SWOT-Analysis for Henkel's Loctite

Table of Contents

1. Case Summary

2. Strengths

3. Weaknesses

4. Opportunities

5. Threats

6. Problem Definition

7. Options

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

9. Option 1: Launch Bond-A-Matic
(a) Pros
(b) Cons

10. Option 2: Both Heads
(a) Pros
(b) Cons

11. Option 3: Price of 175 $ / 140 $
(a) Pro
(b) Cons

12. Option 4: Increase the sales price.
(a) Pros
(b) Cons:

13. Option 5: Loctite Name and “Bond-A-Matic”
(a) Pros
(b) Cons:

14. Option 6: Advertising according to Media Plan
(a) Pro:
(b) Cons:

15. Option 7: Advertising via Direct Mail – Program #2
(a) Pro
(b) Cons

16. Option 8: Expand distribution
(a) Pros:
(b) Cons

17. Other Information That Should Be Obtained

18. Recommendation

Table of Figures:
Table of Sources

Loctite Corporation: Industrial Products Group

Case Study

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-Matic^[1].

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 - 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 $ - FY 1979: 40,000,000 $

Long tradition in adhesives market - 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: - 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 - 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])
- 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 - prevents intenal cannibalisation: SuperBonder for new users: clear strategies: increase number of users - market development; increase purchase volume - market penetration

highest advertisement and promotion budget (175,000 $, 5% of sales) in industry - competitive advantage: good media planning: tries to solve problem of non-acceptance of adhesives^[2] ; 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

Company / Bond-A-Matic

Higher commission for sales people on adhesives than on equipment.- discouraged to sell Bond-A-Matic.

Sales Forces’ inexperience in selling equipment - additional costs and efforts

Bond-A-Matic production problems: inability to serve large demand. Threat: dissatisfied customers - loss of image

Heavy requirements of customer service - no capacities to serve customers if Bond-A-Matic is introduced.

Anaerobics market

limited customers and use of anaerobics

Insufficient communication of obvious advantages to market: Not yet accepted by market (only 1 in 4 dollars spent for anaerobics)

Cyanoacrylates Market

high variable costs, industrial market is vulnerable, broad and fragmented, sparse information about identity of CA’s industrial users, no clear predictors for likely CA usage

[...]

^[1] see 6. Problem Definition for details

^[2] cf. 3. Weaknesses