Canty International
Developing a viable Pricing Strategy for the Decoline Paneling System
Team Ten: Kenneth Chong, Eugene Dong, Katrina Mumford, and Don Sadler
November 3, 2009
Table of Contents
Problem: ................................................................................................................................................................ 3
Key Findings:........................................................................................................................................................ 3
Assumptions: .................................................................................................................................................... 3
Research - SWOT Analysis: ................................................................................................................................. 4
Strengths: .......................................................................................................................................................... 4
Weaknesses:...................................................................................................................................................... 4
Opportunities: ................................................................................................................................................... 4
Threats: ............................................................................................................................................................. 4
Competitive Analysis:........................................................................................................................................... 5
Drywall and Painting ........................................................................................................................................ 5
Present Paper backed Wall Panels .................................................................................................................... 5
New Decoline vinyl backed wall Panels........................................................................................................... 6
Competitive Comparison of Top 2 alternatives to the new Decoline wall coverings................................... 7
Wallpaper Panels – Ratings .......................................................................................................................... 7
Target Market: ...................................................................................................................................................... 8
Alternatives & Recommendation:......................................................................................................................... 8
1) Going with cost based method (15% markup from cost - $29 per square meter) ....................................... 8
Advantages: .................................................................................................................................................. 8
Disadvantages:.............................................................................................................................................. 8
2) Competitor based method: premium pricing (10 year value with installation): $55 vs. competitor’s $57.50)
.......................................................................................................................................................................... 9
Advantages: .................................................................................................................................................. 9
Disadvantages ............................................................................................................................................... 9
3) Market Penetration Pricing ($25) ................................................................................................................. 9
Advantages: .................................................................................................................................................. 9
Disadvantages:.............................................................................................................................................. 9
Solution:.............................................................................................................................................................. 10
Implementation plan (plan of action):................................................................................................................. 10
Plan B: ................................................................................................................................................................ 10
Course Concepts: ................................................................................................................................................ 11
References: ......................................................................................................................................................... 12
Calculations: ....................................................................................................................................................... 12
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Canty International is rapidly growing its establishment as a manufacturer in the wall systems
industry. Canty International specializes in customized products to satisfy customer’s needs and
desires, therefore the products are unavailable to be stocked on store shelves. As a result, with
its unique product and incomparable quality, Canty International is expanding to capture the
market.
Problem:
Canty International has an immense potential to be a successful and top leader in the wall
systems industry. In order for Canty International to reach its fullest potential, they must
strategically configure a price that appeals to both consumers and the company.
Key Findings:
Canty International, a Canadian based manufacturer new to the market, is aggressively rising to
dominate the industry. The immense quality and unique product differentiates them from their
competitors. Therefore, Canty International far surpasses its competitors in its rise to dominance.
Canty International received a request for proposal from Bryant Inns to generate a product to
satisfy 150 inns and hotels across Canada. This is a phenomenal opportunity for Canty
International to demonstrate their exclusive products to potential consumers by using Bryant Inns
as a representation of quality.
Assumptions:

Canadian Based Company

Background in developing housing products

Product is patented

No competitors currently have comparable product

Product has lifetime of ten years

Monthly volume sales of 500 meters squared

Good reputation among its customers
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Research - SWOT Analysis:
Strengths:

Experience in the wall systems and covering industry

In-house product development group (Design Lab)

In-house manufacturing division

Sole Producer of Decoline product

Versatile – able to produce high quality customized products
Weaknesses:

Lack of staff to install products to client’s premises

Highly customized products prevent stocking

Inexperienced installation crew for this new product
Opportunities:

Be lead replacement to current panel product (lifecycle of 2 years)

Other Facilities could potentially use our products
o Hotels
o Apartments
o Airports
o Schools
Threats:

Competitors create identical products

Legal issues
o Product has not been extensively tested – may not live up to expectations

Businesses resistant to shift away from current and familiar panelling system
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Competitive Analysis:
Drywall and Painting

Two painter crew-$500 day

Mostly custom use in odd places, ceilings

Costly for designs or patterns

messy clean-up

equipment bulky

low durability to traffic

low tolerance for stains and soiling

no fireproofing or sound proofing

damage problems and low quality patches

interruption to business routine

lots of colours
Drywall and painting has a use within the hotel for special areas, ornate and finicky locations,
and positions where wall panels cannot be used. The main use of Painting is as a custom finish.
It is therefore expensive relative to wall panels. The cost is not only higher because of the
slower nature of painting compared to wall panels, but also because painting does not last long in
traffic areas and has to be reapplied regularly. In most areas of the Hotel, where possible track
has been installed and the present wall paneling system has already replaced drywall/painting.
Present Paper backed Wall Panels

