Loctite ipg case
Elicited pig case BY database PIG should introduce BAM because there is a customer needs, it can be a complementary product to increase average order value per customer and customer life-time value, BAM fits well with ‘Peg’s capability, and PIG can use existing distributor and drop shipment program to serve the new product need. In addition, PIG can use BAM to increase brand loyalty – you have a Elicited adhesive equipment, when you need adhesive, you use Elicited products. Primary target for BAM should be current customers with assemble line, and the secondary target are non-customers with assemble line.
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More specifically, BAM should target plant and production engineers of manufacturing companies. For product, they should position it as a complementary product to current adhesive products, such as Superpose and use up-sale(to current customers) and cross-sale(to new customers). BAM should provide warranty since PIG is known for its quality. For price, BAM should prices close to $250, which is the amount plant and production engineers often had purchasing authority to approve. For Promotion, BAM should use both push and pull strategies.
BAM should provide trainings for distributors. BAM should run branding ads on magazine before product launch and run product-specific ads after launch. BAM should use magazine to drive awareness, consideration and trial, and BAM should use direct mail to drive trial and purchase. Price should not be featured on the ad since it’s not very important for purchase decisions. Instead, the benefit of product and the service of the company should be featured. Trial should be used since the sales are inexperience in selling equipment.
Trial also fits well with company’s good service reputation. For Place, BAM should continue use distributors since most users purchases from distributors. BAM should provide higher commission to distributors and promote shipment program since distributors don’t like to stock equipment. Customer Analysis This product was invented based on customers’ feedback. Although the user will be assembly line workers in dispensing CA from the standard one-ounce and smaller bottles, going with the end user is prohibitively expensive due to the volume.
In addition, they may not impact the purchase decision. Purchase decision maker of BAM will be plant and production engineers of manufacturing companies, and design engineers and the purchasing staff usually also involved. Therefore, the target should be the plant and production engineers and distributors. The case didn’t provide enough information if those engineers are mechanical engineers. If so, since mechanical engineers are reluctant to use chemical solution to a mechanical problem, providing a trial offer will be helpful to acquire new consumers.
Not only BAM solve current customers’ problem, 51% of current users expressed interest in improving dispensing technology. BAM serves the growing market. Although only 30% of the users are industrial users in the instant adhesives market Industrial, industrial users are growing in a rapid pace and overtake consumer market growth soon (total adhesive market was growing at 10%. ) Sales of kick pounds were forecast for the industry market in 1979. Service, not price, drives purchase decision. Although 55% of volume was accounted for by small firms with fewer than 20 manufactures. 7% of purchasers from manufacturers stated that price was not very important in instant adhesive purchase decisions. 72% of them stated that technical service was important in their purchase choice. The BAM should be positioned as a complementary product to Superpose adhesives. To manufacturers with assembly line, relative to only using bottle adhesives, BAM is an easy-to-use tool to enhance the efficiency of using adhesives and improve operation. ” In 1979, marketing team plans to sell Suborned to SIC#20-39, especially CICS 35 to 39.
BAM can tap the resource to reduce incremental marketing budget. Within those categories, BAM should only target companies have assembly lines: up-sale to current users(e. G. When they order Superpose, add an amount to get BAM) and cross-sale as trial package (buy Superpose and BAM package get a package price and trial) to non-users. In addition to the that, the company can also focus their product to companies with assemble lines within SIC#75 Motor vehicle services and #76 Appliance repair because these two segments have the highest percentage of user establishments.
PIG should use BAM as the strategic move to encourage brand loyalty of using Elicited adhesives: once you have that equipment, when you need adhesives, you thought of Elicited (similar to HP sells cheap printer but make money from ink; Kindle sell tablets but the market is in the app. ) BAM serves different needs(one-ounce bottles) from Glutamate IP applicator (for 3-gram size) so it will not significant cannibalize Glutamate tip sales. Company and Competitor Analysis Company’s objective was to become the premiere worldwide marketer of instant adhesives for industrial use by 1985.
Its strength (ex.. L) includes brand (quality, history, service, knowledge etc) and good relationship with distributors. Its weakness includes inexperience in selling equipment and low sales commission incentive to store equipment. BAM should promote its 10% drop shipment program and increase equipment commission to provide incentives to distributors. Low capital barriers to entry and expiration of some patents had attracted several small competitors, but Elicited believe that they lacked selling expertise. A more serious threat was MM.
Therefore, Elicited should focus on its branding effort to position the company as high quality, good service and innovator to differentiate its brand to maintain its high price. Product and Price BAM should position itself as complementary product of Elicited adhesives. The primary strategy is to use the BAM as a method of enhance brand loyalty and average-order-value from current customers. The secondary strategy is to Introduce new users to instant adhesives. From customer-centric’ points of view, BAM current CA users in improving dispensing techniques. It should tie to Elicited brand for the following reasons.
