Seal Air corporation
...ad chipped away Sealed Air¡¦s market leadership position France (1980) „X Price is the key buying determinant „X Uncoated bubbles were priced about 40% lower than AirCap „X The major distributor of AirCap has reduced coated bubble to 30% of the total business (and the balance 70% are uncoated bubbles from Sealed Air¡¦s competitors) „X Seal Air owned an uncoated bubble manufacturer, however, the company did not offer uncoated product in France Germany „X AirCap was a late entrant (1973) and never held commanding share „X Sansetsu had an efficient manufacturing facility and sold approximately $6 million of uncoated product; Sansetsu¡¦s uncoated bubbles were 35% less than for coated The following is the price comparison of 3/16 inch bubbles from various vendors: Supplier Price GAFCEL (uncoated/ truckload) 2 34.79 Astro (uncoated/ truckload) 1 47.00 Astro (coated/ truckload) 1 49.50 Sealed Air AirCap (coated/ truckload) 1 47.65 Sealed Air (uncoated/ truckload) 3 19.00 Note: 1. Price per 1,000 sq ft based on a 50,000 sq ft order 2. Price per 1,000 sq ft based on a 100,000 sq ft order 3. Sealed Air (uncoated/truckload) estimated price 4. Sansetsu price is not available 5. GAFCEL price is approximately 27% less than Seal Air¡¦s coated bubbles In 1981, the 62 person force was expected to allocate time as follows: 60% to Instapak system, 35% to AirCap cushioning, and 5% to other Sealed Air products. However, distributor margins on AirCap cushioning were generally higher than the 10% to 12% for Instapak sales. This means Sealed Air management had not equally allocated sales resources to support distributors to optimize their profits. Question 2: If so, what marketing program would you propose for uncoated product? Sealed Air should consider a new brand for the uncoated bubble product; while keep the existing AirCap and Instapak products intact. Country Sealed Air offerings Competitors US Coated/premium segment: „X AirCap Uncoated/price sensitive segment: „X New brand Coated premium segment: „X Astro Uncoated/price sensitive segment: „X GAFCELs „X Astro „X Other uncoated bubble manufacturers England Coated/premium segment: „X AirCap Uncoated/price sensitive segment: „X New brand Uncoated/price sensitive segment: „X Sansetsu „X Other uncoated bubble manufacturers German Uncoated/price sensitive segment: „X New brand Uncoated/price sensitive segment: „X 2 major competitors „X Other uncoated bubble manufacturers France Uncoated/price sensitive segment: „X New brand Uncoated/price sensitive segment: „X Sansetsu „X Other uncoated bubble manufacturers The recommendations are: For US market, Sealed Air should introduce a new brand with uncoated bubble technology. This allows Sealed Air continue to offer the existing premium coated cushioning products; and uses the new brand to compete in the price sensitive and uncoated bubble segment. For UK market, Sealed Air should follow the same game plan in US. The reason is that Sealed Air has established the protective packaging market there with good distribution network. It does not make business sense to pull out the Sealed Air brand from the market, and to introduce a new brand for the customers. For German and France, Sealed Air should pull out the AirCap (c...