CANTY INTERNATIONAL

Lil Bobdog

Introduction

Canty Internationalwall systems and coverings for

industrial/commercial use

Bryant Innshotel industry

Request for ProposalDesign Lab

Decoline

Techno-FabricAbrasion-resistant & soil-proof

Cement

Bamboo fibreFire-resistant & sound filter

Variety of colors, textures, designs

Problem

What should be the proposed pricing strategy for the Canty International’s Decoline?

Key FindingsCosts Break Down

VARIABLE COSTS (per m2)

Techno-Fabric $7.28 Bamboo Fiber $3.30 Cement $0.80

(environmentally friendly)

Labor $1.31

TOTAL VARIABLE COSTS =$12.69

FIXED COSTS (per month)

Supervision $1080 Inspection $165 Miscellaneous Indirect Labor $84 Floor Space Expense $327 Small Tools & Materials Expense $30 Building Tables $38.75 Marketing Communication Program $403.33 Selling & Administrative Expense

$3896.67

TOTAL FIXED COSTS = $6024.75

X = volume of Decoline Produced S = selling price

BREAKEVEN POINT

Cost = $6024.75 + $12.69X Given a sales potential of 500m2 a month,

Cost = 6024.75 + (12.69 x 500)

= $6869.75

Revenue = SX$12,369.75 = S (500)

The minimum price for Decoline must be $24.74 /m2

PRICE RANGES

optimum capacity: (2000 m2/month) the BEP = $15.70

conservative estimate: (500 m2/month) the BEP = $24.74

pessimistic sales: (250 m2/month) the BEP = $36.79

SWOT Analysis

Strengths & Weaknesses

Strengths Current Plant Well equipped. Lower costs Adequate employees Company Development Well established Current Market

Weaknesses Decoline cannot be an

on shelf item because of the option to make different tints & designs.

Opportunities & Threats

Opportunities If Bryant Inn is happy with the product

that they receive, they are likely to implement the same product throughout most or all of their hotels and inns, nationally and internationally.

Word of mouth, as companies visiting the hotel will see the quality of the product and will recommend it to their friends/partners

Developing a highly recognized brand will be easy as long as their product is high in quality; this will help Canty International build a name in this market.

Threats Other companies producing the same

product, using our ideas and the work we have done to make it to this point. They will not have to create marketing demand for the product category, instead focus directly in creating demand for their specific brand.

Government changing regulations and laws, making it so our product specifications don’t pass building codes or environmental standards.

Price for raw materials go up causing out variable costs to rise causing our product not to be competitive in the pricing margin.

Recommendations

Value-Based Pricing Alternative 1

Canty International can price their product at the low price of $25.00 per square meter. This is just above the breakeven point price if Canty International sells 500 square meters of the product.

Canty International will rely on volume of sales. As the volume of sales goes up the company will be able to reduce the production costs and lower the price even more.

Price SkimmingAlternative 2

A high price of 60$ will be set for Decoline.

Start with a high price to signify quality. Test consumer price sensitivity

(Grewal, 2009)

Product Life Cycle

Price PenetrationAlternative 3

Canty International can price their product at the low price of $25.00 per square meter. This is just above the breakeven point price if Canty International sells 500 square meters of the product.

Canty International will rely on volume of sales. As the volume of sales goes up the company will be able to reduce the production costs and lower the price even more.

Implementation Plan

Tell Main Customers the Price and discounts

Advertize at trade shows that industry leaders will attend

Offer option to product; change in color after a year or two

Boost Price

Plan B

Price Skimming Solution

Course Concepts

4P’s SWOT Innovator Product lifecycle Pioneer product Breakeven point

(math) STP steps –

marketing strategy  

Environmental analysis

Market trend analysis Competitive analysis Market Penetration

Pricing Price Skimming Costs Price-quality

relationship

References

Grewal. (2009). Marketing: Canadian Edition. United States: McGraw-Hill.

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