Jennifer Feng's e-portfolio

Welcome to my e-Portfolio! I will be soon be showcasing here examples of my work. I am currently a student in BCIT for Financial Management. My career goal is to be become a CA. If you wish to contact me, please click on my Contact page and fill in the form there.

Here is a part of the case study my group and I completed in Marketing class.

 

Introduction:

Canty International is a manufacturer of wall systems and coverings for industrial and commercial buildings.  Bob Sweeney, Vice President of Marketing and Sales, received a RFP from Bryant Inns requesting a better alternative to their current wall coverings, which are vinyl/paper based. Canty International developed an innovative product, as per Bryant’s purchasing agent, Diana Cromwell’s request. The new product named Decoline is a techno-fabric covering, cemented to a lightweight but sturdy bamboo fibre core. It is abrasion-resistant, soil proof and low maintenance which results in a longer life span of ten years as oppose to two years provided by the current competition. The current sales potential of Decoline is estimated at 500 square metres per month while the current production capacity is deemed to be 2000 square metres per month.

Problem:

What pricing strategy should Canty International consider for the new product, Decoline; so that they can achieve the sales target of 2000 square metres per month?

Key Findings:Product

• Innovative material Decoline, semi-rigid decorative fabric panel product, introduced by Canty International.
• Decoline is custom made to the consumer’s specifications. The product comes in variety of colours, textures, and designs to rival any offerings of the conventional wall coverings.
• Decoline has undergone extensive testing to meet manufacturer’s needs. It is highly abrasion-resistant, soil proof and requires very little effort to clean and maintain. The fire resistant bamboo backing effectively filters sound.
• Decoline has a ten year life span compared while the industry standard is two years.
• Techno-fibre costs: $6.55 per metre in 90 cm width
• Bamboo-Backing costs: $2.97 per metre in 90 cm width.
• 10 square metres of product will require 8.3 litres of cement.
• Estimates 1.84 direct labour hours at the rate of $7.10 per hour to construct 10 square metres.
• Manufacturing operational costs, prorated on monthly basis include:
  • Supervision: $1080.00
  • Inspection: $165.00
  • Miscellaneous Indirect Labour: $84.00
  • Floor-Space Expenses: $327.00
  • Small Tools and Expenses: $30.00
  • Three Building Tables: $1550.00 (service life of 10 years)
  • Cutting Machine: $480.00 (service life of 10 years)
  • Selling/Admin Expenses: $4300/monthly (includes: $403.33 monthly for a marketing communication program, search engine ads, print ads).
  • Complete Production Cycle to build 50 square metres of Decoline requires 3 hours and 20 minutes; based on a 173 hour work month.
    • Optimum capacity = 2,598 m² per month.
    • Actual (Estimate) Capacity = 77% of Optimum Capacity.
    • Actual Production Capacity (Estimate) = 2000 m² per month.
    • Expected Sales: 500 m² per month.
    • Competitor’s price for wall-coverings with life span of two years = $11.50 per square metre.
    • Competitor’s installation costs = $4.80 per square metre.
    • Decoline’s installations costs = $5.40 per square metre.
    • Canty International mainly deals with B2B transactions.
    • Company policy states material costs are transferred at the standard cost rate only. Therefore, no profit is included in the interdivisional finished-goods transfers.
    • The related division maintains strict quality standards to provide high quality raw materials for Canty International to use.
    • No transportation cost for Canty International in producing Decoline since materials produced in adjacent building.
    • Canty International tints and designs the top layer of material according to customer specifications.
    • The Decoline product can be easily installed on current track systems.

Pricing

Process

Assumptions: 

 

• Customers are willing to pay based on a value based system.
• For the ease of calculations, we have determined 500 square metres as the current sales amount.
• We have also set interest rate as 5% to conduct time value comparisons.

