John A.

Quelch, assistant professor, prepared this case as a basis for class discussion rather
than to illustrate either efective
or inefective handling of an administrative situation. Certain industry and proprietary data
have been disguised.
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1
Loctite Corporation: Industrial Products Group
The frst place a marketing person has to sell is on the insideand that!s the hardest
of all.
1e2rey Fo3# vice president for "ar4eting of 5octite Corporation6s 7nd!strial Prod!cts
8ro!p
97P8:# was co""enting on the concerns of so"e 5octite e3ec!tives regarding the
proposed
introd!ction of a si"ple adhesive dispensing syste"# tentatively na"ed the )ond$,$
+atic -000.1
The syste" was designed to dispense instant adhesive to bond "etals# plastics#
r!bber# and
other "aterials in "an!fact!ring operations. 7n *epte"ber 19'8 Fo3 had to decide
whether to
reco""end f!ll$scale la!nch of the )ond$,$+atic in early 19'9 and# if la!nched# what
"ar4eting
strategy to e"ploy.
Company Background
;ith a prod!ct line of over .00 ite"s# 5octite Corporation# head!artered in
/ewington#
Connectic!t# was a leader in the develop"ent and "ar4eting of high$perfor"ance
adhesives and
sealants for ind!strial and cons!"er applications. <ne of the co"pany6s principal
ob=ectives was to
beco"e the pre"iere worldwide "ar4eter of instant adhesives for ind!strial !se by
198%.
The co"pany had three "a=or pro>t centers?
1. 7P8 was responsible for sales of adhesives to ind!strial c!sto"ers in the @nited
*tates and Canada# both original e!ip"ent "an!fact!rers 9<A+s: and
co"panies in the b!siness of "aintenance# repair# and overha!l 9+B<s:. 7P8
acco!nted for abo!t -%C of 5octite6s sales in FD 19'8 and was responsible for
"ost of the co"pany6s research and develop"ent.
-. The ;oodhill Per"ate3 8ro!p# acco!nting for .&C of sales# reached the /orth
,"erican do$it$yo!rself "ar4et thro!gh '%#000 retail o!tlets with its E!ro
1 Per"ate3# F!ic4 *et# *!per)onder# and *!per 8l!e are registered G trade"ar4s# and )ond$
,$+atic# E!ro#
Front 5ine# 8l!e"atic# Ta4 Pa4# and Hari$Erop are I trade"ar4s of 5octite Corporation.
2
prod!ct line and *!per 8l!e# which held the second$highest "ar4et share a"ong
cons!"er instant adhesives. 7n addition# it sold the Per"ate3 line of gas4eting
and adhesive prod!cts designed for the a!to"otive after"ar4et thro!gh -0#000
wholesalers and =obbers to 800#000 professional "echanics.
.. 5octite 7nternational# acco!nting for &1C of sales# serviced ind!strial and
cons!"er "ar4ets o!tside /orth ,"erica.
7P8 sales had been growing -%C each year and in FD 19'8 had reached J.- "illion.-
7P86s
two principal b!siness !nits# both of which had pro>t responsibility# were 8eneral
7nd!strial
)!siness 987): and *elected 7nd!strial )!siness 9*7):. They acco!nted for (0C and
.0C of 7P8 sales
respectively. 87) sold to ind!strial distrib!tors who resold to "edi!" and s"all <A+s
and the +B<
"ar4et. *7) sold direct to large <A+s# s!ch as a!to"obile and far" e!ip"ent
"an!fact!rers. <ver
half of *7)6s FD 19'8 sales were generated by the *yste"s Eivision# which
"an!fact!red and sold
e!ip"ent for applying adhesives# both direct to <A+s and thro!gh distrib!tors.
The Market for dhesi!es
, variety of technologies co"peted in the ind!strial adhesive "ar4et. They incl!ded
"at!re
technologies# s!ch as solvent ce"ents and epo3ies# and newer technologies# s!ch as
anaerobics and
cyanoacrylates 9C,s:. The "at!re technologies presented n!"ero!s proble"s. For
e3a"ple# solvent
ce"ents were often to3ic# Ka""able# and s!b=ect to shrin4age after being applied.
