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Lyondell Chemical Company Case Study Solution
Lyondell Chemical Company Case Study Help
Lyondell Chemical Company Case Study Analysis
The following area focuses on the of marketing for Lyondell Chemical Company where the company's clients, competitors and core proficiencies have examined in order to justify whether the choice to launch Case Study Help under Lyondell Chemical Company brand name would be a feasible alternative or not. We have to start with looked at the type of customers that Lyondell Chemical Company deals in while an examination of the competitive environment and the business's strengths and weaknesses follows. Embedded in the 3C analysis is the reason for not launching Case Study Help under Lyondell Chemical Company name.
Both the groups utilize Lyondell Chemical Company high efficiency adhesives while the company is not just included in the production of these adhesives however also markets them to these customer groups. We would be focusing on the consumers of instantaneous adhesives for this analysis because the market for the latter has a lower potential for Lyondell Chemical Company compared to that of instantaneous adhesives.
The total market for instantaneous adhesives is roughly 890,000 in the United States in 1978 which covers both consumer groups which have been determined earlier.If we look at a breakdown of Lyondell Chemical Company prospective market or customer groups, we can see that the company offers to OEMs (Initial Equipment Makers), Do-it-Yourself customers, repair work and overhauling business (MRO) and makers handling products made from leather, plastic, metal and wood. This variety in clients recommends that Lyondell Chemical Company can target has different options in regards to segmenting the market for its brand-new product particularly as each of these groups would be requiring the same type of item with respective changes in quantity, need or product packaging. The customer is not rate delicate or brand mindful so launching a low priced dispenser under Lyondell Chemical Company name is not a suggested alternative.
Lyondell Chemical Company is not just a manufacturer of adhesives however enjoys market leadership in the instantaneous adhesive market. The company has its own knowledgeable and competent sales force which adds value to sales by training the company's network of 250 suppliers for assisting in the sale of adhesives. Lyondell Chemical Company believes in exclusive distribution as shown by the reality that it has actually chosen to offer through 250 distributors whereas there is t a network of 10000 distributors that can be checked out for expanding reach through distributors. The company's reach is not restricted to The United States and Canada just as it also delights in global sales. With 1400 outlets spread out all across North America, Lyondell Chemical Company has its in-house production plants rather than using out-sourcing as the preferred method.
Core proficiencies are not restricted to adhesive production only as Lyondell Chemical Company also concentrates on making adhesive dispensing equipment to assist in making use of its products. This dual production technique offers Lyondell Chemical Company an edge over competitors since none of the competitors of giving devices makes immediate adhesives. In addition, none of these rivals sells straight to the consumer either and utilizes distributors for connecting to clients. While we are looking at the strengths of Lyondell Chemical Company, it is important to highlight the company's weaknesses as well.
Although the business's sales personnel is knowledgeable in training distributors, the truth remains that the sales group is not trained in selling devices so there is a possibility of relying greatly on distributors when promoting adhesive devices. It should likewise be noted that the distributors are showing unwillingness when it comes to selling devices that needs maintenance which increases the difficulties of offering devices under a particular brand name.
If we take a look at Lyondell Chemical Company line of product in adhesive devices especially, the business has actually items targeted at the luxury of the marketplace. The possibility of sales cannibalization exists if Lyondell Chemical Company sells Case Study Help under the exact same portfolio. Offered the fact that Case Study Help is priced lower than Lyondell Chemical Company high-end line of product, sales cannibalization would definitely be affecting Lyondell Chemical Company sales income if the adhesive equipment is offered under the business's brand name.
We can see sales cannibalization impacting Lyondell Chemical Company 27A Pencil Applicator which is priced at $275. If Case Study Help is introduced under the company's brand name, there is another possible hazard which could decrease Lyondell Chemical Company revenue. The reality that $175000 has actually been invested in promoting SuperBonder recommends that it is not a great time for introducing a dispenser which can highlight the fact that SuperBonder can get logged and Case Study Help is the anti-clogging solution for the immediate adhesive.
Additionally, if we take a look at the marketplace in general, the adhesives market does disappoint brand name orientation or rate consciousness which offers us 2 additional factors for not releasing a low priced product under the company's brand name.
