Seneca Paper Company

Group D10
Akshay Kumar
Pinaaki Aggrawal
Pratik Bhimte
Raghu Kiran
Swasti Padhi
Suraj Kumar

Gummed Tape Industry

Highly competitive industry
Low entry barrier due to relatively low capital

requirement and material cost.

Two modes of selling Direct or through paper jobbers.
Jobbers exhibited preference for branded products.
50% industry sales dominated by 5 major players
Senecas Tape Division, Phoenix Paper Company,
Compton Paper Company, Fletcher Corporation and
Potsdam Tape Company.
Major two markets East Coast market and Midwest
market.
Seneca had 70-80% of its sale in Midwest market and
remaining in Eastern market.

Competitors Analysis
Phoenix Paper
Company

Compton
Paper
Company

Fletcher
Corporation

Small players

Largest player
in market with
15% sales.
Sold 75% of
product in East
coast market
and remaining
25% in Midwest
market.
Extensive
advertising
oriented
company.
Established
Jobbers network.
Known for their
quality of
product

Competitor of
Seneca for 2nd
and 3rd place.
Sold 75% of
product in East
coast market
and 25% in
Midwest market.
Sold Atlas as
a branded
product in
standard tape
category at
$12.2.
Sold unbranded
standard tape at
$11.6 which
accounted for

Competitor of
Seneca in
Midwest market.
It also sold 7080% in Midwest
market as
Seneca.
together with
Seneca and
Compton it
accounted for
5% industry
sale.

Gained
business by
selling direct to
large number of
users.
Rarely indulges
in advertising
and tend to
promote their
unbranded tape
by underselling
the major
brands.
Bought kraft
from several
sources, major
supplier of kraft
was a large

Pricing History
Phoenix Paper company reduced its prices in 1995 from $13.2

to $12.6 to compete with small-size competitors in Eastern

market.
Following the suite other producers also reduced their price to
avoid full market capture by Phoenix.
Price of super standard tape was also reduced to maintain 90
cent per bundle price differential between standard and super
standard tapes.
Small sized companies continued to reduce prices till 1996, in
response to which Phoenix reduced prices from $12.6 to $12.2.
This move was successful in discouraging price cutting in
Eastern market.
Third-grade tape under the name of Duratape was introduced
by Seneca in 1997 due to jobbers demand in Midwest market.
Duratape was priced at $11.6 per bundle. Smaller producers
sold third grade unbranded tape at $11.4 per bundle.
Sales of third grade tape did not rise beyond 20% since
introduction.
Third grade tape were assumed to cannibalize standard tape
sales

Pricing Decision by Seneca &

Competitor moves
Seneca decided to increase its price owing to little profit

and increasing manufacturing cost.

Seneca believed that its price increase will be followed by
other producers. However even after elapse of 30 days
grace period none of the major producer reduced its price.
Phoenix and Fletcher moved to same level as Seneca in
Eastern market.
Compton discontinued selling an unbranded product and
decided to sell Atlas as their third grade tape at $12.2. In
addition it also introduced Guardian as its new standard
tape priced at $12.8 per bundle.
In Midwest market producers dropped their third grade
tape and continued selling standard and super standard
tape at $12.2 and $13.1 respectively

Decision
Major market for Seneca in Midwest market

(70-80%). In Midwest market producers

have not increased their prices thus if
Seneca increases its price there is chance
of it getting eliminated from the market.
In absence of competitors following the
suite to increase prices it is advised for
Seneca to take back proposed price
increase.