Topics: Marketing, Sales, Revenue Pages: 6 (2119 words) Published: December 8, 2008
Loctite, founded in 1956, has grown become the world’s leading manufacture and marketer of adhesives, sealants, and related products. During the 1980’s, their net sales increased 26.6% from 1983 to 1992. Their net income grew 32.7% in the same time period. Loctite stated in their 1992 annual report that “their growth had been based on a strategy of promoting diversity in end use markets and geographies for their core business.” Loctite educated potential new customers, and their sales team, of their products. By 1992, Loctite estimated its worldwide market share in industrial adhesives at 70%-80%. (Case Study p.1) The company is now a global firm, and their revenues have proved it. Loctite uses multichannel marketing, which “occurs when a single firm uses two or more marketing channels to reach one or more customer segments. An integrated marketing channel system used, which the strategies and tactics of selling through one channel reflect the strategies and tactics of selling through other channels.” (Kotler and Keller p.429) Loctite owns its own distribution network. Loctite starts as an independent distributor, then moves towards a more captive distribution, purchasing the company outright, or make it fully owned. When Loctite acquires a new distributor, they start them off with just a few core products, eventually moving them to direct sales off all Loctite’s products, depending on the market. Some, not many distributors are limited to the amount of products sold in a given distribution area. Loctite holds 100% equity in all countries except; Norway, Indonesia, People’s Republic of China, Taiwan, Thailand, and Venezuela, which are not allowed to have private held companies. Loctite’s distribution strategy is to reach a worldwide scale capability in the chemical adhesive industry. They offer a full range of sealants and adhesive products, which meets a broad range of consumers, due to Loctite being a technical leader. Loctite is a “global firm, which is a firm that operates in more than one country and captures R&D, production, logistical, marketing, and financial advantages not available to purely domestic competitors.” (Kotler and Keller p.598) In 1992, Loctite spent “27% of their net income on R&D.” (Case Study p.14) This is a huge amount of money to spend on research and development, but it shows that Loctite will stay ahead of its competitors, and on top of their customers’ needs and desires. Loctite uses a mixed distribution system. They use independent distributors, and export agents. Loctite also has joint ventures with local partners overseas. “There are many risks in deciding whether or not a company should go abroad. A company may not understand foreign preferences, and fail to offer an attractive product. A company may not understand the foreign country’s business culture, or may underestimate foreign regulations, and incur unexpected costs.” (Kotler and Keller p.600) In a joint venture, Loctite will maintain the controlling share of the company, and will ensure the safety of the company. Loctite has acquired companies and also has wholly owned subsides, which they may start off with a joint venture holding 51% share in the company, and work their way up within a certain amount of time until 100% share is achieved. “In the early 1970’s, Loctite began acquiring equity interests in its distributors. The first joint venture was in Belgium, and the acquisition of distributor companies in the acquisition of distributor companies in the United Kingdom, Spain, and Italy.” (Case Study p.7) Loctite uses exclusive distribution overseas. “Exclusive distribution means severely limiting the number of intermediates. It’s appropriate when the producer wants to maintain control over the service level, and often includes exclusive dealing arrangements. By granting exclusive distribution, the producer hopes to obtain more dedicated and knowledgeable selling.” (Kotler and Keller p.419)...
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