Loctite Corporation: Industrial Products Group Harvard Case Solution & Analysis

1.    Customer Analysis

Loctite Corporation is among one of the three market leaders in the cyanoacrylates segment of the adhesives market. Loctite, Eastman and Permabond mutually accounted for around 75% of the market share in the cyanoacrylates market. The total market of adhesives is growing around 10% but the sales of the cyanoacrylates are increasing twice the rate of the total market. In addition to this, Loctite Corporation contains 85% shares in the Anaerobic Adhesives market in North America. The sales of the company are growing 25% every year and within a year the sales of the Loctite reached to $32 million.

Loctite Corporation (IPGs) has two main business units that are General Industrial Business (GIB) and Selected Industrial Business (SIB). Each business unit of the company is responsible for profit generation as well as accounted for 60% and 30% revenue of the company respectively. GIB sells its products to the industrial distributors then these distributors resell to the medium and small OEMs and MRO markets. On the other hand, SIB sells its products directly to the large OEMs that include automobile and farm equipment manufacturers. The Systems division of the company develops the BAM 2000 in order to tackle the difficulties that are faced by the assembly workers while dispensing CA from the smaller bottles. Hence, the BAM 2000 will provide an opportunity to the users to dispense CA without any waste.

The market segments of the company consist of all the users of the adhesives and mainly the target group consists of the industrial users. In addition to this, the positioning strategy of Loctite is to provide the customers with the high quality adhesives that help them to overcome their existing need and wants. The Bond A-Matic 2000 is a complementary product of the company; it is aimed towards the engineers and household customers. However, the value proposition is its strong and extensive distribution network while on the other side; the positioning statement is to introduce low cost adhesive dispensing system by using the Gluematic tip. The Bond A-Matic 2000 might distort the image of the company in the mind of consumers so it will be beneficial for the company to introduce it as a complement with the SuperBonder Adhesives.

  • 2.     Company Analysis

Loctite Corporation is the leader in the development and promotion of high-performance adhesive and sealants for the industrial as well as for the consumer with a product line of over 300 items. Most of the sales personnel of the company are qualified engineers and are considered to experts in their field. However, the sales personnel are also viewed as problem solvers by the management of the company as they work with the end user in order to demonstrate and recommend them the most appropriate adhesive.

In addition to this, the main objective of Loctite Corporation is to become the premiere worldwide seller of the adhesives for the industrial use. In order to achieve this objective the company has focus on high quality and high pricing strategy. Loctite Corporation has three main profit centers that include IPG which has accounted for 25% of sales, Wood hill Permatex Group which has accounted for 34% of sales and Loctite international has accounted for 41% of sales.

Furthermore, Loctite Corporation target market mainly consists of industrial customers that contribute majority of the company’s revenue. Loctite held 85% of market shares in the anaerobic market of North America in 1978. The sales of the company are growing at the rate of 25% each year.

70% of the sales of IPG are from the technologies that include anaerobic and cyanoacrylates (CAs) while on the other hand, there are 11 products in the super Bonder line of CAs of Loctite. However, the company has to maintain the clear differentiation among the two of its CA products as well as develop the adjusted pricing strategy between their two CA products.  The company uses market penetration in order to increase the buying volume of SuperBonder customers while using market skimming strategy in order to maintain the brand loyalty of the QuickSet404. The sales force of the company has helped in developing strong relationship with its distributors............................

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