SWOT Analysis:

Strengths

                       ·          Canty International has introduced an innovative product named Decoline. It is superior to its current competition because of its life span of ten years against two years for other similar products on the market. This competitive advantage will bring in new sales for Canty International.

                       ·          Canty International is able to secure its supply of material needed to produce Decoline, as the techno-fibre and backing material are already produced on a regular basis in a related division of the company. This minimizes costs, as raw materials are transferred at the standard costs.

                       ·          Canty International experiences minimal transportation costs as the raw materials needed to produce Decoline are manufactured in an adjacent building.

                       ·          The related division and the design lab maintains strict quality standards to provide high quality raw materials for Canty International. The related division expedites the process by having the lead time on materials be a maximum of two weeks. This saves Canty International valuable time which in turn makes them more efficient and lowers their operational costs. 

                       ·          Canty International is a socially conscious company, as they have incorporated using ecologically friendly cement in the production of Decoline.  Canty’s demonstration of corporate social responsibility can result in higher sales, as consumers are becoming more environmentally aware when spending.

                       ·          Canty International has an established brand since it received an RFP from Bryant Inns. The management of this organization perform careful planning before proposing an RFP. This leads me to believe they trust Canty International because of the strong brand.

Weaknesses

• Canty International’s product, Decoline is not an off-the-shelf product. It requires customer input and specifications before being manufactured which can limit the customer base. Limited customer base might result in lower revenue.
• The current monthly sales projection of 500 square metres is substantially lower than the actual production capacity of 2000 square metres. Operational costs are very high since only 500 square metres are attributed to the monthly fixed costs. As sales increase the marginal fixed costs will be reduced.
• Actual production capacity is only 77% of optimum capacity. Improvements need to be made in assembly production to create an efficient process.
• Hotels are often renovating their designs to provide a fresher appearance for their customers. Along with providing its Decoline product, Canty International can also provide interior design consultation. This will increase revenue and brand recognition.
• Shift in consumer behaviour to prefer environmentally friendly product will help the sales of Canty International as it makes products from environmentally friendly cement and natural products like bamboo fibre. It also doesn’t pollute the environment by transportation.
• Shift in consumer behaviour to choose quality products that provide value by improvements in quality and a longer life span. Bryant Inns has decided to choose a better product after frustrating experience with inferior products. Other hotels could use follow Bryant Inns lead and focus their purchasing model based on value rather than price.
• Olympics are being held in Vancouver, Canada in 2010. This will have a significant impact in foreign tourism to British Columbia. The hospitality industry of this region might be interested in Canty International’s offerings.
• Canadian Dollar is rising, which in turn has a negative impact on foreign tourism to Canada. Canty International’s primary customer base of hotels will be hurt by the lack of tourism. This will negatively impact the purchase orders for Decoline and thus reduce Canty International’s revenue.
• The recent economic downturn has negatively impacted the average disposable income for families. Families are reluctant to spend on tourism which reduces the hotel’s income. This might result in a reduction of purchase orders for Decoline and thus reduce Canty International’s revenue.
• Hotels may renovate more often to update their aesthetic appearance. Since they are remodelling regularly, they might not appreciate the value of a product with ten year service life. This might lower Canty International’s sales.

Opportunities

Threats

Competitive Analysis:

Decoline	Current Panel Product
10 year estimated useful life. Made of bamboo fibre covered by techno-fabric. Customizable for each customer; special tints and designs available. Highly abrasion resistant and soil-proof; requires little effort to clean and maintain. Meets industry safety requirements; fire resistant; effectively filters sound.	2 year estimated useful life. Made of foam core panels covered by wallpaper. Not customizable; off-the-shelf; limited offerings in design, colour and selection. Stain resistant, not very durable (reflected in short product life). Meets industry safety requirements; filters sound.

Here is the “WHY BCIT” Video my group and I worked on in Business Information. We had a lot of fun taking pictures for the video and putting the video together.

-patient
-good with computer programs
-can speak English and Mandarin fluently
-good at calculations