Cumberland Metal Industries Analysis

3136 words - 13 pages

Executive Summary
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 group manager, Thomas Simpson, made a few assumptions when predicting the potential market size figures for cushion pads. He estimated that approximately 13,000 pile hammers were owned by companies directly involved with pile driving, and another 6,500 to 13,000 leased pile hammers. Further, he assumed that the total of 19,500 to 26,000 hammers would operate about 30 hours per week at 25 weeks per year, which equals to 750 hours per hammer per year. Additionally, it was assumed that most jobs would average 20 feet of pile driving per hour. Finally, Simpson concluded that a total of six cushion pads would be required to drive 10,000 feet. With most jobs having an average driving figure of 20 feet per hour, this amounted to between 290 million and 390 million feet of piles driven annually. Based upon these numbers, the potential market for the cushion pads could range from 174,000 to 234,000 per year.
Product Offering, Customers and Industry
As CMI’s pads are a new product and that the pile-driving industry has paid little attention to cushion pads prior to CMI’s involvement, there is no other manufacturer that dominates the industry and...

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