Apo3ies were to3ic
and inconvenient. F!rther"ore# they re!ired high$te"perat!re ovens# energy# and
signi>cant
operator training. <n the other hand# '0C of 7P86s reven!es were fro" anaerobics
and C,s.
naero"ic dhesi!es
,naerobic adhesives were colorless and nonto3ic# re!ired no "i3ing# c!red at roo"
te"perat!re# and hardened within a few "in!tes of application. They were intended
to bond
cylindrical "etal parts 9s!ch as a bolt to a n!t:# a li"ited application. 7ncreasingly#
however# they
were viewed as an attractive alternative to traditional "echanical loc4ing devices#
s!ch as loc4
washers and cri"ped n!ts. Thro!gh i"proved loc4ing# sealing# and retaining of
"echanical parts
s!b=ect to stress# anaerobics co!ld prevent lea4age# loosening# wear# and corrosionL
c!t repair and
replace"ent costsL i"prove energy eMciencyL and red!ce e!ip"ent downti"e.
,ltho!gh
"echanical loc4ing devices co!ld be easily disasse"bled for service and inspection#
they were often
"ore c!"berso"e and costly to "aintain. ,dhesives# however# distrib!ted loads
"ore evenly than
"echanical =oints# and so per"itted "ore Ke3ibility in prod!ct design.
Eespite the apparent advantages of anaerobics# /orth ,"erican ind!stry in 19'8 still
spent
al"ost J& on "echanical loc4ing devices for every J1 on adhesives. <ne e3planation
was that#
altho!gh "etalwor4ing >r"s co!ld easily be located# considerable sales e2ort was
re!ired to
convince "echanical engineers that adhesives co!ld be as e2ective as "etal loc4
washers. They were
s4eptical abo!t a che"ical sol!tion to a "echanical proble".
,s the original patent holder on anaerobic technology# 5octite held an 8%C share of
the /orth
,"erican anaerobic "ar4et in 19'8. 5ow capital barriers to entry and e3piration of
so"e patents in
19'8 had attracted several s"all A!ropean and 1apanese co"petitors# b!t 5octite
believed these
co"panies lac4ed ade!ate selling e3pertise. , "ore serio!s threat was .+
Co"pany# whose highly
- FD 19'8 ran fro" 1!ly 1# 19''# thro!gh 1!ne .0# 19'8.
Loctite Corporation: Industrial Products Group #$1%&''
(
trained sales force had beg!n to pro"ote anaerobics and C,s aggressively !nder the
*cotch ;eld
brand na"e.
Cyanoacrylates
C,s# pop!larly 4nown as instant adhesives# set faster than anaerobics# b!t were less
to!gh
and d!rable. C,s co!ld be !sed to bond a broad range of "aterials# incl!ding r!bber#
plastic# and
"etal. The >rst C, was introd!ced by a division of Aast"an Noda4 in 19%8. E!ring
the 19(0s#
Aast"an sold C,s to 5octite for repac4aging !nder the brand na"e 5octite F!ic4 *et
&0&. ,fter
developing its own "an!fact!ring technology in 19'1# 7P8 introd!ced its
*!per)onder line of C,s.
)y FD 19'8 5octite was believed to have e3ceeded Aast"an6s share of the /orth
,"erican ind!strial
C, "ar4et. Aast"an sold a line of fo!r C,s thro!gh its own sales force and was a
partic!larly
i"portant s!pplier to the electronics ind!stry. 5octite6s other signi>cant co"petitor
was the
Per"abond Eivision of /ational *tarch and Che"ical# 7nc.# a @nilever s!bsidiary.
5octite# Aast"an#
and Per"abond collectively acco!nted for abo!t '%C of the ind!strial C, "ar4et# and
all were
"an!fact!red in the @nited *tates. <ther co"petitors sold C,s "ade in 1apan !nder
their own brand
na"es.
