Harvard Business School 9-582-103
Rev. September 24, 1985
Sealed Air Corporation
The president and chief executive officer of Sealed Air Corporation, T. J. Dermot Dunphy, explained the firm’s 25% average annual growth in net sales and net earnings from 1971 to 1980: The company’s history has been characterized by technical accomplishment and market leadership. During the last 10 years we built on our development of the first closed-cell, lightweight cushioning material, introduced the first foam-in-place packaging system, and engineered the first complete solar heating system for swimming pools. We intend to follow the same management guidelines in the 1980s. We intend to seek market leadership because market leadership optimizes profit, and foster technological leadership because it is the only long-term guarantee of market leadership. In July 1981 Barrett Hauser, product manager of Sealed Air’s Air Cellular Products, was reflecting on Dunphy’s management philosophy as he considered how Sealed Air should respond to some unanticipated competition in the protective packaging market. As product manager, Hauser was responsible for the closed-cell, light-weight cushioning material that Dunphy had mentioned. Sealed Air’s registered trademark name for this product was AirCap.1 AirCap cushioning materials had always faced a variety of competitors in the protective packaging market. More recently, however, several small regional producers had invented around Sealed Air’s manufacturing process patents and begun to market cheap imitations of AirCap in the United States.
AirCap Cushioning and Its Competitors
AirCap cushioning was a clear, laminated plastic sheet containing air bubbles of uniform size (see Exhibit 1). The feature that differentiated AirCap cushioning from all other bubble products was its “barrier-coating”: each AirCap bubble was coated on the inside with saran. This greatly increased air retention, meaning less compression of the material during shipment and, consequently, better protection. Barrier-coating and its customer benefits had been the central theme of Sealed Air’s AirCap cushioning selling effort for 10 years.
1 Sealed Air, AirCap, and Instapak are registered ® trademarks of Sealed Air Corporation. Solar Pool Blanket is a TM trademark of the same corporation.
Robert J. Dolan, associate professor, prepared this case as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Certain nonpublic data have been disguised. Copyright © 1982 by the President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685 or write Harvard Business School Publishing, Boston, MA 02163. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.
This document is authorized for use only by Md. Saquib Hussain in marketing ﬁnal taught by Suresh Ramanathan from October 2012 to October 2012.
For the exclusive use of M. HUSSAIN
582-103 Sealed Air Corporation
Between 1971 and 1980 Sealed Air and Astro Packaging of Hawthorne, New Jersey, were the only air bubble packaging material producers in the United States. Sealed Air licensed Astro to use Sealed Air’s patented technology. Astro produced two types of bubbles: a barrier bubble similar to AirCap,2 and an uncoated bubble. Its sales were split about evenly between the two. In 1980 Astro’s total U.S. sales were approximately $10.5 million, compared with $25.35 million in U.S. sales for AirCap cushioning. Sealed Air’s market education had made customers aware of the advantages of coated bubbles; consequently, uncoated bubbles had never achieved greater than a 15% dollar share of the U.S. market...