Loctite Corporation should introduce the new adhesive system Bond – A – Matic 2000 (BAM) as complementary product to the SuperBonder adhesive line. The target customers are plant managers in companies using more than 1 lbs. of instant adhesive per year. Loctite should employ a direct mailing campaign for BAM’s marketing efforts. The new adhesive system will support the company’s strategies to capture 35% of the CA market with the SuperBonder line. Customer Analysis
1. Market Potential Analysis
Based on the numbers for 1978, the market for cyanoacrylates totaled to 890,000 pounds sold between industrial and consumer market. Using the forecasts for 1979 for the industrial market (335,000 lbs.), I calculated an implied a growth rate (CAGR) of 26%, for pounds of CA’s sold (Exhibit 1). The growth in the market for CA’s is supported by the findings of the 1977 survey for the CA buyer behavior; 26% percent of current users expected to increase their use of instant adhesives. Probable increase in the market for CAs is driven by current users as well as potential clients. In Exhibit 2, using the Number of Establishments and Additional % of Potential User Establishments, I computed Potential Establishments NEW users of CAs for SICs 20-39 (SIC’s 20-39 were used for this analysis based on Loctite’s stated goals); using the 35% Loctite market share goal I, finally, calculated Potential Loctite Market Share of NEW Establishments users. Because Loctite has a stated goal to preserve sales of Quick Set 404 to current customers and use the Superbonder line to capture new clients, Potential Loctite Market Share of NEW Establishments users numbers represent o good indication for market potential analysis for the SuperBonder line. Note: Market Potential Analysis for Bond – A – Matic 2000 (BAM) will continue after Customer Segmentation and Target Market Selection Analysis. 2. Customer Segmentation
To analyze which customer segment needs would be best served by BAM, I used the Industrial Market Research Study of 1977 for CAs. On a first level of segmentation, I focused on who made the CAs purchasing decision in the industrial market. The result was that the purchasing agents and users where not the decision makers. Plant engineers were overwhelmingly driving the purchasing decisions. On a second level of segmentation, from the Market Study, I inferred that the CA market is almost evenly divided into users that did not expressed interest in improving dispensing technology and users who did (51%). Hence, our consumer for BAM should be a plant engineer which is interested in improving its dispensing technology. 3. Target Market Selection
The suggested price for the BAM kit (equipment + replacement parts) to the end user ($239.75) and distributor ($184.73) does not exceed the dollar purchasing authority ($250) of plant and production engineers. Hence, because the other dispensers of adhesive (i.e Model 200 and Model 205 Control Console) produced by Loctite where out of the dollar purchasing authority of production engineers there will not be any cannibalization effects due to the fact that plant engineers are simply not active buyers in that market. Furthermore, because current automatic dispensing equipment was purchased by large firms that manufactured products not subject to frequent design changes, BAM should target the opposite; new customers, which produce products with frequent changes. Considering that Loctite had line of CAs, SuperBonder, designed for new customers, based on the previous inferences, BAM should be introduced as complementary product to this line. 4. Positioning Strategy
Based on the above conclusion, I analyzed which of the SuperBonder’s line Product Characteristics satisfied the instant adhesive requirements in the industries in SICs 20-39. In Exhibit 3, I presented those results. Considering that the SuperBonder line cannot serve SICs 20-29&32 and SIC’s 33-35 represent (in my opinion)...