@nli4e anaerobics# C,s were also sold to cons!"ers. <f the 890#000 po!nds of C,s
sold in
/orth ,"erica d!ring FD 19'8# abo!t (-%#000 po!nds were sold to cons!"ers !nder
brand na"es
s!ch as NraOy 8l!e 9"an!fact!red by Toagosei in 1apan:# *!per 8l!e 9"an!fact!red
by 5octite and
sold thro!gh its ;oodhill Per"ate3 s!bsidiary:# and Al"er6s ;onder )ond 9"ar4eted
by )orden
Che"ical:. The re"aining -(%#000 po!nds were sold to ind!strial !sers.
Convenience# however#
pro"pted "any ind!strial !sers who re!ired only s"all !antities of C,s to
p!rchase an additional
-%#000 po!nds fro" retailers serving the cons!"er "ar4et.
The total adhesives "ar4et was growing at abo!t 10C# b!t C, sales were increasing
twice as
fast. 7nd!strial !sage was e3pected to o!t$pace cons!"er "ar4et growth
signi>cantly# altho!gh the
ind!strial "ar4et was "ore v!lnerable to econo"ic downt!rns. *ales of ..%#000
po!nds were forecast
for the ind!strial "ar4et in 19'9. C, "anage"ent was deter"ined to participate in
this growth.
7nfor"ation abo!t the identity of C,6s ind!strial !sers was sparse. Asti"ates of act!al
and
potential !se of C,s by *7C. ind!stry gro!ps d!ring FD 19'8 are presented in "#hibit
$. The "ar4et
for C,s was "!ch broader and "ore frag"ented than that for anaerobics. The
principal p!rchasers
of anaerobics were large# easily identi>able >r"s concentrated in "etalwor4ing. Fir"
siOe was a poor
predictor of C, de"and. *"all >r"s 9with fewer e"ployees: in s!ch diverse prod!cts
as electronic
circ!its# snea4ers# and lipstic4 co!ld be relatively heavy C, !sers.
)uperBonder dhesi!es
7n 19'( there were 11 prod!cts in 5octite6s *!per)onder line of C,s. They di2ered in
viscosity# c!ring ti"e# and the "aterials they were best s!ited to bond. 9"#hibit %
shows a 19'( sales
force data sheet ill!strating the line.: )eginning in 19'' 7P8 e3ec!tives "ade e2orts
both to increase
the n!"ber of *!per)onder !sers and to e3pand the vol!"e p!rchased by e3isting
!sers. To this end#
several *!per)onder 4its were developed for speci>c ind!stries. The Front 5ine Tool
)o3 was
targeted at "echanics and engineers concerned with sealing pipes and gas4ets# and
the Ta4 Pa4# a
wiretac4ing 4it# was introd!ced to appeal to the electronics ind!stry. A3ec!tives
hoped trial of the
*!per)onder 4its wo!ld sti"!late brand loyalty and repeat p!rchases.
. *tandard 7nd!strial Classi>cation 9*7C: codes denote gro!ps of related ind!stries.
*
E!ring 19'' 7P8 co""issioned a "ar4et research st!dy of C, b!yer behavior 9see
"#hibit &:.
Partly as a res!lt# it atte"pted in FD 19'8 to give a stronger identity to the
*!per)onder brand and to
lin4 it "ore closely to the well$4nown 5octite na"e. Pac4aging was redesigned to
disting!ish ite"s in
the line. The n!"ber of *!per)onder adhesives was red!ced to >ve to "ini"iOe
conf!sion a"ong
end !sers and distrib!tor salespeople# and to "a4e it easier for distrib!tors to stoc4
the f!ll line 9see
"#hibit ':. , cap with a b!ilt$in applicator allowing greater dispensing control was
also introd!ced on
the standard one$o!nce bottles. ,n advertising and pro"otion b!dget of J1'%#000
for FD 19'8 was
spent pri"arily on trade "agaOine advertise"ents targeted at partic!lar ind!stry
seg"ents. The ads
9see "#hibits ( and ): ai"ed to give visibility to instant adhesives# to increase
*!per)onder brand
awareness# to co"pare *!per)onder perfor"ance with those of co"peting adhesive
technologies#
and to highlight 5octite6s ability to develop for"!lations c!sto"iOed for partic!lar
ind!stry
seg"ents. E!ring FD 19'8 *!per)onder advertising e3pendit!res e3ceeded those of
all co"peting
C,s co"bined.
