![Canty InternationalMarketing strategies for the Canadian hospitality industryMarketing alternatives for the Bryant Inn’s account. CantyInternationalLimited4219575-704850DANS SOLUTIONS11/3/2009 Table of Contents TOC
1-3
Problem Statement PAGEREF _Toc244938697 3Key Findings PAGEREF _Toc244938698 3SWOT Analysis PAGEREF _Toc244938699 4Competitive Analysis PAGEREF _Toc244938700 5Target Market PAGEREF _Toc244938701 5Alternative 1: Quantity Discounts and Financing PAGEREF _Toc244938702 6Alternative 2: Transportation Shipping Discount PAGEREF _Toc244938703 7Alternative 3: Value Pricing Discounts PAGEREF _Toc244938704 8Implementation Plan/Tactics PAGEREF _Toc244938705 9Promotion PAGEREF _Toc244938706 9Placement PAGEREF _Toc244938707 9Solution PAGEREF _Toc244938708 9Plan B PAGEREF _Toc244938709 9Appendecies PAGEREF _Toc244938710 10 Problem Statement Canty® International has been contacted with a request for a proposal for a contract installing wall panels for a hotel chain named Bryant Inns. They now have to find a price for the product that will covers their variable and fixed costs, appeals to the customer in a value pricing system, and allows Canty® International to make a profit at the same time. In this case study, we will be focusing on profit and sales orientation in order to find a price that will satisfy both the customer and the distributor. Key Findings Bryant Hotels are currently not satisfied with the short service life of their current wall coverings. Canty® International has a product development group called Design Lab that has created a product called Decoline. Decoline lasts for ten years, compared to the original product that lasts only two. Decoline can be produced in a wide variety of colors, textures and designs. It also meets Bryant Hotel’s standards by being specially treated for fire resistance and able to filter sound effectively. We have determined that the break-even point of selling this product would be $24.75/m2 with an order of 500m2. This price is set for equipment, supplies and labour to produce Decoline. Fixed costs and variable costs have been included in this, but we have not included the installation costs which estimated at $5.40 per meter squared. Decoline Costs and Expenses Fixed CostsPrice ($)Variable CostsPrice ($) per m2Supervision1080.00Material Fibre7.28Inspection165.00Bamboo Backing3.30Indirect Labour84.00Cement.80Floor Space Expense327.00Labour Costs1.31Tools30.00Building Tables X 34650.00Cutting Table480.00 Note: Fixed Costs have been broken down to a price for every square meter per month and do not include installation SWOT Analysis ,[object Object],Competitive Analysis Canty® International is involved in a monopolistic competition in regards to getting a strong hold in the wall covering industry. Their competitors are a step behind when it comes to long term life value of their product. The competitor’s wall coverings only last two years, and because of the efficient source of supply, Design Lab of Canty® International can create wall coverings at minimum costs that are comparable to other manufacturers. With this new advancement of wall coverings, Canty® International is going to take the lead in this market. Knowing that Canty® is able to make a better wall covering for a cheaper cost will cause the competitors to either drop their prices for their current product, or develop a wall covering that is just as effective, and sell it at a lower rate then Canty® International. If this is the case, competitors will step up efforts to sell a product at the same level, and the wall covering industry will engage in a price war. Target Market Canty® International’s target market is the commercial industry. They are establishing themselves as a key player in the hospitality segment, and are interested in doing long term contracts rather then short ones. Canty® is attempting to appeal to Canadian markets, and will be targeting large contracts by showing pricing alternatives based on the amount a customer purchases. By having a stronger product then competitors, and a comparable price, Canty® will use a concentrated segmentation strategy to develop a reputation as a leader in supplying wall coverings to the hospitality segment of the commercial industry Alternative 1: Quantity Discounts and Financing A noncumulative quantity discount option would allows us to promote larger orders of Decoline®, while offering enticing prices to our prospective hospitality industry customers. The average hotel room has a wall space of 241.5m2 XE
241.5m2:www.hotelassociation.ca
and the average Canadian hotel has 53.41 XE
53.41:www.hotelassociation.ca
rooms. This gives us an average hotel wall space of 12901.19m2 XE
12901.19m2:www.hotelassociation.ca
per hotel. With each hotel chain offering us years of full production we are well positioned to offer discounts on large orders. The second part of the proposal is to offer financing to amortize the payments over the lifetime of the product, thus allowing our customers to place larger initial orders while reducing up front costs. The installation of Decoline® is an optional service that we will offer to our customers. We will offer this to customers who orders over 13000m2. For example, the Bryant Inn account with 150 properties across Canada, with an estimated wall space of 1935178m2 would cause us to expand to another 9 fabrication locations as to complete the upgrade within a 10 year period. At 10 years our current installation will have run its life and we will be positioned to start a new Installation cycle. ,[object Object],Alternative 2: Transportation Shipping Discount This pricing discount suggests that when customers have bought a set level of products, we would cover any remaining shipping and freight costs for extra products bought above these amounts. For example, Freight costs from Vancouver, B.C, to Calgary, AB = $1,365.85 CAD (Source: Freightquote.com, Journey Freight International INC.) Therefore if we sold 13000m2, at a gross profit of $56506.13 CAD, we could include the shipping and still receive $38808.08 CAD profit. Using this pricing, we can establish that the distance between our shipping point in Vancouver (V5G 4J3) and our customer in Calgary, Alberta (T1Y 7K7) is 967km. This works out to roughly $1.50 per KM. With orders of 13000m2 or over, we will include the shipping costs in the price per meter. Estimated shipping costsVancouver – Toronto, Ontario = $6550.50 Vancouver – Montreal, Quebec = $7341 Vancouver – Winnipeg, Manitoba = $3426 This means that we can ship our product to anywhere in Canada and cover our shipping costs but still receive a profit. From a financial point of view, these orders would cover the costs of materials, labour, tools and other expenses, as well as covering the shipping costs and an ample profit for us. ,[object Object],Alternative 3: Value Pricing Discounts Our third solution to this case study is to introduce value pricing to our product. This means that we will lower the price because the economy is still lagging from the recession. Hotels and businesses have been hit especially hard this is evident by the low prices available to consumers across North America. If we offer customers a price of 5% over the breakeven point we will generate interest and create a buzz about our company. For example for 1250m2 sold the breakeven is $17.51, if we charge $18.39 we are implementing ourselves as the low cost leader and charging a price most would be willing to accept. We will always get a return on our investment and position are company into a strong position for the foreseeable future. Another aspect of this solution would be to offer installation at cost. Installation can be a very expensive process and this alone will a huge selling point to any of our customers. Recession buster prices are a popular trend right now and it would be beneficial for us to join in. If we offer low prices and build a perception of value concerning our company and product this is much more valuable as we will draw many different consumers and more than if we charge at a higher price. And customers will buy from us because we have a comparative advantage, in this situation it is the improved technological process that allows are product to last five times the length of our competitors. Lastly, the final part of this solution would be to offer Value-Based Benefits. Value-added benefits that we can offer to customers include personalized services, free training materials, product updates and bonus offers. These services offer value that is imperative to the success of a company and will generate profit without necessary increasing the price. This solution is has the possibility to be very successful because of the state of the current economy but its weaknesses limit it and therefore make it not suitable for Canty International. ,[object Object],Implementation Plan/Tactics Promotion ,[object Object]](https://image.slidesharecdn.com/cantyinternationalwithcoverpage-091111110704-phpapp01/85/canty-international-with-coverpage-1-320.jpg)
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