Cumberland Metal Industries has developed a coil pad breakthrough in the pile driving cushion pads. The market for pile driving cushion pads is a relatively nascent market.
Products that the coil pads would replace alternatives made from wood, aluminum, micarta and most commonly, asbestos. The benefits and value of the technology have been proven through industry testing. Market Size In 1979 there were somewhere between 19,500 and 26,000 Pile hammers in production in the US.Each of these pile hammers is in action for about 25 weeks out of the year and are driving piles about 30 hours per week. With an average pile driving speed of 20 feet per hour, you can deduce there are between 292,500,000 and 390,000,000 feet of pile driving done each year. A conservative estimate on the durability of the coil pad is 10,000 feet per set. This leaves a demand of between 29,250 and 39,000 sets of coils. Market Segments and Distribution Channels The market segment of this product is fairly homogenous.
There are a various entities that have influence over the market that need to be approached differently.Pile hammer manufacturers, architectural, engineers, soil consultants, pile hammer rental companies, construction contractors, and pile driving contractors. Recommendation Two trial studies were completed in testing the coil pad product. Using the current price and performance of asbestos pads, the economic break even price of each coil pad was computed. In the first trial, Colerick Foundation Company, the price of each pad had a value of $741. 67. Most of this savings is in the minimization of downtime (see exhibit A). In the second trial, Fazio Construction, the value of each coil pad was computed to be $678.
8. Because these pads represent a product that is not clearly understood, it will be difficult to convince construction companies of the value of each pad. Additionally, the enhanced performance will be a deterrent to rental companies. Because these two different stances, the ideal situation is to educate the end users on the merits of the product.
The rental agencies need to be approached on the opportunity to make a larger margin on each pad. The merits of the product are the increased durability, the enhanced performance, decreased down time, and safety.The ideal price should be close to its economic value of $700 per pad. Initially Cumberland will not be able to charge this. Promotional pads should be given out to end users to generate market knowledge. After a period of industry acceptance hinging on Sales Promotion and Publicity, the product should be marketed in full.
I believe that a wholesale price of $300 per pad, $1800 per set and retail price of $600 per pad and $3600 per set is achievable. In the Colerick test, the distributor of the asbestos pads made $400. 00. At the pricing above the distributor would have made $1,800. 0. In the Fazio test, the pad distributor made $800.
00. Under the coil pad pricing the distributor would have made $1,800. 00. when you consider inventory and distributions costs this is a bargain. The weight of the asbestos products needed to complete the Colerick job was 19,200 lbs. This is simply the weight of 480 pads at 40 lbs each.
The weight of the asbestos pads needed to complete the Fazio job was 24,000 lbs. Both of these jobs could be completed with approximately 1 set of coil pads weighing 15 lbs each, a total of 90lbs.