7nd!strial sales of *!per)onder adhesives increased fro" (-#1%0 po!nds in FD 19''
to 91#800
po!nds in FD 19'8. Their average sales price was J.'.&% per po!nd d!ring FD 19'8#
of which %-C was
variable cost. +ar4eting and selling e3penses ordinarily a"o!nted to .0C of dollar
sales. The rest
was available for other overheads# incl!ding research and develop"ent e3pendit!res#
and pro>t.
E!ring FD 19'8# 1&#-00 po!nds of F!ic4 *et &0& 95octite6s other C,: were sold at
J1-9.&0 per po!nd.
F!ic4 *et &0& had b!ilt s!bstantial brand loyalty# so it co""anded a pre"i!" price.
*!per)onder
adhesives were priced to attract new !sers of C,s rather than c!rrent !sers of F!ic4
*et &0&# b!t they
were priced above co"petitive ind!strial C,s# which sold at an average of J.. per
po!nd in FD 19'8.
7n FD 19'8 5octite sold J..&& "illion of *!per)onder# J1.8& "illion of F!ic4 *et &0&#
and J1'.1-
"illion of anaerobics.
The *!per)onder "ar4eting plan for FD 19'9 wo!ld contin!e the FD 19'8 strategy
with
si"ilar advertising and pro"otion e2orts. <b=ectives incl!ded an increase in sales to
J&.% "illion# a
"ar4et share of at least .%C across *7Cs -0 thro!gh .9# and a s!bstantial increase in
awareness and
trial. To broaden the reach of *!per)onder advertising# the FD 19'9 "edia sched!le
"ore heavily
e"phasiOed general engineering rather than ind!stry$speci>c "agaOines. The
principal innovation
for FD 19'9 was the introd!ction of the 8l!e"atic Pen0a handheld plastic disposable
t!be of
*!per)onder adhesive connected to a spring valve designed to open when applied to
a >r" s!rface
and close instantly when re"oved. The valve# called the 8l!e"atic tip applicator#
was to facilitate
precise place"ent of the adhesive and prevent clogging inside the pen. The pen was
e3pected to
red!ce waste# protect !sers6 >ngers# and eli"inate "ess. 7t was sched!led to be
introd!ced in 1an!ary
19'9 by ;oodhill Per"ate3 in a .$gra" siOe for both ind!strial and cons!"er
"ar4ets.
+istri"ution and )ales ,rgani-ation
7n 19'8 5octite sold selectively thro!gh -8% distrib!tors with 1#&00 o!tlets. ,ltho!gh
there
were abo!t 10#000 distrib!tors nationwide thro!gh which 5octite prod!cts co!ld have
been
distrib!ted# e3ec!tives believed that their distrib!tors provided good "ar4et
coverage and s!perior
service. *i3ty percent of 5octite6s distrib!tors were bearing distrib!tors 9who s!pplied
to "achinery
and e!ip"ent "an!fact!rers a diverse range of prod!cts costing between J1 and
J10#000:L -%C were
general$line distrib!torsL and 1%C were specialty distrib!tors for a partic!lar "ar4et
seg"ent# s!ch as
the electrical and electronics ind!stry.
<ver %0C of *!per)onder adhesive sales were "ade thro!gh 5octite6s distrib!tors. ,
higher
percentage of 5octite C,s than anaerobics was sold to ind!strial !sers thro!gh
distrib!tors# who
typically e3pected a -%C "argin on adhesives. They stoc4ed prod!cts with
established de"and. +ost
distrib!tors avoided stoc4ing e!ip"ent that re!ired servicingL however# a
distrib!tor "ight
arrange a direct or drop ship"ent fro" factory to end !ser# in which case 5octite
wo!ld !s!ally pay
the distrib!tor 10C of the price to the end !ser.
