Peak Sealing Technologies - Arguments for and against Introducing Economy Tape - Case Study Example

Marketing

(Case study on Peak Sealing Technologies)

Table of content

Q1. Arguments for introducing economy tape3

Q2. Arguments against introducing economy tape3

Q3. Issues of Peak Sealing Technology4

Q4. Marketing program to resolve existing issues6

Reference list9

Appendices11

• Q1. Arguments for introducing economy tape

The company, Peak Sealing Technologies (PST), headquartered in Texas, is successful in gaining a competitive advantage through technological leadership and intensive research as well as development in such an edge of global competitive market structure (Ayub et al., 2013). The main mission of the brand is to develop sustainably in the recent cutting edge of technology by providing a stronger, secure and efficient sealing solution to their customers (Dolan and Beckham, 2014). The main objective of the brand is to retain more long-term customers towards the brand by maintaining brand loyalty. The product lines of the company, PST are carton sealing and industrial tapes, packaging tapes, complementary packaging tapes and specialised adhesives. The introduction of new products such as economy tape is advantageous for the company, PST to gain competitive advantage over other competitors in the market.

As per the 4C’s model, the company can manage cost, customer, convenience and communication through new product development. Though the cost of the product is high, it can retain more customers through establishing the clients across the world and building strong distribution networks (Entezari, Karimi and Kianfar, 2014). A highly trained sales team interacts with each other to meet the organisational goal by fostering communication and cooperation (Dobbs, E., 2014). Thus, the product is good for the brand as well as the customers as new product development and effective price setting provides the opportunity to the company to gain effective competitive advantage. As the yearly turnover of PST is high, it will be beneficial to promote the economy tape by targeting low end consumers (Refer to appendix 1).

• Q2. Arguments against introducing economy tape

As the product cost is high, it is difficult for the brand to retain low end customers towards the brand. As per the theories of customer’s perception, the low end users of the brand are mainly the price sensitive customers, whereas, semi professional users are such as small businesses and ebay stores. Thus, customer perception models are appropriate to identify the potential buyers of the organisation in the market (Gao et al., 2013). There are also professional users such as online web-stores and business to business users, who are the main consumers of the company, PST. It is easy to retain corporate citizens towards the company through delivering the economy tape to the customers. On the other hand, the issues with the new product development by PST are on-site applications and high performing cost, which deteriorate the cost effective nature of manufacturing the product (Hill, Jones and Schilling, 2014).

Economy tape may fail to retain the customers due to decomposition, brittleness, shrinkage and degradation of sealing properties. High cost of the economy tape decrease customer’s satisfaction level and as the packaging system is heavy; there is a high risk of failure. It is difficult for the organisation to retain the low consumers due to its high price (Hitt, Ireland and Hoskisson, 2012). Changing perception of the customers decreases the ability of the sales team to fulfil the needs of the price sensitive customers. The sales team gives higher efforts to explain the differences between the product of PST and other products of competitive brands. As the brand has negative impacts and reputation loss, it will be difficult for the brand to introduce the new product such as economy tape (Dolan and Beckham, 2014).

• Q3. Issues of Peak Sealing Technology

In the global competitive market, the company face competitive threats due to high stress shipping situations and challenging performance for providing the best sealing application. The organisation face challenges in retaining the customers in Boston as the consumers are price sensitive. Due to low price products of other competitive brands, PST failed to retain more long-term customers towards their brand (Hollensen, 2015). Thus, in the Boston market, the brand cannot maintain their brand loyalty due to high price of the products and services of the PST as compared to the other competitive companies in the market. There are some customers who try to switch the brand from PST to other competitive brands. The consumers also want to switch the distributors for saving few dollars on large numbers of orders (Dolan and Beckham, 2014).

The company is successful in building relationship with the distribution network for delivering the organisational products and services more efficiently after identifying the actual market demand for their products (Hubbard, Rice and Galvin, 2014). The company, PST implements limited rules and policies for their suppliers and uses a wide range of distributors, such that they can distribute their products and services in different market places. In order to distribute economy tape among the customers, the company tries to strengthen the suppliers. However, there are some distributors who have complaint against the economy tape products. Thus, this creates more issues for the brand as the company cannot distribute the products successfully in every market. The distributors refer the potential customers in the market to the sales team of the company. However, the sales team are not efficient to handle the customers of economy tape and they spend more time for selling other products (Lasserre, 2012). Hereby, the distributors cannot serve the customers efficiently that contributes low satisfaction of the consumers and also distributors.

