Loctite Case Study

2649 Words11 Pages
Case #4
Zac Palet
MKT 460

1. Should IPG introduce the BAM? Why or why not?

I do not think Loctite should launch the Bond-O-Matic 2000 (BAM). Loctite manufactures high quality equipment and adhesives and the BAM would dilute this quality. Consumers are willing to pay a premium price for Loctite’s products because they know they are getting a high quality product. The BAM could damage the company’s image because it is priced well below the company’s normal pricing at $175. This could corrode customers’ relationships with all of Loctite’s products, especially their SuperBonder adhesive which would share the Loctite name and a similar brand name. Loctite’s other pieces equipment all have a profit margin around 25% when selling
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I suggest pricing the BAM so it will have similar profit margins compared to Loctite’s other pieces of equipment, which is about 25% when selling to distributors and 33% when selling to end users (excluding selling expenses). This means that the aluminum BAM would be priced at $165 for distributors and $185 for end users (costs from p. 5).

Place: Loctite should expand their distribution network. Currently they only have about 71 general distributors (285*.25 from p. 4) and 43 specialty distributors (285*.15 from p. 4). One of Loctite’s main objectives is to expand their market share to 35% in the SIC industries (20-39). So they should partner with distributors that specialize in the SIC industries (20-39). They should first partner with distributors that specialize in industries with the largest instant adhesive usage. This means that Loctite should first find distributors in the metal products, machinery (33-35) and electrical (36) industries because they use the most instant adhesives. There are about 15,070 instant adhesive users in the (33-35) industry (102,523*.147 from Exhibit 1). Loctite will want to research what a good end-user company to distributor ratio is in that industry then use that to find how many distributors they want to partner with. I am going to assume Loctite should use one distributor for every 100 end-user companies and that Loctite wants to
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