Loctite Corporation: Industrial Products Group #$1%&''
#
Belationships with distrib!tors were highly val!ed. The e2orts of 7P8 salespeople
were
considered critical to "aintaining and developing these relationships. 7n 19'8# -0 7P8
salespeople
specialiOing by ind!stry sold C,s and other 5octite prod!cts direct to *7) acco!nts#
while 80 87)
salespeople# each with a geographic territory# sold the sa"e prod!ct line to
distrib!tors. 7P8
salespeople earned a base salary pl!s co""ission on incre"ental sales over the
previo!s year. The
co""ission percentage was lower on e!ip"ent than on adhesives.
+ost 7P8 salespeople were !ali>ed engineers and highly regarded as e3perts in their
>eld.
They were viewed by "anage"ent as proble" solvers who wo!ld wor4 with end
!sers#
de"onstrating# testing# and reco""ending the "ost appropriate adhesive for
speci>c applications.
They fre!ently called on end !sers with distrib!tor salespeople who were also
!s!ally co"pensated
on a co""ission basis# co"ple"enting the latter6s acco!nt 4nowledge with their
technical e3pertise.
The 5octite sales force also helped distrib!tors plan their inventories of instant
adhesives to "a3i"iOe
ret!rn on invest"ent.
7n addition# 5octite training progra"s for distrib!tor and end$!ser personnel were
highly
regarded. E!ring 19'8 7P8 trained '%#000 people in its >ve technical service and
training facilities and
its si3 Plab"obiles#Q which traveled to end!sers6 plants. 7P8 also held ann!al
distrib!tor advisory
co!ncil "eetings and p!blished a newsletter which distrib!tors co!ld deliver to their
c!sto"ers
!nder their own na"es. Together with consistently high prod!ct !ality# these
services enabled
5octite to co""and pre"i!" prices a"ong both distrib!tors and end !sers.
Eistrib!tors were
e3pected to carry a f!ll line of 5octite adhesives# to list 5octite prod!cts in their
catalogs# and to !se
5octite6s pro"otional literat!re and display "aterials.
*o"e 7P8 e3ec!tives believed the co"pany sho!ld "ove toward "ore e3tensive
distrib!tion.
They arg!ed that "any e3isting or potential !sers of 5octite C,s were not reached by
e3isting
distrib!tors. 7n addition# distrib!tor salespeople often called on only one person at a
partic!lar >r"#
and this person "ight not be the "ost appropriate or indeed the only person to
approach regarding
C,s.
The Bond%%Matic 2&&& +ispenser
7n FD 19'9 7P8 was also considering introd!ction of a !ni!e low$cost adhesive
dispensing
syste" !sing the 8l!e"atic tip. The 7P8 *yste"s Eivision developed the prod!ct at
the re!est of the
"ar4eting gro!p following the 19'' *ales 5eadership Conference# in which several
salespeople
highlighted the diMc!lties of asse"bly line wor4ers in dispensing C, fro" the
standard one$o!nce
and s"aller bottles. )eca!se these bottles were c!"berso"e# the adhesive
fre!ently clogged in the
noOOle. The *yste"s Eivision developed a device which co!ld precisely dispense
dots# dashes# or
lines of adhesive. 9The prototype# tentatively na"ed the )ond$,$+atic -000
dispenser# and the
8l!e"atic tip are shown in "#hibit *.: ;hen the reservoir of the )ond$,$+atic
dispenser# which held
a 1 7b.$container of adhesive# was press!riOed# air wo!ld force the adhesive thro!gh a
feed t!be to the
8l!e"atic tip.