Developed to replace drywall and painting

Lower in Price than drywall and painting in present applications

Has Durability problems because of the paper foam backing

Is hard to clean well

Has longevity issues, must be replaced every two years

Only has reasonable value to in terms of cost
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Paper wall panels with the foam backing that are presently used are not delivering the value on
price that the hotel expects. Although a cheap alternative to painting in the short run, these
panels have added costs in the long run that take away from their value. They are not easy to
maintain or clean. The durability of the product does not stand up to everyday hotel traffic.
They have a short life span which requires replacement at the cost of new panels as well as
installation. The short comings of this product have left an opportunity for the introduction of a
higher quality product.
New Decoline vinyl backed wall Panels.

High durability

High sound proofing and fire proofing

Installs on present track system already installed in Hotels

Very good resistance to soiling and stains

Easy to clean and maintain

stable supply of product from an established manufacturer

quick turnaround on orders of two weeks maximum

Available in patterns, tints, designs. Can be custom ordered

Longevity is high at 10 years

Low installation costs over long run

High quality of Decoline gives customer high value
The new Decoline product of Wall panels has substantially more value than the present paper
backed panels used in the Bryant Inns. The covering itself is of higher quality, with a higher
level of durability against stains and soiling associated with the present panels. These features
will reduce costs for the hotel in cleaning and Maintenance over the long run. The longevity of
the product will also save the hotel in maintenance costs, replacement costs and installation costs.
The Decoline product has a life span of 10 years compared to the present 2 year lifespan of the
paper backed system. The Decoline wall panels need no special installation systems, and
installation of the panels is clean and simple. When compared to the present system over the
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long run, Decoline panels come out ahead on Durability and cost while providing increased
benefits over the present system.
Competitive Comparison of Top 2 alternatives to the new Decoline wall coverings
Wallpaper Panels – Ratings
Current Wall
Drywall/Painting
comment
rating
Coverings
comment
New Decoline
rating
comment
rating
dissatisfied
6
dissatisfied
4
very satisfied
9
cheapest
9
medium
6
medium high
7
Expensive
5
reasonable
7
good
9
Quality
good
8
good
8
good
8
Tested
yes
n/a
yes
n/a
yes/no
Fire Proof
no
0
yes
7.5
yes
8
sound proof
no
0
some
6
good
8
some
5
good
6.5
very good
9
reasonable
6
reasonable
7
very good
9
Durability
Product Price
Install cost (10
yrs)
soil/stain proof
cleaning
Track System
none
n/a
good
n/a
n/a
good
n/a
very good 10
Longevity
reasonable
6
good 2yrs
7
yrs
10
Value
reasonable
7
good
7
very good
8
market share
25%
n/a
75%
n/a
colours
good
9
good
9
good
9
Patterns
timely
7
good
9
good
9
Designs
timely
5
good
9
good
9
poor
6
good
8
good
8
Install clean-up
0
n/a
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Target Market:
The travel accommodation industry is very competitive because of the economy in Canada.
Chained hotels account for a majority of the hotels across Canada with a 66% market share. In
the last year the chained hotel market has grown to an astounding 11 percent. Independent hotels
only hold 34% of the hotel market across Canada and only grew 7 percent. With this
information, we have decided to focus on chained hotels because they prefer to keep a familiar
look throughout. If we can establish a business relationship with a chained hotel, it will
guarantee us future opportunities to grow our business.
Alternatives & Recommendation:
1) Going with cost based method (15% mark-up from cost - $29 per square meter)
Advantages:

Easier to determine price

Cheaper for customer and thus the possibility of gaining a bigger market share

Performing in-dept market analysis is not as important
Disadvantages:

Does not show quality of product with the price

Does not consider competitor’s prices so could end up with prices that are much
lower or much higher than the competition

Does not maximize profits available
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2) Competitor based method: premium pricing (10 year value with installation): $55
vs. competitor’s $57.50)
Advantages:

Signifies better quality and life span than the competing products

Maximizes profit potential

Product enters into market as a strong competitor and has the potential to gain
dependable customer loyalty. Word-of-mouth is the most important factor for a
product’s success

No downtime (lasts 10 years)

Cheaper to install
Disadvantages

Could be difficult convincing customers the product has the value to justify the
price

More difficult to gain market share and is likely to take longer
3) Market Penetration Pricing ($26.81)
Advantages:

High sales

Instant market share control

Creates a tougher market for other competitors to enter into and keeps control of
the market share
Disadvantages:

