Market Case
consumer would then benefit from saving in times and in a more efficient energy use.
The products total economic value would be the price of the consumers next best alternative (in this case the Asbestos pads) plus the economic value of what differentiates the CMI pads from the Arbesto pads.
With the objective of determining value to the customer for the increased efficiency, it is best to reduce all cost calculations to a cost-per-foot basis. The case study estimates that the average hourly cost of pile driving is $238, given that pile drivers average is of 20 feet per hour, the cost of pile driving can be estimated at $11.90 per foot driven.
Products total economic Value = Price of consumers best next alternative are the Asbestos pads, which are used for comparison during product testing.
Question 3
The lack of available statistics on this industry makes the job of evaluating market size difficult, however available data suggests that the average amount of piles driven annually would be between 290 million and 390 million, assuming an average actual driving figure of 20 feet per hour. Assuming, as Simpson did in the case, that a set of curled metal pads (four initially, plus two added after the originals lost some resiliency, adding up to 6 pads) would drive 10,000 feet, we can calculate:
(290000000/10000)*6 = 174 000
(390000000/10000)*6 = 234 000
It is possible to predict a potential market for pads in the interval range of 174 000 to 234 000 cushion pads per year.
Question 4
The price of the pads will affect how much of the market I will get since price acts as a customer segmentation mode, if the price increase is too high, only customers that do not worry