Crystal Components Czech glass is a particularly attractive prod – cutting the chandelier industr
Crystal Components Czech glass is a particularly attractive prod – cutting the chandelier industry. In northern Bohemia, glassworks have been in existence since the mid-fourteenth century and Czech crystal, which is colorless and ideal for en – graving and cutting, has been particularly attractive to chandelier makers. In 1724, Josef Palme began making chandeliers in northern Bohemia. These chandeliers were acquired by King Louis XV, Maria Theresa, and the Russian Czarinas and some have been placed in La Scale in Milan and Versailles. Thomas Klaus, president of Crystal Com – ponents, had established his firm as a major supplier of Czech glass components to the chandelier makers in the Czech Republic. Now, he was thinking of moving into foreign markets. Preliminary research showed large numbers of chandelier makers in the EU, the US, and China. While they were quite capable of making chandeliers to equal the quality of those made in the Czech Republic, they would need the Czech glass to make these chandeliers world class in quality. So, he is most interested in establishing relationships with chandelier manufacturers as quickly as possible. A key question in his mind is the proper pricing for these components. He has established costs for spheres and ovals in the crystal formations used in the chandeliers and also has determined the import duties into each of the target markets. These are seen in Exhibit 10.1. He knows that final prices of chandeliers range from €500 up to many thousands and each chandelier uses anywhere from 10 to 100 spheres, ovals or a combination of both. Since Crystal Components is a small firm, he also knows that he will need distributors to import the product into each of these markets and may have to provide some type of technical expertise to the chandelier manufacturers in their own languages. A quick analysis of the marketplace shows existing suppliers providing alternative product (not from the Czech Republic). Klaus has determined that competitors in general have the following prices for a 1 centimeter sphere – US$ 4.25, EU€ 4.50, China 30 Yuan – and, in most cases, these firms are located within the markets he is concerned about.
1. Which market(s) should Klaus move into first?
2. How should Klaus price his product in each of these markets based on the final pricing for his products?
3. How will this pricing affect the rest of Klaus’s marketing strategy?