SEALAX: A CASE STUDY ANALYSIS

MARKETING PLAN

Contents
Contents..................................................................................................................... 2 Introduction................................................................................................................ 3 1.0 SWOT ANALYSIS...................................................................................................3 1.1 Strength............................................................................................................3 1.2 Weaknesses......................................................................................................3 1.3 Opportunities.................................................................................................... 4 1.4 Threats.............................................................................................................. 4 2.0 MARKETING OBJECTIVES AND STRATEGY.............................................................5 2.1 Marketing and Financial Objective....................................................................5 2.2 Strategy statement...........................................................................................5 3.0 MARKETING MIX DEVELOPMENT...........................................................................7 3.1 Product Design and Development.....................................................................7 3.2 Distribution Strategy.........................................................................................8 W4 Licence 3 Multinational Companies to produce and sale the Multi sealer at an additional premium of $ 5 Per litre sold (5 x 200,000 Litres)....................................12 3.5 Conclusion.......................................................................................................... 12 REFERENCE LIST....................................................................................................... 13

Introduction
Sealax has been in operation for the last 50 years and produces sealer which is used to protect outside items from sun damage. Its range of Sealers is specifically designed to give a protective coat to pavers, brick walls and roof tiles. The owner, John Williams realised the sun damage to other items that are kept outside is extensive, such as, water heater, air-con condensers, outdoor furniture, fabric items like, cushion covers and garden umbrellas among others. He has come up with the idea to produce a single protective sealer for anything and everything because there is clear need for such a product that is unmet. Sealax has declined 30% the past 3 years because of intense competition from larger sealer manufacturers. John Williams wish is that the new product will solve the companys woes and give it a competitive edge over its rivals.

1.0 SWOT ANALYSIS

1.1 Strength
Its an established business for the past 50 years and has in-depth knowledge of the product. The product performance is well known amongst builders, bricklayers, landscapers and gardeners. Capacity to produce 150,000 litres of the product Capacity for research and development Possibilities for price flexibility The existing excess capacity of 50,000 litres per year can be used to produce the new sealant. Leading innovation of a multi-surface sealant

1.2 Weaknesses
The existing product is not known by the public. The Product is not branded

Since Sealax does not actively market its product, but, instead relies on regular trade customers for the past fifty years, the public is ignorant of the brand. The product is highly unsought as it is a preservative product with no immediate tangible benefits. It seems like there is no guarantee against future sun damage to objects. It is impossible to set a new price for the new product as customer response is unpredictable as the product will be the first of its kind in the market. The new product will incur substantial cost attached to it that is sales representative costs, travelling cost, product costs, delivery costs, advertisement costs, packaging costs, storage costs and administrative overheads.

1.3 Opportunities
The idea of a single protective sealer for anything and everything will be the first of its kind within the Australian market It is hoped that the majority of the initial sales will be generated from home owners who want to restore their partially faded items as the benefit is more immediate and visible. The product is able to protect the surfaces of various objects over a period of twenty years. The sealer can restore the slightly faded items to their original appearance and protect them for a further ten years.

1.4 Threats
There is indirect competition from other available specialty sealers for specific surfaces from competitors such as Wattyl Lacquer Finish for metal objects, Crommelin Natural Finish Sealer for outdoor pavers and fabric protection like Scothguard. The consumer attitude towards the product will determine a lot. The technical breakthrough has no guarantee of success within the market as it is unpredictable as to whether the new product will attract market response resulting from its marketing. The fact that Sealax has to pursue market creation of a market with a theoretical potential of 500,000 houses in Perth, does not guarantee that every household will use the product.

Sealax has declined by thirty per cent in the past three years due to intense competition from larger sealers manufacturers often manufacturing better products at lower prices.

2.0 MARKETING OBJECTIVES AND STRATEGY

2.1 Marketing and Financial Objective
A marketing Strategy refers to the approach or the game plan to be adopted to link the product and the consumer whereas the objective is the intended purpose in order to achieve the ultimate goal of the company (Sealax). Sealax has been in operation for the past 50 Years, during this time Sealax has not marketed its product neither does the public know the brand. Up to a year ago little or no research had gone in into Product development. An internal and external analysis has been undertaken to help identity the key internal strengths that can be capitalized on and weaknesses that should be eliminated or avoided, while at the same time looking at the opportunities available from the market and threats posed by the environment. These are the precepts of this marketing strategy.

Objective
To introduce and obtain market leadership through a pioneering multi-surface sealant that is readily available and known to the Australian Market and new emergent markets and increase profits of Sealax by 600% within 12 Months from time of production of the multi-surface Sealant. Specific Objectives To surpass present sales by an additional 50,000 units within 12 months period to within Perth and its environs direct production by Sealax To bring on board 3 Multinational Companies with a global presence and perspective to be contracted production of the multi surface Sealant under license for their target markets. Rebrand and register the Sealax Range of product to secure future Markets

2.2 Strategy statement

In order to achieve this Objective/(s) Sealax will apply the following strategies; Market Strategy Sealax will adopt a multi segment market strategy targeting 500,000 houses within Perth
comprising home owners, contractors and home builders. Beyond Perth, 3 multinationals with a global network will be contracted to market the sealant under license from Sealax.

