case #2: canty international jk and the implementors from set 1k buddy
DESCRIPTION
Case #2: canty international jk and the implementors from set 1k buddy. FMGT 1K MKGT 1102. Introduction. Canty International Manufactures wall systems/coverings Receives RFP Develops Decoline. Bryan Inns Multinational hospitality firm Requires replacement wall system - PowerPoint PPT PresentationTRANSCRIPT
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CASE #2: CANTY INTERNATIONALJK AND THE IMPLEMENTORS FROM SET 1K
BUDDY
FMGT 1KMKGT 1102
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Introduction
Canty International
Manufactures wall systems/coverings
Receives RFP Develops Decoline
Bryan Inns Multinational
hospitality firm Requires
replacement wall system
Has specific requirements
How can Canty International conquer competitors and gain the contract with
Bryant Inns?
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Key Findings
Canty International predicts a conservative sales potential of 500 square metres a month.
The installation costs are cheaper than current available products.
10 years service life No comparable product
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large corporation experience in the industry known throughout the industry funds and resources are readily available to tackle large contracts
ASSUMPTIONS
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FIXED COST
Operational Cost per month:
Supervision cost $1,080.00
Inspection cost $165.00
Miscellaneous indirect labour $84.00
Floor-space expense $327.00
Small tools and expense materials $30.00
Depreciation cost -3 building tables & cutting machine
$42.75
Selling & Administration (Excl. marketing program) $3,896.67
Marketing communication program 403.33
Total Operational Cost/Month: $6,028.75
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Variable Cost
Techno-fibre $6.55/metre (90cm width) $7.28
Bamboo backing $2.97/metre (90cm width)
$3.30
Environmentally cement $0.96/litre, 8.30 litres for every10 square metres
$0.80
Wages $7.10/hour, 1.84 direct labour hours for every 10 square metres
$1.31
Total materials & labour cost/square metre:
$12.69
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Break Even Prices
500m2 / monthly
2000m2 / monthly
2598m2 / monthly
Variable Cost $6345 $25,380 $32,968.62
Fixed Cost $5,028.75 $6,028.75 $6,028.75
Total Cost $12,373.75 $31,408.75 $38,997.37
Break Even Price
$24.75 $15.70 $15.01
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Strengths
High production capacity Up to 2598 square meters per month Can accommodate large companies Can accommodate International
companies Raw materials are produced in adjacent
building eliminating transportation costs
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Weaknesses
Has a narrow range of product lines Assembly production generally produces
at a 77% of optimum capacity
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Opportunities
Environmental manufacturing
Lasts longer than competitors
Economic New Technology Installation
Included
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Threats
Small market Economic downturn Competitors New technology
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Competitive Analysis
Soundproof foam Canty International
Higher price Lower price
No installation Installation
Decorative
Environmentally friendly
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Target Market
Homeowners Business owners Renovators
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Company Objective
Customers
Profit-oriented - Profit Goal 18% Target those value the increase
in prestige such as Bryant Inns Monopolistic competition
– competition on products Company’s own sales team Based on customer's perceived
value- Quality and service- Product value: save time and cost
Channel members
Competitions
Costs
ALTERNATIVE 1 : Price Skimming
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Advantages
High Prices = High Quality
High Profit Margins
Improvement
Attract Competitors
Low Demand Perceived Value
Disadvantages
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ALTERNATIVE 2 : Price Penetration
Initial low price Cheap price of only $16.49
Company Objective = focus on marketshare
Customers = homeowners/firms
Costs = $16.49Competition = price warsChannel Members = retailers +
Canty’s Sales
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Advantages
Build Market Share Fast
Discourage Competitors
Higher Demand
Low Profit Margins Low Price = Low
Quality? Perceived Value Canty
International’s Image
Disadvantages
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ALTERNATIVE 2 : Value Basedand Specialty Promotional Pricing
Promotions to Attract Customers Initially, Higher Price Introduce Promotional Pricing
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Advantages
Attracts Customers
Higher Profit Margins
Stacks Well Against Competitors
Builds Loyalty
Draws in Competitors
Higher Profit Margins
Questionable Non-Sale Price
Perceived Cheap Option
Disadvantages
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Solution
Price Skimming Strategy
Innovative New Product Lower Prices if Competitors Emerge Perceived High Value
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Implementation Plan
Product Requirements Price at $35.58 / m Promotion at Regional Sales Office Internationally Based (Place)
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Plan B
Value Based and Promotional Pricing Attract Customers With Promotions
Cash Discounts Quantity Discounts
Durable Product = Gain Large Market Share
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Course Concepts
Price Strategies Price skimming Price penetration Value based
The five Cs of pricing: Company objective Customers Costs Competition Channel members
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Questions/Discussions
QUESTIONS??