Rubbertech Case

1. Company founded in 2001

2. Company has just 15 employees

3. 2 sales people and 8 workers for assembly of RTP

4. Response was poor in trade shows

5. Sales persons reported enthusiastic responses at test sites – plants

6. Annual operating expenses not including Marketing or COGS = $250,000

7. Inventories are building. Need to move product

8. Priced at $10,000

9. What is the issue? Product too good to be true or is it pricing? Need complete marketing plan

10. Limitation – entire machine needs to be replaced after 1 year of use.

11. Ribbed Smoked Sheet rubber (RSS) is natural rubber. Production is expected to remain steady for 10-15 years (medium term) and decline when Synthetic Rubber will substitute for natural rubber. Most Rubber is produced in Thailand and SE Asia.

12. All Plantations are in competitive sub-markets i.e. firms are price buyers and the market will absorb production of all grades of rubber.

13. Plantations range from large ones with almost 1/3rd of the total production to approximately 2000 ‘mom and pop' stores.

14. Demand is stagnant. 5% of large plantations go out of business each year.

15. The rate for medium and small plantations in 10%.

16. 50% of medium size plantations produce High grade rubber. High grade rubber sells for $2/ ton more than industrial grade rubber.

1. Beta Test site results: Listed above

2. 2 sales reps – One technically trained sales rep at medium size plant. He felt confident that the price could be increased to as much as $14,000. The sales rep disagreed strongly because he felt that the large plants usually pressured suppliers and succeeded.

3. Cost of setting up RTP is below

4. Competitor – Indian Company which will produce a slightly cheaper machine priced at $8000 processing 4000 tons as opposed to 5000 tons by RTP. 90% accuracy. Both machines are far superior to manual labor.

5. Marketing – Initial