The domestic market within Perth will be reclaimed and increased, a big win as the Company is a trusted partner who has supplied the market with good quality sealants for the last 50 years. Product Positioning Strategy The Sealax brand is to be repositioned through rebranding and product diversification within the Perth Market. Being a first entrant, as a multi-surface sealant, the innovation will be patented in order to obtain and maintain technological market leadership over the next 12 months. To maintain this technological market lead, a dynamic operational research model will accompany the production and marketing activities, to avoid potential risks such as go-error and drop error, while also learning and reengineering along the way. According to Ansoffs growth Matrix (diagram 1 below), a multi-level approach is recommended as the product is new and targets both the existing market and new markets with a key focus on product development and diversification. Potential risks of a go-error and a drop error are to be continuously addressed through an adequate and dynamic operational research model. Ansoffs Growth Matrix Existing Product Existing Target Market New Target Market Market Penetration Market Development New Product Product Development Diversification

H.I Ansoff, Strategies for diversification Harvard Business Review 1957, p114 An aggressive personal marketing strategy will be adopted to excite uptake and command leadership in Perth and its environs. For effectiveness, the personal marketing effort will be through professional associations of builder, home owners, residence associations and schools and colleges.

3.0 MARKETING MIX DEVELOPMENT

3.1 Product Design and Development
3.1.1 Product design Keeping in mind a product has to be specifically designed for home owners to perform the task of all in one, single protective sealer for anything and everything, that is a multipurpose product. The product will be designed with protective functions for various surfaces namely fabric, wood, glass, metal and various other outdoor and indoor items. This multipurpose product will aim at a target market being mostly of Australian home owners. Furthermore, the user friendliness and ease of using the product will also be assessed. Product name recommended is Max-Seal, considering its capacity to cover maximum types of surfaces. Max-seal, will tentatively be available in one litre trigger spray bottle for smaller surface area coverage and a four litre easy pour containers that can be used with ordinary spray bottles that will help cover large surface areas. Considering the nature of the sealant, it will be designed in such a way that its containers will have twisting cover tops to ensure that the left over sealant, if any, can be used again at a later stage. The directions of use of the product will be printed on the containers, together with the ingredients, manufacturing and expiry dates. A warning of dos and donts should also to be included. Furthermore, the containers will be designed adopting the design of collapsible tubes which will ensure that the re-use of empty containers will not be possible. 3.1.2 Product Development

The sealer that has been produced by Sealax for the past fifty years only protected pavers, brick walls and roof tiles. Almost every Australian household is affected from damage due to intense sun exposure that failed to protect fabric items, metal and outdoor furniture. This triggered an idea for developing a "single protective sealer for anything and everything". The development of Max-Seal will thoroughly go through a rigorous screening process that involves identification at an early stage the costs and benefits of developing it that is the costs of developing the product should not exceed the benefits derived from its production, however, not compromising its quality. A physical prototype of the product will then be created and tested by the chemical engineers under actual use conditions. Prior to penetration into the market, the marketing capability of the product will be tested. It is recommended to deliver samples of Max-Seal to randomly selected households to create awareness of the forthcoming product and, of course, collecting customer feedback after a certain time frame. For mass users like builders, roof tilers, bricklayers, landscapers and gardeners, larger samples are recommended and feedback collected accordingly.

3.2 Distribution Strategy

The distribution situation at Sealax Distribution is mainly getting a product from point A to B. The process in between will be determined by the strategies to be implemented by a company. Westwood John (2006) states that distribution entails: marketing channels; physical distribution and customer service. Sealax does not have an active distribution process; instead it relies on regular trade customers since its inception. Its speciality sealers are sold directly to the trade and are used by trades people. This means that other customers, who are a do it yourself kind of consumers, do not have access to Sealax products. The intense competition from other larger sealer manufacturers did not make it better therefore Sealax needs to restructure its distribution strategies. Due to the publics lack of product knowledge of Sealax products, its left with an excess capacity of 50,000 litres and this will not be good for its financial bottom line. The competition being larger companies who have the advantage of providing cheaper products, Sealax needs to form a distribution strategy that will focus on its strengths as a small company. This essay identified various distribution

strategies and will elaborate on each and find the most appropriate for Sealax so as to gain a competitive advantage. There are three distribution decisions, that a company needs to make before creating a distribution strategy: 1) channel length- how many channels the product has to go through before it makes contact with the consumer; 2) type of intermediaries- if the company chooses to use intermediaries, which kind will they be and 3) market coverage- will the company use intensive coverage, selective and exclusive.

