MARKETING MANAGEMENT CASE STUDY: SEALED AIR CORPORATION

Facts of the Case

The company Sealed Air had achieved market leadership by differentiating its AirCap cushioning materials by using the `barrier-coating ' making AirCap cushioning material more versatile and reliable. The company had depended on this crucial differentiating factor that had been communicated to its customers in different ways.  Sealed Air salespersons had been trained to project the superiority of coated bubble cushioning. Sealed Air technology is patented and so it enjoyed leadership in the cushioning market industry. The Seal Air brand, AirCap was positioned as high quality, premium-cushioning material.

There is an increase in competition from two quarters. First, there are several small manufacturers that have invented processes similar to that of Sealed Air and have produced cheap substitutes. Second, there is an increase in uncoated bubble cushioning manufacturing and marketing in the USA especially by a new competitor that is GAFCEL. 

Point of View 

The President and Chief Executive Officer of Sealed Air Corporation, T.J. Dermot Dunphy.  

The issue to be decided is whether Sealed Air should commence manufacturing uncoated bubble operations to counter this new competition or should Sealed Air continue with its strategy of emphasizing the benefits of coated bubble technology. There are pressures from several quarters on Hauser to make the decision. The GAFCEL sales are increasing very quickly, the distributors of AirCap have also taken up the distribution of GAFCEL and the distributors are actively asking for uncoated bubble cushioning. On the other hand Hauser is torn because Sealed Air has been positioned as a coated bubble company, it has communicated the benefits of coated bubble technology over the years and its sales force is also oriented towards selling coated bubble cushioning. 

There are several requirements and limitations. The requirement for Sealed Air is to stem the falling market share at home and abroad. For example, in England, Sealed Air needs to counter the challenges thrown to it by the Japanese firm that is selling uncoated bubble products at 50 less price than AirCap cushioning. Similarly, in France the market share of AirCap has fallen from 50 to 30 because of increased competition from uncoated products. Finally, In Germany, AirCap was losing its share at the rate of 20 to 30 per year. Even though the gross sales of AirCap in the US market are increasing, the rate of increase is much slower than what it was in early `70 s. For instance the increase in sales from 1973 to 1974 was 30, the increase in sales from 1979 to 1980 was only 19. The basic requirement for Sealed Air is to counter the fast eroding market for its coated AirCap . It must be able to regain its market share to at least 1978 levels. Sealed Air has other requirements it must be able to protect its current positioning in the market, it should be able to protect its coated bubble sales and must not dilute the brand equity of Aircap.

SWOT Analysis

Strength

The company Sealed Air had achieved market leadership by differentiating its AirCap cushioning materials by using the ``barrier-coating ' making AirCap cushioning material more versatile and reliable

Weakness 

There is an increase in competition from two quarters. First, there are several small manufacturers that have invented processes similar to that of Sealed Air and have produced cheap substitutes. Second, there is an increase in uncoated bubble cushioning manufacturing and marketing in the USA especially by a new competitor that is GAFCEL.

Opportunities

Sealed Air can produce uncoated bubble cushioning materials without re-tooling or buying new machines.

Threats

Competitor GAFCEL is getting much attention as the cheaper alternative to AirCap.

Course of Action

Sealed air must start manufacturing uncoated bubble cushioning, to counter that of GAFCEL’s similar product.  The Name of AirCap is well known to its consumers as the leading brand for cushioning materials, and a cheaper substitute for a cushioning material coming from the same brand that gave them the dependable coated bubble cushioning will be most welcome.

Customers can create demands and in this case, they wanted a cheaper substitute to the more expensive coated bubble cushioning.  By manufacturing and marketing the Aircap uncoated bubble cushioning as an alternative product, consumers could now enjoy having cheap bubble cushioning at a lesser price from a known bubble wrap maker.

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