First, BAM can Elicited brand to drive trial. Second, BAM, as a new innovation, enhances Locket’s brand as a leading brand with a wide-range of adhesive offers. BAM should provide warranty since PIG is known for its quality and service. The BAM should be priced close to $250. The BAM purchase decision marketers are plant and production engineers of manufacturing companies. They often have purchasing authority of up to $250. Although design engineers and recharging staff usually involve, pricing no more than $250 can still avoid some procurement complexity and expedite purchase process.
Ex. 3 shows that with price of equipment products. Ex and 3 shows that Marginal cost of high pressure BAM is higher than the low pressure BAM model. However, half of sales are from Suborned 420 and 295, which are low pressure equipment. Therefore, BAM should price both pressure at $250. However, the price of high pressure can be reduced if there are other strategic goals (e. G. Increase market share in a specific industry using high pressure adhesive, initial launch shows there is confusion among gig and low pressure products etc. For those potential new customers, besides minor cross-sale and up-sale incentives, PIG should not offer price promotion because 72% of non-users states that price was not a barrier to their use. Instead, PIG should offer trial and education because there was a low knowledge of instant adhesives and their capabilities. Promotion and Place BAM should use both push and pull strategies. With 62% of current sales are through distributors, BAM should continue to use push to enable the product in distributors.
At the same time, since it’s a new product launch, branding and awareness will be ere important, they should also use pull tactics – trade magazine advertising and direct mail. For magazine ad media planning (Ex.. 4), since they will also launch Glutamate tip applicator in early 1979 (at the same time of BAM), I suggest PIG runs a serious of Elicited branding campaign to emphasis the company’s quality and innovation in the industrial industry before both product launch. The branding ad will benefit all products including these two new launch.
Right after product launch, PIG should continue to run mix of branding and product-specific creative to focus on the product benefit and associate BAM with the great Elicited brand. The KIP for the branding ads should be awareness and consideration – including brand recall, consideration rate, and trial rate. They should focus more on consideration than awareness since the company already has low history and awareness. The KIP for the product ad should be trial rate and purchase. For branding ads, the ad should focus on the company’s service and history. 4% of instant adhesive users didn’t have a preferred brand, although 97% were satisfied with the products they use. That means PIG has a great opportunity to build the brand with limited resource. With expiration of some patents and threat from MM company, building brand will distinguish the company from competitors and continue its premium price. For product ad, Price should not be mentioned in advertisement since the target segment doesn’t think price was not very important in their purchase decisions. BAM is a product that generated from consumers’ need.
Its low price was because of its low cost, not its low quality. In addition, without feature the price, PIG can maintain its brand position as the premiere worldwide marketer. What should be emphasized in the ad are the benefit (easy to use) and the company’s good technical service – 72% f purchaser from manufactures stated that technical service was important in their purchase choice. The creative should also feature multiple BAM in several work stations in an assembly line to increase sales quantity and reduce executives concern about Jeopardize Locket’s quality image.
For direct mail, the strategy should be using the direct mail to generate their own database (so they don’t need to keep buying the list in the future. ) Therefore, an incentive for the receiver to response (e. G. Response to get future packaging engineer PIP event invitation etc. ) will be important ease didn’t provide conversion rate from direct mail responders to purchasers. I developed sensitivity analysis in Ex. Once they have the rate and its predicted production capability, they can select appropriate list and media. BAM can use magazine to drive awareness/consideration and follow up with DAM to drive purchase.
Based on my calculation (Ex.. 5 and 2), if BAM doesn’t change its current media plan, which is about ask budget for both magazine ads and one list of DAM names, BAM would have to drive at least kick of sales to achieve market spend under 30% of sales. With that, BAM needs to sell 1300 equipment. From media Roe’s points of view, while there are unlimited combinations to achieve the goal of 1 ,300 order, one of the scenario will be use DAM list with 14,749 names, 10% of people who receive the DAM called, among people who called, 20% of them purchase at least one equipment.
In addition, for magazine ads, need to have 2% of readers response, and among those people who response, 10% of them purchase at least one equipment. Again, there is unlimited combination to achieve the order amount, but if one of the above number can’t be achieve, other numbers need to be higher than my assumption to reach the 1 ,300 order. Alternatively, if the production is only 500 per year, they would have to cut marketing budget to achieve marketing/sales as 30%. 62% of instant adhesive users purchase through distributors. They have already been trained about the Elicited products and have been given technical support.
Using this channel will be a good initial option for BAM. Since distributors didn’t prefer selling equipment that requires servicing or equipment inventory, providing a higher commission for the distributors, providing trainings and encourage drop shipment program will help sales. Direct distribution of BAM would be difficult as the adhesive market is regimented and it’s difficult to identify potential users. However, if BAM has internal data showing which of the current customers have assemble lines, BAM can use it to do direct sales.