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  Has specific requirements How can Canty International conquer competitors and gain the contract with Bryant Inns?

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

 large corporation  experience in the industry  known throughout the industry  funds and resources are readily available to tackle large contracts ASSUMPTIONS

FIXED COST

Variable Cost

Break Even Prices 500m 2 / monthly2000m 2 / monthly2598m 2 / monthly Variable Cost$6345$25,380$32, Fixed Cost$5,028.75$6, Total Cost$12,373.75$31,408.75$38, Break Even Price$24.75$15.70$15.01

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

Weaknesses  Has a narrow range of product lines  Assembly production generally produces at a 77% of optimum capacity

Opportunities  Environmental manufacturing  Lasts longer than competitors  Economic  New Technology  Installation Included

Threats  Small market  Economic downturn  Competitors  New technology

Competitive Analysis Soundproof foamCanty International Higher price Lower price No installation Installation Decorative Environmentally friendly

Target Market  Homeowners  Business owners  Renovators

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

Advantages  High Prices = High Quality  High Profit Margins  Improvement  Attract Competitors  Low Demand  Perceived Value Disadvantages

 Initial low price  Cheap price of only $16.49 Company Objective = focus on marketshare Customers= homeowners/firms Costs= $16.49 Competition= price wars Channel Members= retailers + Canty’s Sales

Advantages  Build Market Share Fast  Discourage Competitors  Higher Demand  Low Profit Margins  Low Price = Low Quality?  Perceived Value  Canty International’s Image Disadvantages

 Promotions to Attract Customers  Initially, Higher Price  Introduce Promotional Pricing

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

Solution  Price Skimming Strategy Innovative New Product Lower Prices if Competitors Emerge Perceived High Value

Implementation Plan  Product Requirements  Price at $35.58 / m  Promotion at Regional Sales Office  Internationally Based (Place)

Plan B  Value Based and Promotional Pricing Attract Customers With Promotions Cash Discounts Quantity Discounts Durable Product = Gain Large Market Share

Course Concepts  Price Strategies  Price skimming  Price penetration  Value based  The five Cs of pricing:  Company objective  Customers  Costs  Competition  Channel members

Questions/Discussions  QUESTIONS??