This has raised product line management issues, particularly centralization, and fords the opportunity for the development of a marketing plan for any new product introduction. The timing of launch and any change in policies for Air Cap cushioning and Sealed Air’s other products also needed to be communicated. 2. What has been happening In this market? How Is AS doing? Segments: The protective packaging market had three major use segments: Positioning, blocking, and bracing – e. G. Shipment of motors, computer peripherals etc. Flexible Wraps – could be used as void fill also, e. G. Lassoer, small spare parts, light medical instruments etc. Void Fill – to prevent movement during shipping, did not generally qualify as flexible wraps. Products Till 1970 heavy paper based products had dominated the market. In the seventies companies began product development with an assessment of packagers’ needs. In addition to coated and uncoated polyethylene alarm bubbles there were two major competitors In these markets: paper based products and foams. Users The proliferation of packaging products and the lack of easily demonstrable universal superiority caused confusion among the end users.
Users were a varied lot – some eying on price/performance basis whereas the others with purchase department decision. Influencer Based on domain knowledge Hauser guessed that a packaging engineer influenced about 40% of the material purchase decisions. The other group of course would be the purchase department as mentioned above. Marketwise Performance of Sealed Air The US Market – Packaging Supplies were viewed as productive, cost saving resource. Sealed Air had kept most of the air bubble market (20% of Flexible wrap market). Key factors being: Patent protection.
Licensing of only one competitor (Astor Packaging) Extensive Market Education The European Market – Packaging supplies were viewed as expendable commodities. AS was the only company selling coated products in these countries. England – AS had developed the market and had good distribution but the uncoated manufacturers were chipping away at SAC’S market share (likely to lose 50% market share to uncoated manufacturers). France – AS owned SKIBOB (uncoated MFC. ) and was facing competition in uncoated products (price lower than Air Cap) from 2 other manufacturers (one with a superior production facility).
Market was shifting gradually towards uncoated products. Germany – AS was a late entrant and could never establish itself as a commanding player. It was losing market share rapidly per year) to the more efficient manufacturers. 3. Should AS introduce an uncoated product to compete with GAFFED and the incipient competition from other small U. S. Producers and Sunsets? Yes, it should introduce an uncoated product to compete with GAFFED (Appropriate Parallels have been drawn with the European Market and the same has also been detailed below). The primary reasons being
To ward off the threats from the uncoated manufacturers. Catch up with the competition. Several of Air Cap’s distributors were taking Gaffer’s line. The New York Metropolitan market was similar to European Market (detailed in the next bullet) with no customer and distributor loyalty and price being a key determinant. Customers in the European market preferred uncoated packaging and were price sensitive as they considered packaging supplies as ‘expendable commodities’. Here market share of Sealed Air was 22% and declining. The learning from this endeavor can be used in the European markets.
GAFFED not only competed on price basis but also on quality (quote ‘…. Made a “decent product” in Hawser’s estimation’). AS could leverage its high quality production facilities. Another relevant parallel would be – In Germany and France uncoated manufacturers with better production facilities were eating into SAC’S market share. The other option of reducing price or distributor’s margin (to match Gaffer’s offering) may have a detrimental impact on the bottom line. Distributor Truckload Price 3/16 in h in GAFFED $31. 63 $36. 03 Air cap $43. 50 $65. 35
In this case we have taken the minimum price offered by Air Seal. AS could also consider entering the food packaging industry. 4. If so, what marketing program would you propose for uncoated? Product/price specification It should launch uncoated products matching SO-22 (3/inn) and LO-22 (1 /in) offerings of GAFFED. It should further launch a product in the 5/inn category so that it attacks its competitors from all fronts and may also help in capturing any untapped market potential. 3/16 (S) 5/16 (S) 1/2 in (S) AS Dollar Margin 11. 5 12. 5 14 Brand identification
These products should be marketed under the umbrella brand of AS. But an identity distinct from Air Cap should be created. Since like the European markets, New York metropolitan markets considered price as a key factor the issue of centralization and detrimental effect of the uncoated products on SAC’S existing products do not arise (catering to different buyer groups). Direct Sales program In case of truckload / railcar orders by end users AS can directly ship the material from the plant at New Jersey and give a margin of 8 % to the distributor (handling sere credit and technical service in turn).
In all other cases sales would take place through distributors. Selling Efforts The prevalent programs in AS for training its sales personnel and its incentive schemes (Base salary plus 1. 5% commission etc. ) should be continued with as this has yielded rich dividends and the sales force of AS have a formidable image of being the best in terms of product knowledge etc. The uncoated products would however not require a huge selling effort as price is the main consideration. New sales personnel should be recruited. Geographic markets
AS should first test-launch its products in New York Metropolitan market (here the consumers are more price conscious and look for a cheaper product with the same quality – a favorable ground for the launch of its uncoated products). With the consumers in other markets of US viewing packaging supplies as productive, cost saving resource; coated packaging should be continued in these markets. Distributor program For the uncoated products it should abandon its policy of selective distribution only for the uncoated product and make the product available in as many centers as possible.