,fter e3tensive testing# two )ond$,$+atic dispenser "odels were developed? a high$
press!re
"odel with an al!"in!" reservoir to dispense the "ore visco!s adhesives# and a
low$press!re
"odel with a plastic reservoir to dispense less visco!s adhesives.& +aterial costs
were esti"ated at
J10% for the high$press!re "odel and J'% for the low$press!re "odel# ass!"ing
ann!al prod!ction of
at least -%0 !nits each. Hariable labor costs for in$ho!se asse"bly wo!ld be J1'.%0
per !nit for both
& The high$press!re "odel was designed for *!per)onder &.0# &1&# and &1(. The low$press!re
"odel was
designed for *!per)onder &-0 and &9%# tho!gh *!per)onder &.0 and &1& co!ld also be !sed.
9,bo!t half of
e3isting sales were of *!per)onder &-0 and &9%.:
'
"odels# or parts asse"bly co!ld be s!bcontracted to an o!tside s!pplier at J1%.'%
per !nit. )y
*epte"ber 19'8 prototype develop"ent costs had been J18#000 and capital
invest"ent had been
J.0#000. *igni>cant additional capital invest"ent was not anticipated.
The 8l!e"atic tip was especially s!ited to dispensing adhesives onto hard s!rfaces.
The Hari$
Erop applicator was designed for soft s!rfaces. 7t dispensed adhesive thro!gh a
detachable needle
which co!ld be replaced when worn. The needle co!ld also deliver free$falling drops
where the
applicator tip co!ld not to!ch the part. Hariable costs of each 8l!e"atic tip and each
Hari$Erop
needle were -% cents and 1% cents# respectively. Preli"inary tests indicated that an
operator !sing the
)ond$,$+atic dispenser and 8l!e"atic tip co!ld apply a dot of adhesive every three
seconds. *peed
of application and d!rability of the tip depended on the s!rface and adhesiveL
however# tests
s!ggested that a tip# if !sed properly# wo!ld be good for at least 1-#000 dot
applications. ,n o!nce of
*!per)onder adhesive co!ld provide at least 8%0 s!ch applications.
Fo3 believed the )ond$,$+atic o2ered "any advantages to the end !ser# tho!gh
so"e "ight
view it as nothing "ore than an interesting gadget 9see "#hibit +:L however# he was
not s!re how large
a "ar4et "ight e3ist for it. He wondered what level of !sage wo!ld be s!Mcient to
warrant p!rchase
of the )ond$,$+atic. , related iss!e was whether its anticlogging feat!re wo!ld
sti"!late increased
sales of instant adhesives or "erely highlight to potential !sers one of their principal
proble"s.
Internal .eaction to the Bond%%Matic
)efore planning the details of a )ond$,$+atic "ar4et introd!ction# Fo3 had to
consider the
li4ely response of the *yste"s Eivision# the 7P8 sales force# and 5octite6s distrib!tors.
E!ring FD 19'8 the *yste"s Eivision esti"ated that it sec!red half the dollar "ar4et
for
instant adhesive applicator control consoles and dispensing heads in /orth ,"erica.
A!ip"ent
val!ed at J'%0#000# "!ch of it c!sto"iOed# was sold direct to *7) c!sto"ers.
*tandard "odels val!ed
at J&%0#000 were sold direct to 87) c!sto"ers# with an additional J-%0#000 worth
reaching 87)
c!sto"ers thro!gh distrib!tors or drop ship"ent. The *yste"s Eivision had b!ilt a
rep!tation for
high$!ality e!ip"ent. "#hibit , shows two consoles and a patented pencil$type
applicator
dispensing head typical of the prod!ct line# together with cost and price infor"ation.
The +odel -00
co!ld dispense a variety of adhesivesL the "ore sophisticated and d!rable +odel -0%
had been
speci>cally designed to dispense C,s. )oth were "ore precisely engineered than the
)ond$,$+atic
and incl!ded ad=!stable press!re reg!lators. The cheapest syste" 9-00 console pl!s
applicator: was
priced at J'-% to end !sers. Co"parable co"peting e!ip"ent was priced as "!ch
as one$third
lower. Co"petitors were generally s"all with li"ited reso!rces# serving either
regional "ar4ets or
partic!lar ind!stries. /one "an!fact!red instant adhesives. They !s!ally sold
thro!gh independent
"an!fact!rers6 representatives rather than direct to !sers.
