CMI Case Analisys

7 Pages 1718 Words

shion pads, it was necessary to determine the product’s intrinsic value to customers by conducting an Economic Value Analysis (EVA). Using the results from the Colerick and Fazio tests both time and cost savings were determined, presuming contractors will be renting equipment for each job. The first step in this process involves identifying the Reference Value, which is the price per unit of the next best alternative, i.e. asbestos pads. Reference values for the Colerick and Fazio jobs were $166.40 and $400.80, respectively. Positive Differentiation Values of $219.33 and $639.20 were calculated for the Colerick and Fazio tests, respectively. Neither test proposed any negative value as a result of using CMI’s pads. Therefore, the total economic values of CMI’s pads were $$385.73 for the Colerick job and $1040.00 for the Fazio job. (For detailed calculations and results of the EVA, please refer to Appendix I). It is critical to set a price and develop a marketing plan that communicates and guarantees the value-adding incentives of CMI’s pads while ensuring profitability for CMI.
Pricing
Pricing of a product as ground-breaking as CMI’s curled metal pads is crucial to its success. If priced to high, sales will be lost to the next best alternative. If priced to low, revenue will be lost and profits will suffer. After evaluating the EVA (Se...