Sales Management and Personal Selling Essay

To address your immediate need from Kendrick Foundation Company (KFC) for a cost quote on Curl Metal Cushion Pads (Cushion slogs or CMCP), it would be beneficial to establish a proper pricing outline. It may also be beneficial to not only consider the compendious terminus, but also the potential long term pricing strategy for future consumers as well. To estimate the economic value price or price premium, it is advisable to keep in mind perceived value added propositions for your consumer. Also, as with virtually harvest-festivals, it is meaningful to perform a margin analysis base on potential pricing to nodes to determine gainfulness of the overall harvest-tide venture. Last but not least, external competition should also be considered as a factor on your harvest-feast price. First, base on the study given, relative pricing analysis stooge be performed utilizing information from consumer purchases of conventional pads. Based on the price paid for the conventional p ads for to each one project, it can be assumed the node is spontaneous and able to take over comparable pricing for CMCP (assuming the same benefits are created for users).A higher value price can be created by emphasizing the supererogatory features or benefits of utilizing CMCP versus the conventional pads. The main supererogatory features include more efficient mob driving time and less(prenominal) required time for change (overall less labor utilized), this value proposition can be estimated based on labor cost savings. In addition, CMCP are generally safer than the conventional pad, epoch the measurement of this value/benefit may be harder to measure, it is yet an other(prenominal) merchandise point that could increase the price premium the node is provideing to constitute for CMCP. For purposes of having a measurable pricing strategy, the focus of this analysis is on labor time savings. Assuming the average cost per Real minute of arc is $63/Hour for labor (HBS Curled Metal Inc Table A), and the willingness to pay for the material itself is same as what the customer paid for the conventional pads, the extra benefit from labor time saved (utilizing conventional pad as bench mark) can be considered cost savings to customers therefore, addition to customer perceived value.Table 1 Revenue Analysis exhibits the cost to customerfor purchases of conventional padding (project based), this cost plus the labor cost savings switching from conventional pads to CMCP translates to an estimated per unit customer value price for CMCP. With comparable data collected for the two test customers, the estimated value pricing is $765/pad (based on exchange 6 pad sets) and $1,392/pad (based on selling 5 pad sets) for size 11 , and $339/pad (based on selling 6 pad sets) for size 11 Inch. This is evident of the upward price we can charge the customers, also, a differentiated price can be based on volume sold per set. To continue the flow of the discussion an d to be conservative, we will assume the remaining discussion pertains to selling sets of 6 or at the $765/Unit (11 Inch pad price) and $339/Unit (11 1/2 Inch pad price). Second, margin analysis is necessary to determine additionability based on the aforementioned customer value pricing.Table 2 Cost/Margin Analysis calculates the profitability per unit for short term (250 Units Production) and long term (500 Units Production), this analysis utilizes the estimated perceived value calculation on with prior information provided (HBS Curled Metal Inc Exhibit 6). Analysis is performed for the most popular sizing 11 inch pad, along with two other product lines to expand the production consideration. Result of the analysis concludes the 11 product is most profitable among the three products. In regards to your consideration of whether to expend $150K on steadfast tooling, based on our analysis, it does result in higher profit margin than using your original equipment. However, th is is given that there is enough customer demand to cover the cost of the additional tooling. Lastly, based on the analysis, COGS will also decrease as production increases even with the additional cut down for equipment (comparison of 500 units vs. 250 units produced).With uncertainty on market demand, and with limited resources on marketing research efforts, I would advise you to hold off on perpetual tooling purchase until demand is more certain. Third, competitors and substitutable products could have an impact on product price. Since CMCP is the starting signal of its kind to enter the market, you will have first mover advantage, however, competitors could enter the market with a similar product and additional pricing strategies, such as rebates/discounts or changes to list price may need to be considered. While it is not a huge stir during product launch period, it should something to be cognizant ofin case the product proves to be profitable.Further analysis should be per formed to ensure maximum customer price value is captured. Based on the aforementioned information, I would offer focusing efforts on the 11 inch CMCP and charging the customers upwards of $765/Unit (based on selling sets of 6 pads) and $1,392/Unit (based on selling sets of 5 pads). In the short run, I would advise not to purchase the additional permanent tooling cost until there is more certainty around the demand for the product. In the long run, with proven sales records, the company can benefit from additional operational efficiencies from higher volume production. If you have any further questions regarding this, entertain do not hesitate to reach out to me.