Sealed air corp


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Sealed air corp

  1. 1. Sealed Air Corp<br />Group 6<br />Prashant Shukla [21]<br />Yashvardhan Naudiyal [35]<br />Siddharth Prasad [29]<br />AbishekRajan [3]<br />
  2. 2. Context<br /><ul><li> Sealed Air Corporation the worlds leading manufacturer in “Coated Bubble” packaging products ( AirCap) , is also characterised by technological innovation and market leadership
  3. 3. Distinctive feature of AirCapproducts is the barrier-coating of each individual bubble using saran. This barrier coating and related customer benefits have been the central sales theme for the last 10 years. AirCap benefits, as illustrated in their advertisements, relate to ‘cushioning’, ‘protective wrap/interleaving’, and ‘void fill’
  4. 4. AirCap, the closed-cell lightweight cushioning material, has recently encountered some unanticipated competition from small regional producers who have invented around the Sealed Air process patents and offer cheaper versions of the product in the U.S.
  5. 5. Sealed Air has licensed its technology to Astro Packaging; Astro manufactures both a barrier coated bubble (using Nylon instead) as well as an uncoated bubble
  6. 6. 1980 U.S. sales for both AirCap and Astro were $25.35 million and $10.5 million respectively
  7. 7. Until 1980, only Astro was a significant in the Uncoated Bubble Packagingplayer with approximately $5 million in sales. And has 15% market share of uncoated bubbles
  8. 8. In 1981, GAFCEL in New York generated $ 1 million in sales on the account of uncoated Bubbles, and several of AirCap’s distributors have taken up the GAFCEL products as well
  9. 9. The European Market for Coated Bubbles is continuously loosing ground to the Uncoated Bubbles</li></li></ul><li>Problem<br />Considering the trends in European Markets and the competitive scenario in the US, Mr. Hauser, the product manager of AirCap is contemplating the manufacture and marketing of “Uncoated Bubbles packaging material”<br />
  10. 10. Options<br />Mr Hauser has the following options:<br /><ul><li> Option I: To Introduce the Uncoated bubbles worldwide
  11. 11. Option II: Do not introduce the uncoated bubbles at this point of time and increase the marketing support to Aircap.
  12. 12. Option III: Introduce the uncoated bubbles in The US only
  13. 13. Option IV: Introduce the uncoated bubbles in European Markets only</li></ul>Considering<br />Uncoated Bubbles can be produced as cheaply as the competition, within a month and with no major capital investment with a corresponding volte face on their current stand<br />
  14. 14. Product Evaluation Matrix<br />Index:<br />Industry Sales- Bubbles Packaging Material<br />Company Sales- Coated bubbles <br />Market Share – Coated Bubbles/ Bubbles Packaging Material<br />C/B (E) – Coated Bubbles in Europe<br />C/B (U/S) – Coated Bubbles in The US<br />
  15. 15. Findings Of The Case <br /><ul><li>AirCap sales in US have been growing at 25.4 % CAGR since 1972 (Ex- 6)
  16. 16. Coated Bubbles Sale in The US in 1980 has been $30 Mn against the overall Bubble packaging sales of to $35.85%, thus giving the share of 83% to the coated Bubbles. (Ref: AirCap cushioning and its competitors Para – 1)
  17. 17. Buyers in the U.S. realise the benefits of a better Quality packaging material , though a certain section still values price as a more important criterion. (Ref: Buying Influences)
  18. 18. The European markets are considered more price sensitive and the sales of coated bubbles packaging is steadily declining. AirCap market share is expected to slide significantly year on year owing to the proliferation of uncoated bubbles for the next 2-3 years. (Ref: European market)</li></li></ul><li> Evaluation Of Alternatives<br />Considering the findings of the case and the product evaluation matrix the options are evaluated as under:<br /><ul><li> Option I – To introduce the coated bubbles worldwide
  19. 19. According to the Product Evaluation Matrix ( PEA) the product stands in totally different positions in Europe and The US, hence any decision regarding the introduction of uncoated bubbles has to be location specific
  20. 20. Option II – Do Not Introduce Uncoated Bubble at all
  21. 21. Considering the steadily loosing market share in the European Markets that option is also ruled out if one has to remain competitive there
  22. 22. Option III – Introduce the Coated bubble in the US Markets only
  23. 23. Considering the market conditions in the US and the product position in the PEA the option can be ruled out
  24. 24. Option IV – Introduce Uncoated Bubbles in Europe only. Recommended </li></li></ul><li>Recommendation<br />European market - Must introduce uncoated bubbles as early as possible, However the coated bubble may not be discontinued<br />The US - since the market is well educated about the value of better quality pack and AirCap would shortchange itself in bringing uncoated bubbles in here. Further, this would validate the competition in AirCap’s single largest market.<br />The organisation must, given the trend in the market toward thin foam, battle this through the A-100<br />Further, it needs to counter loss of share in the 0.5 inch segment (presumably to GAFCEL)<br />As indicated in the case, it is possible that the sales force mind share of the AirCap products is<br />Skewed toward the Instapack products due to the incentive system. This may require systemic intervention.<br />