Sealed Air Case Comments

Topics: Sales, Contribution margin, Variable cost Pages: 7 (2050 words) Published: December 2, 2012
Sealed Air Case Comments

Sealed air case is a comprehensive case that captures many issues that we have discussed in the marketing course. It is also one of the best selling marketing cases and I think for some very good reasons.

Here are my comments on the case questions.

Question 2:

Sealed Air created value to its customers by building high performance (technical) product quality in its coated bubbles and by educating the customers about the benefits of coated bubbles through the educational efforts of its salesforce and its brochures. Sealed Air’s salesforce also used “consultative sales approach” and provided problem solving advice to the customers. However, there are also indications that the company may be providing too high performance(technical) quality at least for some applications. The company created value for its distributors by the strength of its brand equity, the strong demand for its products and its helpful salesforce. The company also used selective distribution policy which meant less competition among distributors and thus this policy preserved the distributors’ profit margins.

Question 3:

There are several possibilities here. The important ones (not counting no response) are:

• Spend more resources in educating customers about the benefits of bubbles • Launch uncoated bubbles
• Cut prices of the products most directly affected by the uncoated bubbles • Provide additional services to the coated customers to offset the effects of lower prices of competing uncoated bubbles • Develop intensive sales efforts directed at distributors with the goal of getting them to stay away from uncoated products

Question 4:

(In the discussion below, when I say GAFCEL, I mean GAFCEL and other similar producers who may come to the market.)

In analyzing what part of Sealed Air's coated business will be threatened by the uncoated bubbles, we have to examine the price and performance of uncoated bubbles in comparison to various types of coated bubbles. We cannot go by thickness of the bubble but the case provides assessment of how GAFCEL’s uncoated bubbles perform relative to Sealed Air’s coated bubbles. The case states that in terms of product performance, GAFCEL’s uncoated bubble is comparable to ST-120 and SD-120 lines for applications involving light objects. The case says that at higher loads, the cushioning curves of GAFCEL’s uncoated bubbles go above SB-110 bubbles. This does not mean that GAFCEL’s bubbles get better than SB-110 at higher loads but that they get worse than SB-100 at higher loads. What the case does say is that GAFCEL’s uncoated bubbles are as good as ST-120 and SD-120 coated bubbles. This means that for lighter applications, GAFCEL’s uncoated bubbles will compete with ST-120 and SD-120 lines. Now, SC-120 coated bubbles are worse and so are SB-110 and A-100. This means that all three 120 lines and SB-110 and A-100 face competition from these uncoated bubbles. When we look at the prices of all of these products, we discover that SB-110 and A-100 are actually lower priced than GAFCEL’s uncoated bubbles and hence they will not lose much share to the uncoated bubbles. However, the three 120 lines can lose sales to GAFCEL’s uncoated bubbles for lighter applications.

Some of you have written that customers with “purchasing department” metality or “price sensitive customer” will buy the uncoated bubbles. That may happen. But sales of uncoated bubbles will NOT be restricted to only those customers. Customers where packaging engineers make the decisions will be perfectly happy buying these GAFCEL’s uncoated bubbles for light loads because in terms of product performance they are as good as the coated bubbles and of course they are significantly cheaper.

Based on the case data, we can also conclude that the uncoated bubbles are unlikely to be a serious threat to the 240 or 480 lines because of the performance gap....
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