,!to"atic adhesive dispensing e!ip"ent was generally p!rchased by large >r"s
that
"an!fact!red prod!cts not s!b=ect to fre!ent design changes. ,ltho!gh plant and
prod!ction
engineers often had discretionary p!rchasing a!thority on capital e!ip"ent of !p to
J-%0# the siOe of
the dispensing e!ip"ent p!rchase !s!ally "eant that design engineers and the
p!rchasing sta2 also
beca"e involved in the decision$"a4ing process.
The *yste"s Eivision had designed both )ond$,$+atic "odels to dispense a broad
range of
adhesives incl!ding C,s and anaerobics# b!t the 7P8 "ar4eting gro!p arg!ed that the
)ond$,$+atic
sho!ld be positioned pri"arily as a C, dispenser. *yste"s Eivision e3ec!tives
wondered how the
new dispenser "ight a2ect the i"age of their e3isting prod!ct line# partic!larly if it
carried the
5octite na"e. They were !ncertain as to whether the )ond$,$+atic wo!ld sti"!late
or cannibaliOe
sales. They do!bted that they co!ld rapidly "an!fact!re large !antities of a
standard prod!ct# and
feared being in!ndated with c!sto"er service calls fro" end !sers ine3perienced
with adhesive
Loctite Corporation: Industrial Products Group #$1%&''
/
dispensing e!ip"ent. A3isting *yste"s Eivision e!ip"ent sales already re!ired
heavy acco!nt
"aintenance.
The 5octite sales force had not traditionally foc!sed on selling e!ip"ent. Fo3
wondered
whether they wo!ld be interested in learning to de"onstrate the )ond$,$+atic and to
deter"ine
which "odel and tip best >t each intended application. There was also a ris4 that#
given the li"ited
ti"e of any sales call# salespeople wo!ld either ignore the new dispenser or p!sh it at
the e3pense of
5octite6s basic prod!cts. The cost of a sales call# esti"ated at J1-0# wo!ld probably
precl!de visiting a
distrib!tor or end !ser solely to sell the )ond$,$+atic.
Fo3 also s!spected that sales force reaction wo!ld depend on the willingness of
5octite6s
distrib!tors to stoc4 the )ond$,$+atic dispenser and necessary accessories.
Eistrib!tors wo!ld have
a sta4e in its s!ccess only if they co!ld be pers!aded to stoc4 it.
+e!eloping a Marketing Plan
Product0 Pricing0 and 1uality ssurance
7f the )ond$,$+atic dispenser was introd!ced# Fo3 >rst had to decide which
c!sto"ers to
p!rs!e. <nly then co!ld he develop a detailed "ar4eting plan and decide whether
both "odels
sho!ld be "ade available and whether the Hari$Erop needle as well as the 8l!e"atic
tip sho!ld be
incl!ded with each !nit. He also had to deter"ine a pricing sched!le for the
dispenser and
accessories. 9"#hibit $- presents one sched!le being considered.: *o"e e3ec!tives
arg!ed that a J1'%
price "ight =eopardiOe 5octite6s !ality i"age witho!t enco!raging "!ltiple
p!rchases for several
wor4 stations in an asse"bly line.
, f!rther !estion was whether the 5octite na"e sho!ld appear pro"inently on each
!nit.
*o"e e3ec!tives arg!ed that the 5octite na"e was associated with high$!ality
adhesives# not lowcost
dispensing e!ip"ent# and !estioned lin4ing the na"e with the !nproven )ond$,$
+atic. They
also s!ggested that the si"ilarity between the na"es )ond$,$+atic and *!per)onder
"ight
=eopardiOe the favorable brand na"e recognition recent advertising had b!ilt !p for
*!per)onder
sho!ld the )ond$,$+atic prove !ns!ccessf!l.
