Sealed Air Case Essay Example
Sealed Air Corporation has been the market leader in the protective packaging market for many years. Unanticipated competitors have entered the market offering uncoated bubble packaging which has gained significant market share from Sealed Air’s AirCap® coated bubble packaging material. To regain market share and expand Sealed Air’s business, a swift strategy of introducing uncoated bubble products needs to be implemented. By leveraging their large distribution network and existing manufacturing infrastructure, Sealed Air can capture the price-sensitive customers before their competitors have time to expand.
Sealed Air prides itself on being the market leader and fostering technology leadership. It markets a superior product for industrial and consumer shipping and invests lots of time educating the market about the product advantages. However, technological improvements in the manufacturing process of cheaper uncoated bubble products and confusion among end users caused by an excessive number of packaging products available allowed a new competitor - GAFCEL - to tap into price-sensitive customers seeking comparable products. Currently GAFCEL operates only in the NYC area but continuing current trends, Sealed Air could lose up to 10% of its market share in the US and up to 50% in Europe (Exhibit 1), where customers are not educated about the advantages of the coated bubble packaging. This loss would represent a decrease in sales revenue of $4.3 million. The most obvious response would be the introduction of the uncoated bubble product variety but the CEO would likely resist this strategy of introducing an inferior product and would ask to review all possible alternatives to combat this new competitive threat (Exhibit 2).
Sealed Air has several choices to counter this new competition and gain new market shares.
1) Defend coated bubble product market through increased sales and distribution effort.
Sealed Air could consider resisting to the rise of GAFCEL by
Sealed Air prides itself on being the market leader and fostering technology leadership. It markets a superior product for industrial and consumer shipping and invests lots of time educating the market about the product advantages. However, technological improvements in the manufacturing process of cheaper uncoated bubble products and confusion among end users caused by an excessive number of packaging products available allowed a new competitor - GAFCEL - to tap into price-sensitive customers seeking comparable products. Currently GAFCEL operates only in the NYC area but continuing current trends, Sealed Air could lose up to 10% of its market share in the US and up to 50% in Europe (Exhibit 1), where customers are not educated about the advantages of the coated bubble packaging. This loss would represent a decrease in sales revenue of $4.3 million. The most obvious response would be the introduction of the uncoated bubble product variety but the CEO would likely resist this strategy of introducing an inferior product and would ask to review all possible alternatives to combat this new competitive threat (Exhibit 2).
Sealed Air has several choices to counter this new competition and gain new market shares.
1) Defend coated bubble product market through increased sales and distribution effort.
Sealed Air could consider resisting to the rise of GAFCEL by