SWOT-Analysis for Henkel′s Loctite

von: Anne-Kathrin Müller

Table of Contents

1. Case Summary 1

2. Strengths  1

3. Weaknesses  3

4. Opportunities  4

5. Threats  4

6. Problem Definition 4

7. Options  5

8. Analysis  5

(a) Analysis for Option 1: Launch Bond-A-Matic  5
(b) Analysis for Option 2: Both Applicators 6
(c) Analysis for Option 3 & 4: Prices  6
(d) Analysis for Option 6: Advertising according to Media Plan 7
(e) Analysis for Option 7: Advertising via Direct Mail 8

9. Option 1: Launch Bond-A-Matic  8

(a) Pros 8
(b) Cons 9

10. Option 2: Both Heads  9

(a) Pros 9
(b) Cons 10

11. Option 3: Price of 175 $ / 140 $  10

(a) Pro  10
(b) Cons 10

12. Option 4: Increase the sales price 10

(a) Pros 10
(b) Cons 11

13. Option 5: Loctite Name and “Bond-A-Matic”  11

(a) Pros 11
(b) Cons 11

14. Option 6: Advertising according to Media Plan 11

(a) Pro 11
(b) Cons 12

15. Option 7: Advertising via Direct Mail – Program #2 12

(a) Pro  12
(b) Cons 12

16. Option 8: Expand distribution 12

(a) Pros 12
(b) Cons 13

17. Other Information That Should Be Obtained  13

18. Recommendation 13

Table of Figures:  A

Table of Sources  A

1. Case Summary

Industrial Products Group (IPG) is division of Loctite Corporation. In the end of 1978, vice president Jeffrey Fox has to make decisions concerning the introduction of a new product – the Bond-A-Matic1. These decisions have a strong impact on Loctite’s other divisions, products, distribution channels and salesforce, and the existing marketing plan.

2. Strengths Company

Market leader in development and marketing of adhesives and sealants. Clear company structure: division of market under three profit centers à great worldwide presence, no internal competition between divisions. Pays attention to internal opinions to make sure that new products get internal support: prerequisite to sell successfully in outside market Strong growth of IPG sales (25%): FY 1978: 32,000,000 $ à FY 1979: 40,000,000 $ Long tradition in adhesives market à outstanding selling experiences and market knowledge. Well-established brand, Strong brand awareness, Well-known company Strong and good image that fits its strategy. Reputation for high quality adhesives and equipment Clearly stated objective: Premier worldwide marketer of instant adhesives for industrial use in 1985. Clearly stated high-quality, high-price strategy in order to reach objective; adjusts activities to this strategy: prices above industry average, accepted by customers, selected range of loyal distributors, good market coverage, superior service: well-organised distribution system; professionalism of salespeople customer orientation: knows importance of market research, employs it to keep customer orientation.

broad customer market coverage: industrial and consumer applications, OEMs and MROs relationship management by IPG salesforce: à good, highly valued relationships with distributors, other customers, and distributors’ salespeople; services: help distributors plan inventory; demonstration, testing and recommendation of appropriate tool for specific applications; training; advisory meeting, newsletter model à Added value: gives expertise and experience to customers, works side by side with them. Problem solving orientation: provides solutions to its customers, offers standard and custom-built adhesives and equipment: Strong marketing orientation. Tries to make service more attractive to distributors by its direct drop shipment arrangement. Product development according to needs of customers / users. Corporate promotion and display materials. Present in Anaerobics and cynoacrylates market. 70% of IPG sales from newer technologies (anaerobics and cyanoacrylates[CAs]) à no severe problems (contrary to mature technologies in adhesives market).

Anaerobics Market

85% market share of anaerobics in North America (Loctite Corp.). original patent holder: no imitations or copies yet; name is associated with anaerobics innovative alternative to traditional mechanical locking devices due to several advantages identifiable customers growth potential Cyanoacrylates market industrial market is expected to grow by 26,42 % in 1979: good chance for Loctite to participate in this growth own manufacturing of CAs clear differentiation of Loctite’s two CAs and adjusted pricing strategy à prevents intenal cannibalisation: SuperBonder for new users: clear strategies: increase number of users à market development ; increase purchase volume à market penetration highest advertisement and promotion budget (175,000 $, 5% of sales) in industry à competitive advantage : good media planning: tries to solve problem of non-acceptance of adhesives2; 41,71 % growth in SuperBonder from FY 1977 to 1978; 6,75% of sales price for profit awareness of clogging problem and thus development of Gluematic Tip.: QuickSet 404 for current users substantial brand loyalty Bond-A-Matic existing need for Bond-A-Matic extensive testing of new product Could dispense both adhesives Strong Systems Division: Responsible for over 15% of IPG’s sales.

3. Weaknesses

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1 see 6. Problem Definition for details

2 cf. 3. Weaknesses