Fall
2013
Eco-Decking Case Study 2
TEAM EH, MARKETING 1102 SET D
ANNE MARIE WEBB-HUGHES
Mike Butterfield, Jacquie Kine, Nicole Whiting, William Chen, Mike Xu
Table of Contents
Introduction and Problem ................................................................................................................................... 2
Key Facts/ Findings / Assumptions...................................................................................................................... 2
SWOT ................................................................................................................................................................... 2
Competitive Analysis ........................................................................................................................................... 2
Target Market ..................................................................................................................................................... 3
Alternatives ........................................................................................................................................... 3
Solution ................................................................................................................................................. 5
Implementation ..................................................................................................................................... 6
Appendix A ........................................................................................................................................... 7
Appendix B ........................................................................................................................................... 8
Appendix C ........................................................................................................................................... 9
Bibliography.......................................................................................................................................... 9
Introduction and Problem
Eco-Decking manufacturers and distributes environmentally friendly decking products to contractors
working in the residential and commercial building industries. Their new product is not only made out
of recycled material, but they also offer product value by offering a 25 year warrantee alongside
cheaper installation prices. What pricing strategy should Eco-Decking use to increase its market share
in British Columbia, by December 30, 2014?
Key Facts/ Findings / Assumptions

Techno-material made from recycled tires(Web-Hughes, 2013)

Surface is 100 % water tight, and water proof (Web-Hughes, 2013)

Breakeven Point: $46.92 m2

Total Fixed Costs: $13 031.67 (Web-Hughes, 2013)
SWOT
Eco-Decking’s strengths include being specialized in eco-friendly products. They have already
established channel partners for North American distribution, and they’re in close proximity to raw
materials. Their current weaknesses are that they have a low production capacity. Eco-Decking’s
opportunities are quite vast including growing popularity for low maintenance decking in the US1.
Their main threats are the high number of competitors in the decking industry, along with not being a
Canadian brand. (See Appendix A)
Competitive Analysis
The decking industry is highly competitive; for example, Trex did $300,000,000 in sales last year.
When looking to compete with already established companies, we need to address what they’re
currently doing, what their unique selling propositions are so we can create a better offer. Trex offers a
25 year warrantee, while Azek’s focus is after-service sales. Azek’s has very good customer
relationship management. They’re available to respond to their customers at all times. Shantex offers a
patented interlocking system that you can snap together yourself, that means that the consumer doesn’t
have to pay to hire a contractor. Taking our USP into consideration we’re going to differentiate
ourselves through price. (See Appendix B)
Target Market
Based on our research shown in Appendix B, Eco-Decking’s ideal target market is small contractors
with less than 25 employees that are making less than $500,000 a year in annual sales. We chose these
businesses because they’re highly involved in the development of the Vancouver area. Moreover,
they’re small enough that we don’t have to go over our production capacity to satisfy their demand.
Eco-Decking will be a “new purchase” for contractors who are currently buying and using similar
products.
Alternatives
1) Use penetration pricing to facilitate the introduction of our new “Eco-Deck” product in the
first quarter. Eco Deck Product sold at $30 (with an added 8% buffer) for 3 months, and on
April 1, 2014 up prices 15% to $33m2
Advantages

Contractors are more likely to try and recommend “Eco-Deck” due to the limited time
contractor promotion. They’re getting a quality product, for a low introductory price

It will increase market share and square meters sold

Contractor makes more profit because of reduced material price for that limited time
Disadvantages

Won’t be marginally profitable until the second quarter of 2014

Sudden increase in demand could leave Eco-Decking without enough production space to
satisfy its target markets needs

If we only sell half of our goal (Goal=2000m2/2=1000m2) we will lose $5/m2 and it will make
our buffer pointless
2) Use cost-plus pricing to earn stable profit and re-invest the money into Trade-shows.
Increasing our brand awareness and ultimately our market share. Raise price by $ 7 above
break-even to match competitor price at $35/m2. Sell at $35 and produce 2000m2/month
Advantages

Direct and clear. Easy to evaluate monthly whether or not we’re on target and making profit.

Many of our competitors do trade shows, so we can start catching up to the competition

Small contracting companies have booths as well, so we can optimize our networking
capabilities
Disadvantage

It does not consider the demand of the market and is unresponsive to the changes of the market

Consumers may think our products are the same as our competitors because our pricing is the
same, and our warranties are the same.
3) Use Price Skimming to set our prices higher than our competitors at $45/m2 selling 2000m2/
month. The value of having an eco-friendly product will reflect our higher price. Our end users
are eco-conscious and will see more value in an environmentally sustainable products than
worrying about price.
Advantages