The competitive environment of Lyondell Chemical Company would be studied via Porter's 5 forces analysis which would highlight the degree of rivalry in the market.
Bargaining Power of Buyer: The Bargaining power of the buyer in this industry is low especially as the purchaser has low understanding about the product. While business like Lyondell Chemical Company have actually handled to train distributors regarding adhesives, the last consumer depends on distributors. Roughly 72% of sales are made directly by producers and distributors for instantaneous adhesives so the purchaser has a low bargaining power.
Bargaining Power of Supplier: Provided the reality that the adhesive market is controlled by 3 gamers, it could be stated that the provider enjoys a higher bargaining power compared to the purchaser. The truth stays that the supplier does not have much impact over the purchaser at this point particularly as the purchaser does not show brand acknowledgment or rate level of sensitivity. This indicates that the supplier has the higher power when it comes to the adhesive market while the purchaser and the maker do not have a significant control over the actual sales.
Threat of new entrants: The competitive environment with its low brand name loyalty and the ease of entry revealed by foreign Japanese rivals in the instant adhesive market indicates that the marketplace enables ease of entry. However, if we look at Lyondell Chemical Company in particular, the company has dual capabilities in regards to being a producer of adhesive dispensers and immediate adhesives. Potential threats in equipment dispensing market are low which reveals the possibility of developing brand awareness in not only instantaneous adhesives however also in dispensing adhesives as none of the market gamers has actually handled to position itself in dual abilities.
Threat of Substitutes: The threat of alternatives in the instant adhesive market is low while the dispenser market in particular has alternatives like Glumetic suggestion applicators, in-built applicators, pencil applicators and advanced consoles. The reality stays that if Lyondell Chemical Company introduced Case Study Help, it would be enjoying sales cannibalization for its own items. (see appendix 1 for structure).
Despite the fact that our 3C analysis has actually offered numerous reasons for not launching Case Study Help under Lyondell Chemical Company name, we have a suggested marketing mix for Case Study Help provided listed below if Lyondell Chemical Company decides to go ahead with the launch.
Product & Target Market: The target market selected for Case Study Help is 'Automobile services' for a number of factors. There are presently 89257 establishments in this section and a high usage of around 58900 lbs. is being used by 36.1 % of the marketplace. This market has an extra growth capacity of 10.1% which might be a good enough specific niche market segment for Case Study Help. Not only would a portable dispenser offer benefit to this particular market, the fact that the Do-it-Yourself market can likewise be targeted if a safe and clean low priced adhesive is being sold for use with SuperBonder. The item would be offered without the 'glumetic suggestion' and 'vari-drop' so that the consumer can choose whether he wants to select either of the two accessories or not.
Price: The recommended rate of Case Study Help has been kept at $175 to the end user whether it is offered through suppliers or via direct selling. This price would not consist of the expense of the 'vari tip' or the 'glumetic suggestion'. A price listed below $250 would not need approvals from the senior management in case a mechanic at an automobile upkeep shop needs to purchase the item on his own. This would increase the possibility of influencing mechanics to acquire the item for usage in their day-to-day maintenance tasks.
Lyondell Chemical Company would only be getting $157 per unit as displayed in appendix 2 which provides a breakdown of gross success and net profitability for Lyondell Chemical Company for introducing Case Study Help.
Place: A circulation model where Lyondell Chemical Company straight sends out the item to the local supplier and keeps a 10% drop delivery allowance for the supplier would be utilized by Lyondell Chemical Company. Since the sales team is currently participated in offering immediate adhesives and they do not have competence in selling dispensers, involving them in the selling process would be costly particularly as each sales call costs roughly $120. The distributors are already selling dispensers so offering Case Study Help through them would be a beneficial alternative.
Promotion: Although a low promotional budget plan should have been designated to Case Study Help but the truth that the dispenser is an innovation and it requires to be marketed well in order to cover the capital costs incurred for production, the suggested advertising plan costing $51816 is recommended for at first introducing the product in the market. The planned advertisements in magazines would be targeted at mechanics in automobile maintenance stores. (Recommended text for the advertisement is shown in appendix 3 while the 4Ps are summed up in appendix 4).
