Loctite Corporation Industrial Products Group Harvard Case Solution & Analysis

Loctite Corporation Industrial Products Group

Customer Analysis

The target market for Loctite Corporation lies between the classification groups 35-39, which uses at least 9 pounds of instant adhesive every year. The role of BAM is quite evident and effective in the industry and within the target market. With the introduction of BAM 2000, the company is looking to introduce low cost instant adhesives. The idea behind the launch of this product is to improve the exiting SuperBond dispensing technology. The industries specific for BAM 2000 are small to medium while the growth potential is immense in the industry. BAM 2000 will also provide the cumbersome ounce bottles that are at the moment prone to clogging and making a mess of assembly lines. Basically, BAM will provide customers with control reliability and efficiency in the process.

Company Analysis

Loctite Corporation has been the pioneer brand in the adhesive market and is the number one brand in the industry. The market share for Loctite Corporation accounts for 47.5% of the total market share in the CA Cyanoacrolates industry. Along with this, the automotive adhesive dispensing equipment also elevates the total sales in the market. In addition to this, Loctite Corporation contributed more than 15% sales of the total IPG (industry product group) in the FY 1978. With the introduction of Bond-A-Matic 2000 and Gluematic tip, it will help in clogging the competitive landscape too. In addition to this, the Bond-A-Matic 2000 helped IPG to boost its growth in new markets with a revenue growth rate of 70%. The role of BAM 2000 is to ensure low cost product to the customers. The newly developed product can be distributed through the same distribution channel, which has already made the company to grow at a rapid pace while making it achieve a good reputed market share.

Competitor Analysis

Bargaining Power of Supplier: Moderate

The bargaining power of supplier is moderate for the industry. The reason it is moderate because other than Loctite Corporation there are some other suppliers too in the industry such as Toagosei and Borden Chemical. The buyers have options to choose from although, Loctite Corporation is a superior quality product.

Bargaining Power of Buyer: Low

With the product not easily accessible and the number of suppliers being medium for the industry makes it a low bargaining market for the buyers. They are basically restricted to utilize the products manufactured by limited number of buyers.

Threat of New Entrants: Low

The threat for new entrants is low for the industry because of the high capital investment required to start the business. Secondly, to compete in the industry all players need to have technical and operational expertise in order to maintain and compete with the existing players.

Rivalry among Competitors: High

The rivalry among industry players is quite high. The industry makes it tough for the rivals because all the players have unique skills and features, which makes them highly competitive for other players in the industry. With such high capital investment for the industry, it is next to impossible for industry player to exit the industry.

Threat of Substitutes: Low

The threat for substitutes is low in the industry. The reason for it is that there are no real substitutes for instant adhesive, anaerobic, and the newly launched technology by Loctite Corporation, which is called BAM and cyanoacrolates.

Question 2

Product Strategy:

The Bond-A-Matic 2000 Dispenser was basically a new product that was unique and low cost adhesive dispensing system. Basically, BAM 2000 complements the SuperBonder line of instant adhesives offered by the company. The sales of BAM should be correlated with the Vari drop needle, applicator and the Gluematic tip. Adoption of BAM 2000 will also increase sales of one-ounce bottles, which will reduce and at some point will be removed by either pushing demand to either one-pound containers or the three-gram Gluematic tip Pen. Therefore, introducing BAM 2000 to the company portfolio will add on to the current sales revenue for the company and further will help increase sales. The position statement for the BAM 2000 is a low cost adhesive dispensing Gluematic tip. The customers can benefit from it being a plastic reservoir to recover less viscous adhesive.

Price Strategy:

The recommended price for BAM is to keep it $250 for the end user. The reason to make it $250 for the end user is based on the stock equipment by raising the margin on equipment sales, which can present a greater incentive to market the product to the end customer. The company should follow the price skimming strategy. The reason to opt for skimming pricing is that as the case states the industry is not sensitive to prices, in fact buyers are willing to pay higher for better product. Therefore, price skimming can be the ideal scenario for the company to base its prices in the industry. The prices can be based ....................................

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