Fo3 was considering two approaches to ass!re potential end !sers and distrib!tors of
the new
dispenser6s !ality. , .0$day free trial co!ld be introd!ced# with the p!rchaser being
invoiced at the
end of the trial period if the dispenser was not ret!rned. <r# a one$year li"ited
warranty# valid only
so long as 5octite adhesives were !sed in the dispenser# co!ld be o2ered. , warranty
registration
card to be ret!rned to 5octite6s head oMce wo!ld be incl!ded with each !nit. This
wo!ld also allow
5octite to infor" p!rchasers of f!t!re prod!ct i"prove"ents or additions. The
*yste"s Eivision#
however# !estioned whether the costs of ret!rned e!ip"ent and service repairs
associated with
these o2ers wo!ld be treated as a "ar4eting or a "an!fact!ring e3pense.
d!ertising
Fo3 was !ncertain whether to !se advertising to assist the prod!ct la!nch since he
co!ld not
forecast its i"pact. ,n advertising ca"paign "ight failL b!t it also "ight be too
s!ccessf!l#
sti"!lating !n"anageable in!iries and orders. )!t Fo3 do!bted whether
advertise"ents for the
)ond$,$+atic dispenser# even if placed in "agaOines directed at speci>c ind!stries#
co!ld convey a
"essage s!Mciently tailored to sti"!late p!rchase. /evertheless# 5octite6s
advertising agency had
developed the "edia sched!le in "#hibit $$ on the ass!"ption that the dispenser
wo!ld be
introd!ced early in 19'9. +agaOines were selected to "a3i"iOe reach to prod!ction
and pac4aging
$
engineers of >r"s in *7Cs .% thro!gh .9. 7nsertions were ti"ed to co"ple"ent the
pro=ected editorial
e"phasis and *!per)onder advertising in each iss!e. The agency also reco""ended
that broch!res
on the )ond$,$+atic be incl!ded with all 1 lb.$pac4ages of *!per)onder adhesives
and with 10$pac4s
of 1$oO. *!per)onder bottles d!ring the la!nch period.
Concerns abo!t the content of any advertising centered on whether the price of the
dispenser
sho!ld be incl!ded and what degree of e"phasis sho!ld be placed on the 5octite
na"e. Fo3 also
wondered whether the advertising sho!ld be !sed "erely to develop awareness or
whether it sho!ld
actively solicit in!iries and orders. 7n the latter case# ads co!ld si"ply incl!de the
co"pany6s
address or incorporate a reply co!pon in the body of the advertise"ent# or the )ond$
,$+atic co!ld
be incl!ded on the "!ltico"pany P)ingogra"Q infor"ation re!est cards incl!ded in
"ost ind!strial
"agaOines. ,ny in!iries co!ld be followed !p with a telephone sales call by 5octite
head!arters
sta2# co"pany salespeople# or an o!tside telephone sales organiOation# which wo!ld
charge J1- per
call. Telephone orders "ight be credited to the salesperson "anaging the territory
fro" which they
originated. 7f an order ca"e fro" a >r" already !sing a 5octite distrib!tor# the
distrib!tor "ight
receive 5octite6s standard 10C drop ship"ent allowance.
+irect%Mail Program
)eca!se of !ncertainty that all potential )ond$,$+atic p!rchasers co!ld be e2ectively
reached thro!gh advertising# Fo3 was considering direct "ail as an alternative or
s!pple"ent to the
advertising ca"paign. Three "ailing lists co!ld be p!rchased fro" di2erent so!rces
containing the
na"es and addresses of prod!ction and pac4aging engineers wor4ing for >r"s in *7C
categories .%
thro!gh .9. The lists wo!ld cost as follows? J--% 9containing -#('8 na"es:# J('%
91&#'&0 na"es:# and
J.0% 9%#1'' na"es:. ,t a !nit cost of J.# a pac4age co!ld be prod!ced and "ailed to
each individ!alL
this wo!ld contain a letter tailored to the recipient6s b!siness# a broch!re describing
the )ond$,+atic#
a reply card# and a 8l!e"atic Pen which co!ld highlight the dispenser6s !ni!e
anticlogging
feat!re. Fo3 hoped that at least 10C of the recipients wo!ld ret!rn the reply cards.
Aach "ight then
receive a telephone sales call.