Loctite Corporation: Industrial Products Group Harvard Case Solution & Analysis

1.     Competitor analysis

Loctite Corporation has developed the competitive advantage in the cyanoacrylates (CAs) market as being a first mover.  In addition to this, it has been growing among the industrial users by taking away the shares from other companies in the industry whereas, the marketing campaign of 1978 has paid off well resulting in tremendous sales growth for the company.

Furthermore, market for the adhesives has low capital barriers as well as it includes few expired patents that increases the number of the entrants in the market especially because of these market conditions which have attracted several small European and Japanese rivals. However, the main threat for the company is the 3M company that has highly skilled and trained Sales force that  advertise on cyanoacrylates and anaerobic. Additionally, the cyanoacrylates (CAs) market has strong competitors of the company which include Permabond Division of National Starch, Chemical Inc and the Krazy Glue. However, in the market there are various well established brands available that make it difficult for the new and small companies to successfully enter in the market and gain market shares.

However, introduction of the Bond A-Matic 2000 will also provide the company a significant benefit over its rivals in the industry; this is because the competitors in the market are generally small having limited resources as compared to the company. These competitors are neither fulfilling the needs of regional markets nor of the selected industries, as well as none of these competitors of Loctite Corporation have instant adhesive.

In the perceptual map (Exhibit 5) the Bond A-Matic 2000 is placed at the 1st quadrant as Bond A-Matic 2000 is a unique and high quality adhesive dispensing system at a low price that is the solution to the various problems faced by the industrial users as well as sales force.  In order to gain the sustainable advantage in the industry it is important to develop the differentiation and innovation strategies that distinguish the firm from its competitors in the market. However, the introduction of the Bond A-Matic 2000 may give the company sustainable advantage due to the uniqueness and reliability of the product at a lower cost. However, Loctite Corporation needs to develop an effective marketing and diversity plan that will help them to maintain the benefits gained from this product.

2.     Price

Loctite Corporation has kept the price for the Bond-A-Matic 2000 very low in comparison to their current prices of the adhesives that are $250 price for the end-user. In addition to this, from the25% margin the distributor will receive $250 price for the end-user and this price will allow the distributor to have more stock of the product. The BAM 2000 will enter the industry at a price that is going to be lower than the price of the automatic dispensers made by the other companies in the market. Loctite Corporation pricing strategy is based on Price skimming in order to generate more sales by using the Bond-A-Matic 2000 in comparison to the competitor’s offerings.

3.     Product

The company is currently operating in the industry with more than 300 items, however, now it wants to introduce a new and complementary product for the SuperBonder that is the unique low-cost adhesive dispensing system. In addition to this, BAM 2000 must be aligned with the Gluematic Pen and VARI Drop Needle as well as it will enhance the growth of the revenue for IPG. This will also provide the customers with a better version and it will shift the demand from the one ounce bottles to 1 Ib-container of adhesive. The BAM 2000 includes two models, low pressure model with plastic reservoir in order to dispense the more viscous adhesives while the high pressure model with Aluminum reservoir in order to dispense the more viscous adhesives.  It will decrease the errors which are occurred while assembling as well as increase the product’s   reliability while reducing the rework cost.

4.     Promotion

The direct mail program is an effective advertising campaign that can be used by the company in order to promote the Bond-A-Matic 2000. The promotion strategy of Loctite for the BAM 2000 is to sell the complementary product by using promotional packages that will be distributed to the industrial users   in order to help them understand the benefits as well as the uses of this new product............................

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