Sealed Air prides itself on being the market leader and fostering technology leadership. It markets a superior product for …show more content…
We strongly recommend Sealed Air introduce a new more affordable uncoated bubble product variety to counter competitive threat in US and grow its market share in Europe. This strategy carries an enormous opportunity to redefine the bubble product market and grow it by adding customers that currently use inferior products because of their lower prices. The risks associated with the recommended strategy is as follows:
1) Brand equity erosion and cannibalization of sales: A major concern is that the low-quality bubble may negatively impact the premium image of both Seal Air and AirCap. Entering into the uncoated bubble market could undermine all of its efforts to promote AirCap as a quality brand and cannibalize its sales.
2) Lack of support from distributors. Distributors have been complaining about the sales force’s lackluster selling effort of AirCap and too many grades and may not be open to the idea of distributing another product.
3) New product offers no competitive advantage. Seal Air would have to reallocate resource (manufacturing facilities, sales force, etc.) to the production of the uncoated product. Seal Air has comparable production costs and margins to GAFCEL and does not have any manufacturing or cost advantage that could create any