Loctite Corporation: Indusrial Products Group Harvard Case Solution & Analysis

ANSWER TO Q#1(a)

Yes, Industrial Products Group of Loctite Corporation should introduce the new adhesive dispensing system. The company’s strategy should be efficiently applied and implemented in order to get 35% market share.

CUSTOMER ANALYSIS

The target market should be SIC 36 as the current share of Loctite in the industry of electrical and electronic equipment is 5235 establishments out of 19610 establishments. The expected increase in target market would be 3588 establishments. It is also depicted that the increase in target market would increase the demand for adhesives by 28781 lbs.

Moreover, the products in this industry are subject to frequent design changes. Small amount of establishment uses large amount of adhesives as compared to other industry. A short increase in SIC 36 industry will increase the demand for adhesive stamps by large ratio. This is because the price elasticity of demand of adhesives in this industry is highly elastic.

Since the target market uses a large amount of adhesives, BAM would attract the customers of that market because it offers low price as well as it is very convenient to use. Moreover, BAM is more efficient than other adhesives it can put more drops in a minute than any other adhesives.

BAM should not be offered as a separate product it should be offered with super bond adhesiveness as a complementary product. It should be advertised along with super bond in such a manner that the customer gets complete insight of the advantages that the customer would get by using this instant adhesives it will attract the current customers as well it will create awareness in new customers also.

Therefore, the company can easily attract the customers by this innovative product and could easily capture a large share in the target market.

COMPANY ANALYSIS

Loctite is a well renowned manufacturer of adhesives as it has earned its customer’s satisfaction and customer’s loyalty by offering highest quality products. It has captured a huge share in the entire market. In order to get more shares in the market the company has decided to launch a new product named Bond A Matic. BAM will help the company to attract its customers and to penetrate in to new markets due to its sophisticated design, high efficiency and low cost. It will help the company to get their desired market share in the industry.

If the product is sold separately, then it will cannibalize the sales of super bond to a large extent because of the difficulties faced by the line workers in dispensing CA’s from one ounce and small bottles. The adhesive clogs in the nozzle of these bottles because their nozzles are not wide enough to release the adhesive easily. This causes waste of time of line in workers as well as decreases efficiency of their work, the, if the product is sold separately then the customers will move towards BAM and subsequently BAM will cannibalize the sales of Super Bond adhesives. Thus, BAM should be sold complementary with SB so that the cannibalization effect could be eliminated as well as revenue will be increased.

COMPETITOR ANALYSES

Loctite has a well-established brand name and being the sole producer of CA’s within the region it is enjoying the benefits of monopoly in CA’s. There are very low barriers to new entrants, but due to Loctite’s goodwill and brand image the company does not have any threat of losing its sales because of new entrants in the market. Moreover, the company charges higher price of CAs from its costumers due to its monopoly. Thus, the company has competitive advantage in the industry.

On the other hand, 75% of the market share is acquired by Wood hill, Permatex, and Loctite. This could be a threat that if the company would not be able to sell BAM beyond its breakeven units as calculated in exhibit 2, therefore, it will increase the cost of the company and the company might lose its competitive advantage in the industry.Loctite Corporation Indusrial Products Group Case Solution

ANSWER TO QUESTION # 2

PRODUCT STRATEGY

The current position of the company’s share in the target market is 26.7% and it is anticipated that the company would grab 18.3% more market in the future. It is suggested that the company should use Gluematic tips for hard surfaces and for soft surfaces and falling drops a combination of Vari Drop needle should be used.

This should placate the needs of customers in the targeted industry as there are many line workers in the industry and BAM is suitable for line workers. Since the cost of heads is very low, therefore, providing both heads would not increase the cost of Loctite to a considerable amount however, this will definitely attract the customers due to increase in their flexibility......................

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