Stresses our points of difference

Higher price can make us more profit while staying within production capacity

Strengthens our brand identity
Disadvantage

Potential to scare away our target market

Harder for contractors to make a profit on the materials

Difficult introductory route in the decking industry
Solution
Our pricing solution for Eco-Decking is to use penetration pricing to launch into the BC market. It will
increase our market share based on the increased rate of recommendations through contractors who
will be making a higher profit. This is our primary approach based on the levels of competition in B.C,
it will make our prices substantially lower in the introduction stage. The contractor limited time
promotion encourages our target market to try our new Eco-deck product. We will use penetration
pricing to gain our target markets interest because our “Techno Material” has an unproven track
record.
Implementation
Step 1: Issue press release to inform industry of new Eco-decking product launch. Features points of
difference including information about our valuable eco-friendly product, and our contractor limited
time promotion.
Step 2: November 20, 2013 Hire sales staff in British Columbia, and immediately provide networking
training. Make sure every sales representative has a professional (free) linked in account. We want our
staff to specialize in networking to help us increase our market share.
Step 3: December 1, 2013 immediately begin networking with other companies. Attending social
corporate events (free) in community to start building networks with other construction professionals.
Every sales rep must show that they’ve attended at least 1 per month.
Step 4: January 1, 2014-April 1, 2014 Release limited contractor promotion. Limited time price of
$30/m2 that expires after 3 months on April 1, 2014.
Step 5: February 19, 2014-February 23, Use January’s buffer revenue to fund Trade shows; 2014 BC
home and garden show, set up booth. Get word out about our contractor promotion.4
Step 6: Trade shows end April 1, 2014 contractor promotion expires. Raise our prices 15% after
promotion, selling at $ 32.17
Step 7: Year-end December 30, 2014 Evaluate how demand shifted using penetration pricing
Appendix A
SWOT
Strengths
Weaknesses
Narrow niche
Only offering a narrow line of ecofriendly products
give Eco-Decking a competitive advantage.
Positioned as a specialist in sustainable decking
market.
Low Production Capacity
They have a lower production capacity of only 77%
a month. If they want to sell any more than 2000m2
a month they’re going to have to double their fixed
costs to accommodate for a new manufacturing
facility (or a bigger one). Would also have to hire
more employees if they do decide to expand.
North American Distribution
Has channel partners and distribution for customers
in the United States and Canada
Close Proximity to Raw Materials
No costs for transporting and low lead time for
materials
Ability to Customize Product to Consumers
Specifications
Opportunity for higher markup due to
customization
Opportunities
Threats
High Market share in US for low maintenance
decking1
Low maintenance decks are growing in popularity,
extrapolated we expect similar conditions in
Canada
High Number of Competitors
5 Suppliers control 87% of decking demand3
Central American distribution
Decking and railing market up 4.8% from 2012
Not Identified as a “Local Business”
They’re not a Canadian based company and a lot of
Canadians prefer to support local business.
Appendix B
Competitive Analysis
Deksmart
Trex
Product
Price & warranty
Availability
Install Offered
Vinyl
5 year limited 15
year warranty on
ultra-decking
products
Available in
headquarters
No installation
offered.
25year warranty
Available in
headquarters
Wood
Composite
in stock online
in stock online
Azek
Azek deck
Limited
warranty
Available in
headquarters
in stock online
Offers
installation video
& Offers deck
builder.
Offers
Installation
video and
Installation
guide book.
Target Market
Main Dimensions
Variables
Typical Breakdowns
Geographic
Segmentation
Region:
BC
Location:
Census metropolitan area
Number of employees
1-25 Employees
Annual sales volume
Benefits sought
<$500,000
Quality, Durability
Usage rate
Ex-user & regular user’s
User status
Non-user, first-time user.
Loyalty status
None
Purchase method
Individual, selling as a bulk
Type of buy
New buy
Demographic
Segmentation
Behavioral
Segmentation
Appendix C
Course Concepts:
Market Share
Cost-Plus pricing
Product Line
Price Skimming
Unique Selling Proposition
Geographic segmentation
Customer Relationship Management
Behavioral segmentation
Trade Discount
Product life cycle
Elasticity of Demand
Introduction stage
Market Penetration
Bibliography
(2013, January 2013).Home Depot. Retrieved October 31, 2013, from
http://www.deksmart.com/products.html
(2013, January 2013).Home Depot. Retrieved October 28, 2013, from
http://www.homedepot.ca/?eid=us-language-selection-en&utm_source=us-language-selection-en.
(2013, January 2013).Rona. Retrieved October 28, 2013, from
https://www.rona.ca/en/outdoor-and-garden/materials---decks-and-verandas/recycled-plastic-composite-pvc.
(2013, January 2013).Lowes. Retrieved October 28, 2013, from
http://www.lowes.ca/.
(2013, January 2013).Trex. Retrieved October 28, 2013, from
http://www.trex.com/our-company/.
(2013, January 2013).Timber Tech. Retrieved October 28, 2013, from
http://timbertech.com/.
(2013, January 2013).Azek. Retrieved October 28, 2013, from
http://www.azek.com/.
(2013, January 2013).Shantex. Retrieved October 28, 2013, from
http://www.shantex.ca/.