Market would diminish too quickly due to 10 year product lifespan

Does not distinguish the product’s value with a lower price

Production can’t keep up (2000 sq. Meter capacity allotted)
o Needs new capacity strategy
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Solution:
Our solution for Canty International is to use a competitor-based pricing method, in
particular the premium pricing method. The price is very important to emanate Decoline’s
quality above the competition. The ten year life span of Decoline is an important feature for the
customer to consider when determining the quality of the new product compared to the current
wall coverings in use that only has a 2 year life span. Decoline will save the customer from
having to replace the wall coverings and paying for all the extra installation costs involved. This
is one reason why Decoline can be priced higher than the competitors. With a high price,
Decoline enters the market with a strong presence. If the company continues to maintain that
strength and prove their superiority with excellent customer service, more business can be
generated by recognition through loyal customers. Setting Decoline at a high price when entering
the market will maximize the profits gained because chained hotels prefer quality and simplicity.
Implementation plan (plan of action):
Create a demo to showcase the strengths of the new product and prove the qualities of Decoline,
such as the soundproofing and fireproofing, to the potential customers
1. Test their product in a working environment
2. Have a complete run through with the new product from manufacturing all the way to
installation
3. Get feedback from a respected customer and their staff on how well the product functions
4. Gain entry into the market
5. Be able to avoid typical start-up costs of a new product
Plan B:
Sell at low cost for market penetration. The Decoline wall covering is a new product that may
meet with resistance in the marketplace. For this reason the back-up plan will be to use a costbased pricing strategy. The advantages will be a win-win situation for both the Bryant Inns
Hotel chain and Canty International. The Hotel will get a chance to update their Hotel in the
latest wall coverings available, for an inexpensive price.
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By forming this relationship with the Hotel chain, there are many advantages for both
Organizations. As an established manufacturer promoting a new product the input and feedback
is needed for Canty. As a competitive advantage the Bryant Inns will be able to have input into
how the wall coverings are developed to suit their specific requirements. Because of the extra
value built into the Decoline product over the presently used system of paper backed boards.
There is no need to try and undercut the present price for the present paper backed product being
used. The cost based pricing strategy will be positioned so that Canty’s start-up costs of $24.73
per square meter (without installation) will be more than covered with a slight mark-up to a
selling price of $26.81 per square meter. The advantages to Bryant Inns of a more durable wall
covering will make this cost easily acceptable. The Decoline of wall coverings is durable for 10
years or more. The money Bryant will save on replacing their present system every two years
will be an important advantage in downtime, installation and replacement panel costs.
Course Concepts:
The concepts used to develop our marketing strategy were based mainly on the concepts taught
in Chapter 12 (Pricing Concepts and Strategies: Establishing Value). We looked at all the options
available in terms of pricing, deciding the pros and cons of each one. In relational to Canty
International’s business, we have decided that it would be best for them to implement a
Competitor-based pricing model. They have a Business-to-Business relationship and would
benefit the most if they price their products close to their competitors. As a highly customized
product, we did not want to implement the Cost-Based or Market Penetration strategies because
we are unable to produce our products and stock them. Thus, we would have an excess in
demand and a shortage in supply.
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References:
(2009). Case #2 - Canty International. Vancouver.
Dhruv Grewal, M. L. (2009). Marketing - Canadian Edition. : McGraw-Hill Ryerson Higher Education.
Euromonitor International. (2009). Travel Accommodation - Canada. Retrieved October 30, 2009, from
Euromonitor International: http://0www.portal.euromonitor.com.innopac.lib.bcit.ca/PORTAL/Magazines/Welcome.aspx
Calculations:
𝐵𝑟𝑒𝑎𝑘𝐸𝑣𝑒𝑛 ∗ (#𝑜𝑓 𝑃𝑎𝑛𝑒𝑙𝑠 𝑆𝑜𝑙𝑑) = 𝑇𝑜𝑡𝑎𝑙 𝐹𝑖𝑥𝑒𝑑 𝐶𝑜𝑠𝑡𝑠 + (𝑇𝑜𝑡𝑎𝑙 𝑉𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝐶𝑜𝑠𝑡𝑠)(#𝑜𝑓 𝑃𝑎𝑛𝑒𝑙𝑠 𝑆𝑜𝑙𝑑)
𝐵𝑟𝑒𝑎𝑘𝐸𝑣𝑒𝑛 ∗ 500 = 6024.75 + 12.68(500)
𝐵𝑟𝑒𝑎𝑘𝐸𝑣𝑒𝑛 ∗ 500 = 12364.75
𝐵𝑟𝑒𝑎𝑘𝐸𝑣𝑒𝑛 =
12364.75
500
𝐵𝑟𝑒𝑎𝑘𝐸𝑣𝑒𝑛 = $24.73
Page | 12