LOCTITE CORPORATION Harvard Case Solution & Analysis

Should the Industrial Products Group of Loctite Corporation introduce the new adhesive dispensing system?  3C analysis

            The analysis is about 3Cs that are used to proceed during the planning in the business and introduction of the products or services into the market. It requires the analysis of three things that are; customer, company and competitors. The decision is whether to introduce Bond-A-Matic 2000 (BAM) into the market or not. If it is introduced then it should be decided that whether it should be introduced with a brand name of Loctite or with its independent identification in the market. The detailed analysis is given below. It must proceed with the product with higher price or higher quantity to earn profits and cover advertisement expense as shown in appendix.

Customer Analysis:

            The customers are of two types; first type is the industrialist and another one is final consumer who consumes the product. The company is operating under two types of market; one is anaerobic and second one is adhesives. The adhesive market (cyanoacrylates) is growing faster however; the products under adhesive are less tough and durable in comparability. The suitable option is to go with the growth and the growth is there in the adhesives market.

            The market for CAs was 890,000 pounds in North America for the year 1978 and the growth of 10% is expected for the next year in the market and the same rate of growth can flow to Loctite. Most of the sales are of 625,000 pounds that are sold under the brand name and remaining is sold to the industrialist users who buy irrespective of the brand name.

            BAM should focus on both the market segments, therefore it is necessary to use a high reputed brand name i.e. Loctite to grab the market share. The problem for the company is to offer such low price product with the name of the company that is famous for its quality and high prices. The price is lower but then the quality is acceptable, therefore to use the name of Loctite will provide a benefit to the company to charge higher price than that identified in the case i.e. $157.5. The price can earn a positive contribution but its demand must be considered while looking at the break-even point of advertisement expense (appendix).

Company Analysis:

            Loctite is enjoying the market leadership, as the quality it sells to the market gives it a competitive advantage over its competitor. It can charge a higher price because of high market reputation.

            It has a good distribution network; it has selected roughly 285 distributors in 1978 with 1400 outlets. It has about 10,000 distributors nationwide. This is the strength of the company to have such distribution network that can deliver fast as customers would not have to wait for the product delivery.

            The company makes adhesive equipments to facilitate the use of the products that are being sold in the market; therefore, this is a competitive advantage to the company. The dual production capability of the company gives it an advantage to attract the customers.

            It sells its products directly to the customers and it has an opportunity to sell all its products to the customers, it may be an option to its other competitors. Selling directly to its customers gives an advantage to the company of high customer awareness and price can be charged according to the perception of the customers with direct dealing.

            The company’s sales team is not experienced and they are not given training on how to operate the product. The customers are dealing with the sales team and the sales team does not know about the product specification, therefore the company may be losing customers due to lack of training to the sales personnel.

            The company is pending highly on Super-Bonder to increase its sales, and at the same time it is introducing a product with same nature that can affect the sales of Super-Bond that effect in cannibalization effect of the company products.

            The price of BAM is lower than other products, therefore it is highly going to affect the sales of its other products and cannibalization is not in the favor of the company to introduce this product now.

Competitor Analysis:

            The barriers to entry are low; therefore a new entrant will be a competition to the new and existing products of the company. Thus, it must be careful while introducing a product.

            The buyer’s power is low because of little substitute and no knowledge about the product to customers.............

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