Whats your price for the curled metal pads? Why?

& How much do you think one of these pads is worth to a customer? The MSRP for the curled metal pad will be established at $5000 for a set of 6 pads. Our analysis indicates that the average indifference price for a typical construction project is approximately $6000 (See Exhibit 1), which is also the perceived value to the customer. Other intangible components like safety will further increase the perceived value of the product by lowering insurance and workers compensation cost. At a price of $5000, the customers incentive to purchase is greater than $1000 and is therefore more attractive than asbestos pads. Considering the value and quality that the CMI pads provide to the consumers, they have a clear differential advantage, and with no competitors in the marketplace, setting a price of $5000 is a good start. The price at which the product will be sold to the distribution channel will be set at $4500. Based on our analysis of the Colerick and the Fazio test, the price of $4500 will provide a 11% profit margin to the distributors. From a financial perspective, the CMI pads will provide the distributors with more absolute profit than the asbestos pads. Compared to $300 (30% of $1000 which is the pad cost for the Colerick test) of profit which the channels realize by selling the asbestos pads, CMI pads will provide them with a profit of $500 (which is more than 50%). How are you going to market these pads? Describe your marketing plan. As part of our marketing plan, pads will be manufactured in standard sizes of 11.5, 14, 17.5, 19.75, 23, 30. Custom sizes will be manufactured working with architectural engineers and contractors and will be shipped directly to the consumers. Our analysis (See Exhibit 2) indicates that the lower bound of the current market size for pads is about 19,500 sets of pad per year for a total market size of approx. $100 million ($5000 per set). Cumberland will need to capture 3730 pads or 3.2% of the market in order to break-even. They will have to invest $2.85M in equipment purchases for the additional capacity required to capture the entire market (9750 pads monthly). Furthermore, the contribution margin after all variable manufacturing costs will be 92% of the selling price. With a company target of 40 50% contribution margin, there is a lot of room to reduce the price if market conditions change and competitors get into the market. The customers for the pads are primarily pile driving contractors who are not sophisticated but very knowledgeable about the practical aspects of pile driving. The marketing message to them needs to highlight the cost reduction and time savings that can be realized by using the CMI pads. They will realize a 20% savings in time for an average contracting job. During a typical pile driving season which comprises an average of 10 jobs, this time savings will allow them to take on two additional jobs for a total of $150,000 in additional revenue. There are various entities that Cumberland should collaborate with who will play an important role in influencing the purchase of these pads. Exhibit 3 and 4 highlight the different collaborators and influencers, how they influence the decision making and what kind of strategy is going to be used to get their endorsement for CMI pads. As a starting point, Cumberland needs to promote the CMI pads and raise pad awareness thru publishing Professor R. Stephen McCormacks test results. This will provide the influencers to have awareness of the CMI pads and do their due part in the purchasing decision. Our strategy for Cumberland is to go after the entire market using multiple channels of distribution. The selected channels are the rental outlets and the construction supply houses. The rental outlets will cater mostly to contractors that rent or lease equipment and the construction supply houses will cater mostly to contractors that own their equipment. Our expectation is that lack of equipment rental will not be an issue since the rental outlets will make money by selling pads and that should offset some of the lost revenues through rental. Hardware

stores would not be a feasible channel of distribution because they do not cater to the pile driving contractors. The primary risk associated with this plan is that it is very easy for a competitor to enter the market place because this product is to copy even if protected with a patent. As the pioneer of these pads, Cumberland needs to continuously monitor the market for new competitors, keep innovating the pads. What are you going to say to the Colerick Foundation? We are going to ask Colerick Foundation to provide input on how much they would be willing to pay for this product. If the price they would be willing to pay is close to ours, it will validate the price that we have established. If they are grossly below our price point, then we will educate them on the value of our product based on the analysis in Exhibit 1. Furthermore, we will ask Colerick to provide testimonial for our product and in doing so, we will grant them the status of a preferred customer and provide them a 10% discount and charge them $4500 for a set of pads.