In order to promote economy tape in the market, the company, PST needs to focus on the packaging style of the products such that the gross margin for packaging the organisational products can be high as compared to other competitive brands. The market demand of USA depends on the economy trend and mostly on manufacturer’s shipments, construction expenditure and packaging shipments. The cost of managing economy tape is high and this further adversely affects the brand to retain more loyal customers towards the company. In 2012, the demand for theory packaging products has declined approximately 4% as compared to the demand of 2007 as it depends on the volume of the packaging shipments (Dolan and Beckham, 2014). In order to maintain economy tapes, the brand incurs a high cost contributing to a high price level of the organisational products.

The company, PST also face some issues related to the economy tape as the company does not offer the products to the low end market for retaining the potential buyers in that market segment. Thus, lack of connection with distributors and high price adversely affects the brand to compete with the existing competitive brands in the market. IPACK is one of the main competitor of PST and the products of IPACK are low quality and the price is also approximately 25-35% lower than PST (Dolan and Beckham, 2014). Thus, PST faces high competition in the market and it is difficult to promote economy tape in such an era of global competition. Tensile is also another competitor of PST who gains effective competitive advantage in the Boston market (Dolan and Beckham, 2014).

• Q4. Marketing program to resolve existing issues

The company mainly focuses on delivering quality products and services by implement technological innovation within the organisation such that it is easy to retain more customers towards the brand (Leonidou et al., 2013). Through the theory of Porter’s five forces, it is easy to identify the threats of new entrant, threats of substitute products, competitive rivalry, bargaining power of the suppliers and bargaining power of the buyer in the market (Magretta, 2013). The organisation has high competitive rivalry due to existing competitive brand such as IPACK and Tensile. The brand also faces high threats of new entrant and threats of substitute products as the competitive brands are efficient in delivering low quality products at lower price as compared to the company, PST. The Porter’s five forces can be described below:

Figure 1: Porter’s five forces of PST

Competitive rivalry: High

Threats of new entrants: High

Threats of substitute products: High

Bargaining power of the suppliers: Low

Bargaining power of the buyers: High

(Source: Mellahi and Frynas, 2015)

On the other hand, as the distributors are satisfied with the business activities, the bargaining power of the suppliers of the brand is low (Malshe et al., 2016). However, the bargaining power of the buyers is high as the there are other cheap products in the market. In order to resolve the existing issues of high competition, high price and misunderstanding among the suppliers, the company needs to develop effective strategic planning through developing new product in cost effective way and promoting the products properly (Phillips and Moutinho, 2015). For producing economy tape and distributing these ethically, the cost of the products has increased by 25% contributing high price of the products. In order to develop an effective plan the company needs to utilise organisational strengths by reducing its weaknesses and utilising new opportunities through minimising the market threats. In this regard, SWOT analysis is appropriate to acknowledge the existing strengths and weaknesses and upcoming opportunities and threats (Ritter, 2014). The SWOT analysis of the brand can be illustrated below:

Figure 2: SWOT analysis

Strength:

Quality products

Industry leader in technology innovation

Highly efficient team

Strong distribution network

Attractive profit margins

Weaknesses:

Lack of flexibility to offer in low end market

Misunderstanding among the distributors

Opportunities:

Growing market segments

Introducing economy tape

Emerging operations in low end market

Threats:

High competition in low end market.

(Source: Rothaermel, 2015)

After identifying the strengths and opportunities as well as competitive forces of the company, PST, it is important to provide effective marketing strategies through which the brand can resolve the existing issues. New product development helps the brand to enter into a new market segment, mainly in the low end customers such that it is possible to retain a wide range of consumers towards the brand. Moreover, economy tape helps the brand to improve the values of stakeholders and this new product development also provides an opportunity to the brand to maintain corporate social responsibility of the organisation.

In order to resolve the issues of sales team and distribution network, the company needs to organise the sales team such that, they can track the market demand and distribute the products efficiently as per the consumer’s requirements. It is important to monitor the work progress and practices of the sale team as well as also build proper cooperation and interaction with the distributors such that it is easy to deliver the organisational products to the right customers in more a cost efficient manner within the proper time (Smith and Chaffey, 2013). Proper monitoring and audit system improves the work practice of the sales team within the organisation and provides them with a scope to run the business activities more systematically. It is also necessary to encourage employee’s creativity and technological advancement such that the company can manufacture distribute the products more efficiently.

