value.

A set of statistics taken from the Colerick Test:

| |Asbestos pad |Cushion Pad |

|Feet driven per hour |150 |200 |

|Piles driven per set of pads |15 |300 |

|Number of pads per set |24 |6 |

|Number of sets required |20 |1 |...