Loctite Corp. Harvard Case Solution & Analysis



1.     Bargaining Power of Supplier: (Rating: Moderate)

The bargaining power in the industry is moderate as there are other suppliers too from which one can purchase the product offered. Other suppliers include, TOAGOSEI and BORDEN CHEMICAL producers of adhesives, but LOCTITE is renowned for its quality assured products and therefore the bargaining power stands moderate as the buyer won’t compromise on the finished product.

2.     Bargaining Power of Buyer: (Rating: Low)

As the product is the need of the industry and due to low pricing cost already bargaining power of buyer stands low. They are restricted to purchase the products manufactured by limited number of suppliers currently present in the market. As the rest are supplying at a high price power to bargain is low.

3.     Threat of New Entrants: (Rating: Low)

As this is an industry that requires capital investment threat to new entrants is low. Moreover, the switching costs in this industry are also high due to which the threat of new entrants is further minimized. But creative destruction may produce new technologies that can further reduce the price and enhance quality therefore; compelling efforts are needed to remain in the market.

4.     Rivalry among Competitors:  (Rating: Moderate)

Rivalry amongst the firms is relatively moderate and can move on to high as competitors can easily imitate the low cost production technique. They already stand alone in achieving the competitive advantage for first mover in producing CYANOACRYLATES.

5.     Threat of Substitutes: (Rating: Low)

The threat for substitutes is low in the industry. The reason for it is that there are no real substitutes for INSTANT ADHESIVES, ANAEROBICS, and the newly launched technology by LOCTITE, which is called BAM 2000 and the CYANOACROLATES. In addition, the marketing campaign of 1978 paid-off and tremendous amounts of sales for instant adhesives were achieved.

                      I.            CASE # 2: “If the IPG plans to launch the new Adhesive Dispensing System, provide specifics for the marketing mix they could use”

1.     Product Strategy

BAM 2000 is a new product which is also a novel product with respect to cost adhesive dispensing system. It is a complementary product for SUPERBOND and its sales must align with the VARI Drop Needle and the GLUEMATICTIP Pen. Further, BAM 2000 will shift the demand from one-ounce bottles to one-pound containers or the three-gram GLUEMATICTIP PEN. Hence BAM 2000’s sales will boost revenue growth to 70% for IPG and customers can get a better version of less viscous adhesive too.

2.     Price Strategy

The BAM 2000’s price is kept way low from the current prices of adhesives e.g. $250 specifically for the end-user. The 25% margin for the distributor on a $250 priced product will make him stock more of the product. Price skimming strategy is used by LOCTITE to make the BAM 2000 better on sales generation versus the competitors offering safe use and clogging free advantage.

3.     Distribution Strategy

Distribution Strategy opted by LOCTITE in its value chain is one that is very strong. It is evident from the facts mentioned in the case that what the distributors are to LOCTITE’s success. Out of 10,000 distributors nationwide LOCTITE has chosen only 285 distributors from which it accumulates 50% of its sales revenues. However, the sales force and the distributors alike need to get some training on communicating the uses and application of BAM 2000 and its complementary advantages when used along with SUPERBOND, which is already one of LOCTITE’s best sellers.

4.     Promotion Strategy

For promoting BAM 2000 in the target market, LOCTITE can go for Guerilla Marketing Techniques. LOCTITE can use platforms through which it will communicate the advantages of BAM 2000 and its use and applicability with SUPERBOND. Other than that, it can pursue PULL strategy, making excessive availability of the product on every available platform and thus make consumers at least try it out once. However, the risk is if the strategy went other way around, then the product image will suffer as one that is of low quality...............................

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