Case Study 2 Final 2

MKTG 1102 TEAM A – SET CCASE STUDY 2-895350-485775FORIN . PARMAR . ZITA . THOMAS . ALBERT . CHAISSON . BOECHLER TOC
1-3
Problem Identification PAGEREF _Toc244884649 3 Findings PAGEREF _Toc244884650 4 Standard Industry Pricing PAGEREF _Toc244884651 4 Market Opportunity PAGEREF _Toc244884652 4 Hotel Chains PAGEREF _Toc244884653 4 Target Market PAGEREF _Toc244884654 5 Demographic: PAGEREF _Toc244884655 5 Geographic: PAGEREF _Toc244884656 5 Psychographic: PAGEREF _Toc244884657 5 Behavioural: PAGEREF _Toc244884658 5 Swot Analysis PAGEREF _Toc244884659 6 Internal PAGEREF _Toc244884660 6 Strengths PAGEREF _Toc244884661 6 Weaknesses PAGEREF _Toc244884662 6 External PAGEREF _Toc244884663 6 Opportunities PAGEREF _Toc244884664 6 Threats PAGEREF _Toc244884665 6 Alternatives PAGEREF _Toc244884666 7 Alternative 1 PAGEREF _Toc244884667 7 Price Skimming and Brand Strategy PAGEREF _Toc244884668 7 Alternative 2 PAGEREF _Toc244884669 7 Value Based Pricing Strategy PAGEREF _Toc244884670 7 Alternative 3 PAGEREF _Toc244884671 8 Price Penetration Strategy PAGEREF _Toc244884672 8 Solution PAGEREF _Toc244884673 8 Value Based Pricing PAGEREF _Toc244884674 8 Value Based Pricing Structure (Chart) PAGEREF _Toc244884675 9 Old VS New Product Costing PAGEREF _Toc244884676 9 Implementation Plan PAGEREF _Toc244884677 10 Sales Campaign PAGEREF _Toc244884678 10 Trade Shows PAGEREF _Toc244884679 10 Industry Publications PAGEREF _Toc244884680 10 Online Marketing Campaign PAGEREF _Toc244884681 10 Revenue Forecasts PAGEREF _Toc244884682 11 Concepts Used From MKTG Course (Index) PAGEREF _Toc244884683 12 References PAGEREF _Toc244884684 12 Problem Identification Canty International (CI) is a manufacturer of wall systems and coverings for industrial and commercial use. They were recently RFP’d by the Canadian hotel chain Bryant Inns who is in need of a custom wall covering system that CI did not already manufacture. In response to the RFP XE
RFP
CI developed a completely new product called Decoline. Product testing XE
Product testing
indicates that Decoline will likely exceed client expectations. In short, Decoline lasts 5 times longer than Bryant Inns current wall coverings, and was custom built to meet all Bryant’s specific requirements. Development of this new product has subsequently created a new business opportunity for CI. Their current customer database reacted well after learning of the new product resulting in 500sq/meter of estimated sales in the pipe. A positive outlook for sales is predicted. CI’s sales reps are ready to hit the ground running and the product development group “Design Lab” is prepared to expand to accommodate a potential influx of sales. Future success is dependant on the marketing challenge CI is now faced with. The problem defined is: “What pricing strategy should be used to insure a balance between sales profit, sales volume and customer satisfaction is achieved for Decoline? Findings Standard Industry Pricing Our team conducted market research XE
market research
to determine ball park price rates. Conversations were held with the following firms to gain a better understanding of how pricing is structured within the wall systems industry: AllCommercialNoise.com – Custom fabric noise reduction wall systems for the commercial industry Acoustical Surfaces – Solutions for noise reduction and soundproofing. Technature.ca - High quality customizable wall systems for the commercial industry We found that pricing of wall systems is affected by a number of variables, the most important being: ,[object Object]

Customizations e.g. color, size, shape, installation and mounting methodsHeavy IndustrialLight IndustrialHeavy CommercialLight CommercialDecorative ArtisticLarge manufacturing plants & factory'sWarehouses, and light manufacturing plantsHotel Chains, Hospitals, Schools, Office BuildingsPrivate businesses, small offices e.g. strip malls.Residential and premium offices with interior design.$10 - $100/Sq Meter$15 - $50/Sq Meter$20 - $80/Sq Meter$50 - $150/Sq Meter$99-$300+/Sq Meter Decoline can be considered a premium wall covering system within the heavy commercial category. Although it is designed to be aesthetically appealing, the primary purpose is to be durable, reduce noise, and blend in with the surrounding visual environment. Wall systems in the decorative category however, are designed to attract attention and be recognized as decorative, artistic interior design feature. Discovering this contrast had a strong influence on the selected pricing strategy. Market Opportunity Hotel Chains When considering the sheer number of brand name hotels in Canada’s top 5 cities, we can conclude there is a huge market available for penetration. The following hotel count data was provided by Expedia.ca: Number of Hotels By Top 5 Canadian City (Expedia.ca)TorontoMontrealVancouverCalgaryEdmonton2041641758174 Target Market Demographic: The demographic target XE
demographic target
will focus on large heavy commercial organizations within the B2B market. Examples of these “heavy hitters” include commercial developers, wall-covering resellers, hotel chains, convention centers, office buildings and government & educational institutions. Sales and marketing efforts directed towards top tier organizations will ensure large average purchase orders and increase opportunity for high margin returns. Heavy IndustrialLight IndustrialHeavy CommercialLight CommercialDecorative ArtisticLarge manufacturing plants & factory'sWarehouses, and light manufacturing plantsHotel Chains, Hospitals, Schools, Office BuildingsPrivate businesses, small offices e.g. strip malls.Residential and premium offices with interior design. Geographic: The Geographic target XE
Geographic target
will be National (Canada wide) with emphasis on local markets. Because larger potential clients such as Bryant Inns are likely to have locations spread across Canada, it makes sense to target organizations with a nation wide presence. Psychographic: Because CI’s new product will be considered premium value within the heavy commercial category, the psychographic target XE
psychographic target
will be comprised of organizations who believe they are progressive, and take pride in their corporate image. These corporations understand that paying extra can insure value is achieved through product quality. Behavioural: Key behavioural factors XE
behavioural factors
of targeted customers include organizations that are likely to develop strong brand loyalty XE
brand loyalty
. They also have an appreciation for value, and are seeking to commit to long term value based relationships with their suppliers. They strive to uphold a high social status and high level of integrity in the corporate world. Swot Analysis Internal Strengths ,[object Object]

Established base of clients that show interest in being early adopters XE "early adopters" of CI’s new products.

High quality materials (Techno fibre and backing) are available internally within CI at minimal cost. Weaknesses ,[object Object]

CI has limited production capabilities (2000 sq meters/month). They would need to expand current operations in order to support large scale production.

Due to unique customer requirements, Decoline is not an “off the shelf” product. This prevents ability to pre-produce product in high quantities. External Opportunities ,[object Object]

CI now has the opportunity to leverage their newly created technology to start a new sales campaign pushing the “first of its kind” product to every organization within its target market. In these scenarios, huge revenues are possible.

To expand production volume possibilities by investing in more equipment (tables, cutting machines etc).

Nation wide expansion.Threats ,[object Object]

At any point a competitor may introduce a superior product to the market at the same cost.

Although competitors may not have a superior or equal product, their sales and promotion efforts may be much more aggressive than CI. Alternatives Alternative 1 Price Skimming and Brand Strategy Pros ,[object Object]

Case Study 2 Final 2

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