On the other hand, the main issue of the organisation is high price of the product as compared to the other competitive brands. The brand needs to focus on the product diversification strategy in order to maintain the product portfolio and enter into big customer segment including the price sensitive consumers. Through product diversification and promoting economy tape in the market, the brand can project high rate of market demand due to the efficiency in packaging segment (Sorensen, 2012). On the other hand, the brand needs to implement an effective distribution plan through which they can deliver the organisational products efficiently. In this regard, the brand needs to target the engineering groups, online customers and large business houses, such that they can distribute the products as soon as possible which contribute high growth rate of the company.

In order to maintain current product portfolio of the organisation, PST needs to uphold the brand integrity and utilise the sales team to deliver the products at an effective price range. Targeting appropriate locations and pitching the products directly to the organisations are better options for the brand to increase the market demand. The brand also needs to focus on the sales promotion and empowerment of the customers, such that the consumers can provide with an appropriate feedback through PST website. As the packaging segment of delivering economy tape is the best solution in recent years, the brand can utilise this advantage for gaining a high competitive advantage over other competitors (Stead, J. G. and Stead, W. E., 2013). In order to promote the product, the brand also needs to adopt marketing strategies such as advertising, developing quality website of the company and social media advertising, such that they can provide important information to the customers.

• Reference list

Ayub, A., Razzaq, A., Aslam, M.S. and Iftekhar, H., 2013. A conceptual framework on evaluating SWOT analysis as the mediator in strategic marketing planning through marketing intelligence. European Journal of Business and Social Sciences, 2(1), pp.91-98.

Dobbs, E., M., 2014. Guidelines for applying Porter's five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), pp.32-45.

Dolan, R. J., and Beckham, H., 2014. In a Bind: Peak Sealing Technologies’ Product Line Extensiion Dilema. [Pdf] Harvard Business School. Available at: < http://ws.banachcourses.com/wp-content/uploads/2014/02/B2B-Product-LIfe-Cycle-Case-Study.pdf > [Accessed 19 May, 2016].

Entezari, A.R., Karimi, B. and Kianfar, F., 2014. Optimal production control and marketing plan in two-machine unreliable flexible manufacturing systems. The International Journal of Advanced Manufacturing Technology, 73(4), pp.487-496.

Gao, L., Porter, A.L., Wang, J., Fang, S., Zhang, X., Ma, T., Wang, W. and Huang, L., 2013. Technology life cycle analysis method based on patent documents. Technological Forecasting and Social Change, 80(3), pp.398-407.

Hill, C., Jones, G. and Schilling, M., 2014. Strategic management: theory: an integrated approach. London: Cengage Learning.

Hitt, M., Ireland, R.D. and Hoskisson, R., 2012. Strategic management cases: competitiveness and globalization. London: Cengage Learning.

Hollensen, S., 2015. Marketing management: A relationship approach. London: Pearson Education.

Hubbard, G., Rice, J. and Galvin, P., 2014. Strategic management. London: Pearson.

Lasserre, P., 2012. Global strategic management. New-York: Palgrave Macmillan.

Leonidou, L.C., Leonidou, C.N., Fotiadis, T.A. and Zeriti, A., 2013. Resources and capabilities as drivers of hotel environmental marketing strategy: Implications for competitive advantage and performance. Tourism Management, 35, pp.94-110.

Magretta, J., 2013. Understanding Michael Porter: The essential guide to competition and strategy. London: Harvard Business Press.

Malshe, A., Krush, M.T., Al-Khatib, J., Al-Habib, M. and Torkistani, H., 2016. Strategic Importance of Marketing Planning Capability: A Perspective from Saudi Arabia. In Marketing Challenges in a Turbulent Business Environment, pp. 171-172.

Mellahi, K. and Frynas, G., 2015. Global strategic management. London: Oxford University Press.

Phillips, P. and Moutinho, L., 2015. The Marketing Planning Index: A Tool for Measuring Strategic Marketing Effectiveness in the Hospitality Sector. Proceedings of the 1997 Academy of Marketing Science (AMS) Annual Conference, pp. 262-262.

Ritter, J., 2014. What is the role of marketing in strategic planning?. The Business & Management Review, 4(4), p.88-112.

Rothaermel, F.T., 2015. Strategic management. London: McGraw-Hill.

Smith, P.R. and Chaffey, D., 2013. Emarketing Excellence: Planning and Optimizing your Digital Marketing. London: Routledge.

Sorensen, H.E., 2012. Business Development: a market-oriented perspective. New-Jersey: John Wiley & Sons Ltd.

Stead, J.G. and Stead, W.E., 2013. Sustainable strategic management. New-York: ME Sharpe.

• Appendices

Appendix 1: Financial data of PST

(Source: Dolan and Beckham, 2014)