Sealed Air vs. Gafcel

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2. SUMMARY

The protective packaging market is becoming more competitive.

Sealed Air company is encountering a growing number of competitors in its field. Similar or alternative systems are now proposed against those of Sealed Air. These new systems are often cheaper but as argued by Sealed Air less effective concerning the protection they offer and therefore less cost-effective.

A new company (GAFCEL) has entered the market with an uncoated product and is having success on the New York, California and Ohio market. Sealed Air will face further erosion of its US market share.

Based on the analysis of the AirCap® product as well as on the analysis of the market, we will answer questions regarding Sealed Air's reaction to its new competitor GAFCELL and the opportunity to introduce a new uncoated product in the market.

We will make marketing recommendations on how to introduce this new product and in which geographical market to launch it in order to maintain Sealed Air as a leader of the protective packaging market.

3. QUESTIONS

3.1. What should Sealed Air be trying to accomplish in any decision it makes in response to the GAFCEL threat?

•It should be trying to gain back the market share that was taken by GAFCEL and it should ensure it does not loose anymore market share.

•It should ensure it keeps its reputation of a company built on ‘technical accomplishments' and must ensure its image does not suffer from the possible introduction of this new uncoated product.

•It should not ‘cannibalise' itself and therefore it should ensure the products are segmented correctly.

3.2 What has been happening in the market and how is Sealed Air doing?

In order to answer this double question, we have completed and focused our analysis mainly on the AirCap product manufactured by Sealed Air.

3.2.1 Strengths and Weaknesses

MIXSTRENGTHSWEAKNESSES
PRODUCT-quality & reliability
-benefit to customers
-barrier coating with saran
-8 different grades to fit all applications
-patent protection
-registered trade mark-only coated products offered in the USA PRICE-10[%] margin to distributors for direct sales
-quantity discount-higher than competitors, up to 50[%] (England)

COMMUNICATION-promotional brochure
-competitive product information
-price lists
-direct communication to end customer
DISTRIBUTION-7 regional manufacturing operations in USA
-manufacturing facilities in Canada
-licensed manufacturing facilities in Australia, Mexico, South Africa and Spain -sales organization in Japan
-manufacturing operations in Europe
-62 salespeople
-370 distributors
-licence to ASTRO
-distribution policy and loyalty from distributors-60[%] of time of salespeople to Instapak -35[%] of time of salespeople to AirCap
-distributors offer competitive products

SERVICE-packaging labs
-strong support to distributors
-best trained salespeople in market

Conclusion :

Between 1971 and 1980 Sealed Air and Astro were the only producers of air bubble packaging in the USA. With its patented coated product AirCap®, technologically more advanced than its competitor, Sealed Air is the leader of the market.

Using a very efficient distribution policy and innovative services has allowed Sealed Air to make AirCap® coated products the undisputed number one in the bubble products.

3.2.2 Opportunities and threats of market

ENVIRONMENTOPPORTUNITIESTHREATS
ECONOMY-growing world market for bubble protective packaging -shipping and freight are increasing in the world
COMPETITION-Sealed Air is the leader of US market
-SIBCO is already in the French market with uncoated products-Sealed Air is losing market shares very rapidly in Europe -major competitors have better facilities
-price is the key buying determinant
TECHNOLOGY-barrier coating is more advanced
-easy to do uncoated bubble (New Jersey)
POLITIC/LAWS-patent...
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