Loctite Corporation: Industrial Products Group Harvard Case Solution & Analysis

Question 1:

Customer Analysis

The distributors account for 50% of the sales of IPG’s current Super Bonder adhesive as their prime customers are small and medium sized OEMs. However, the segment within CA is not in proper shape and is highly fragmented. Besides that, the size of the firm is used to predict demand, which is not appropriate. Nonetheless, the major target market is SIC as in 16 of SIC groups more than 10% of the firms are the prime user of instant adhesives. BAM 2000 is a product that will provide the end users to dispense dots precisely or any other adhesives without creating any mess.

In the current market, Loctite can easily create its market share extensively as there are only 16% of the firms that are using instant adhesives which provides an opportunity for the company to expand the market size by educating the target market. Super Bonder is already present in the market, which is why the company must market this product as a complementary to Super Bonder. The market is new and the industry is young and the target market are the firms in the SIC industry groups from 35-39.

The BAM 2000 must be marketed on the basis of usage and sought benefits and must target the engineers of the defined target market. Thus, the company will be able to leverage segmentation to provide current users of instant adhesives with a more suitable and efficient product besides Super Bonder and also target new customers with the efficiency that BAM 2000 offers top the market.

Company Analysis

Loctite has the advantage of being the industry pioneer and holds a strong market share in the country in the industrial CA market. Besides that, the company has leveraged innovation to hold strength in this market. Furthermore, the company has a strong recognition in the industry and is quite unique in its manufacturing process for automatics adhesives. The target market is quite loyal to the firm and has attained a strong presence in the company’ success portfolio.

However, there are certain weaknesses of the company as well that include the inexperience which the company has in the form of its sales team. Secondly, the company also has high prices, which is a disappointing factor and can restrict the company from exploiting new opportunities. The company has strong relationships with its distributors who has also a prime customer of the company provided the leverage to the company to carry on with premium pricing. These distributors not just carry the complete product of adhesives, but also make room for the products of the company in their catalogs as well.

Sales people have the opportunity to improve through training, but the systems division of the company is under real consideration about the launch as BAM 2000 does not fit it. The inexperienced users will cause service demand and the overall reputation of the company will be at risk for a complementary product. Thus, outsourcing can be an option for the company which it can undertake and outsource manufacturing of BAM 2000.  On the other hand, an initial investment of $48,000 is required and this may create distortion in the company’s overall growth rate that is currently being faced by the company. The company can increase revenue from $32 million to $40 million without launching the product. The breakeven as shown will occur on 1304 low pressure and 719 high pressure models.

Loctite case solution

Competitor Analysis

The market in which the BAM 2000 is competing is quite competitive; however, BAM 2000 is an adhesive dispenser which is positioned as low cost. However, the industry in which it is competing is also offering low price adhesive dispensers which make it challenging for the company to compete in the market leveraging penetration. The strong and stiff competition will not allow the company to penetrate strongly in the market for BAM 2000. However, BAM 2000 has the advantage in the form of technology that it can leverage to differentiate itself from the competitors and establish its own base.

Nonetheless, the competitors that are already present in the market have the advantage in the form of first mover which will restrict the company from stealing market share and mark its significance in the industry. Therefore, the company should not rely on aggressive promotion, but should be done by focusing more towards creating awareness among the target market and should focus more towards distributors who are the prime customers. Thus, the company will have very few opportunities to create a point of difference, which is why it should focus more towards creating its point of parities stronger............

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