The types of channel length Marketing channels, as explained by (Westwood, 2006) means how a company chooses to contact potential customers. Sealax has an advantage of its product being known, although they will need to choose the appropriate channel or channels so as to maximise on how fast and efficient the new product will reach its customers. The channel lengths include: Direct marketing, short, long and integrated channels. www.marketingmo.com, state that a company needs to focus on its end- users needs so as to create a good distribution strategy. Sealaxs new product is one that does not need a lot of procedures to apply. 3.2.1 Recommended Distribution Channel for Sealax Sealax will need to use an integrated type of channel, which comprises of suppliers- toconsumers and suppliers- to retailers- consumers. This is referred to as push strategy. Given that the product can easily be copied in two years, Sealax does not have time for trial and error and this where the Push strategy proves efficient. 3.2.2 Recommended Intermediaries for Sealax Sealax should form a reliable dealer network who will be the suppliers and retailers to the consumers. They will be licensed and well informed of the product. They will act as suppliers to the consumers who are already informed about the correct and proper use of sealant, who are; well- versed home owners, contractors and homebuilders. They will be retailers to the consumers who are new to the product and therefore need; advice on correct application, free support on

guidance and post purchase service. A dealer network distribution is also necessary because as much as the new product is easy to use, the customers need to be provided with relevant information so as to fully utilise it. The dealers will act as reliable local representatives to provide feedback from the customers, who will then be used to provide them with, efficient after sales service. This is both cost effective and product efficient for the company and the customers will be satisfied and feel connected to Sealax. 3.2.3 Recommended market coverage for Sealax As mentioned earlier, market coverage consists of; intensive, selective and exclusive. Since the product is easy to apply, the coverage should be intensive. The product should be sold through the dealers and other home product stores. The dealers should target home builders and contractors through providing a discounted price as they will be buying wholesale, and the stores should target the do- it- yourself home owners who want readily available products.

3.3

PRICING STRATEGY

Knowing the aggressiveness of marketing strategy that can develop a boost in promoting a new product, but considering the most important factor which is the customer, we should not ignore the fact that customers react almost immediately to the price .Both internal and external factors affect the pricing of the product , which should also be open to adjustments over time. Sealax range of sealers have never been marketed for the past 10 years. The new product namely MAX-SEAL has to be priced in such a way that the price should be an indicator for quality assurance, since the public does not know the brand. With its competitors often offering better products and/or lower prices, Sealax has to come up with a pricing strategy such that its quality is not compromised and that it generates a profit making revenue. For a more sustainable long term advantage, and to combat potential competitors from taking advantage of the market share, Sealax should patent its product .It may initially be hard for the business, but even harder for its competitors to penetrate and take over its market share. However, introductory price discounts and increased promotion can be used in the beginning but may only have a short term impact on sales due to the fact that the customers get used to obtaining regular discounts and this will no doubt increase

sales volume with very minimal profit margins, sometimes even leading to breakevens and selling at a loss. The pricing decision of Max- seal obviously also depends on the target markets with different customer groups responding to price differently based on their ability or willingness to pay. Since Sealax is a well established firm for the past 50 years producing a range of sealers, the assurance of quality to the customer may not be questioned, however, Max-Seal has some unique features which include protection of objects from sun damage for up to 20 years, restoring the original appearance of slightly faded objects and protecting them for a further 10 years and spraying on blue but drying clear in 30 minutes ensuring that the object is completely sealed with no missed areas. Taking the above into consideration, consumers expect and are expected to pay more for more features because additional features and functions cost more to provide. It can also be assumed that the potential buyers of Max-Seal will be willing to pay more for its quality after its user experience. Sealax will have to promote Max-Seal which may initially push up advertising costs and therefore the prices, but, advertising stimulates consumer demand which in turn can lead to price increase. Increased product knowledge reduces the risk of buying the wrong product. Consumers will be prepared to pay for such certainty and quality assurance.

3.4

PROJECTED INCOME STATEMENT

SEALAX LIMITED PROJECTED INCOME STATEMENT (FOR MAX-SEAL) FOR YEAR ENDING 20XX $000 $000 Sales (W1) Direct Cost of production (W2) Contribution Licence fees (W4) Gross profit 1,000 2,350 1,500 (150) 1,350

Expenses

Packaging, storage and delivery expenses (W3) Sales representative Promotion costs Travelling costs Administrative overheads 30 200 20 50

75

(375)

Net Profit

1,975

Workings W1 Assuming selling price per litre of $30. Therefore for 50,000 litres a sales revenue of $1,500,000 W2 Cost of sales of $ 150,000 (50,000 litres x $3) W3 - Packaging, storage and delivery expenses $1.50 X 50,000 litres = $75,000

W4 Licence 3 Multinational Companies to produce and sale the Multi sealer at an additional premium of $ 5 Per litre sold (5 x 200,000 Litres).

3.5 Conclusion
Sealax as Sealer producer has a lot of potential especially due to its new product which is an all surfaces sealer. The company should utilise the results of its SWOT Analysis to optimise its strengths, reduce and learn from its weaknesses, develop its opportunities and ensure its threats do not ensue. This marketing plan will enable Sealax to strategise on how the new sealer product will fare from the beginning (product design and development), to when it is marketed and distributed to its consumers and the projected income from it.

REFERENCE LIST
Ascoff, H.I, Strategies for diversification Harvard Business Review 1957, p114 http://www.marketingmo.com/strategic-planning/how-to-develop-your-distribution-channels/ Westwood, John How to Write a Marketing Plan, Kogan Page, 2006, http://www.ecu.eblib.com.au/patron/FullRecord.aspx Category Business / Management, Literature