Sealed Air Corporation (HBS 9-582-103) case analysis Essay

Custom Student Mr. Teacher ENG 1001-04 14 July 2016

Sealed Air Corporation (HBS 9-582-103) case analysis

1. What are the problems?

Market leadership and technological innovation have marked Sealed Air’s participation in the U.S. protective packaging market. Several small regional producers have introduced products, which are less effective than Sealed Air’s but similar in appearance and cheaper. The company must determine its response to this new competition. The company is faced with a difficult choice of choosing from a range of feasible options ranging from doing nothing to introducing a new product. This has raised product line management issues, particularly cannibalization, and affords the opportunity for the development of a marketing plan for any new product introduction. The timing of launch and any change in policies for Air Cap cushioning and Sealed Air’s other products also needed to be communicated.

2. What has been happening in this market? How is SA doing?


The protective packaging market had three major use segments:

Positioning, blocking, and bracing – e.g. shipment of motors, computer peripherals etc.

Flexible Wraps – could be used as void fill also, e.g. glassware, small spare parts, light medical instruments etc.

Void Fill – to prevent movement during shipping, did not generally qualify as flexible wraps.


Till 1970 heavy paper based products had dominated the market. In the seventies companies began product development with an assessment of packagers’ needs. In addition to coated and uncoated polyethylene air bubbles there were two major competitors in these markets: paper based products and foams.


The proliferation of packaging products and the lack of easily demonstrable universal superiority caused confusion among the end users. Users were a varied lot – some buying on price/performance basis whereas the others with purchase department mentality considered price per square foot and delivery before any purchase decision.


Based on domain knowledge Hauser guessed that a packaging engineer influenced about 40% of the material purchase decisions. The other group of course would be the purchase department as mentioned above.

Marketwise Performance of Sealed Air

The US Market – Packaging Supplies were viewed as productive, cost saving resource. Sealed Air had kept most of the air bubble market (20% of Flexible wrap market). Key factors being:

Patent protection.

Licensing of only one competitor (Astro Packaging)

Extensive Market Education

The European Market – Packaging supplies were viewed as expendable commodities. SA was the only company selling coated products in these countries.

England – SA had developed the market and had good distribution but the uncoated manufacturers were chipping away at SA’s market share (likely to lose 50% market share to uncoated manufacturers).

France – SA owned SIBCO (uncoated mfr.) and was facing competition in uncoated products (price lower than Air Cap) from 2 other manufacturers (one with a superior production facility). Market was shifting gradually towards uncoated products.

Germany – SA was a late entrant and could never establish itself as a commanding player. It was losing market share rapidly (20-30% per year) to the more efficient manufacturers.

3. Should SA introduce an uncoated product to compete with GAFCEL and the incipient competition from other small U.S. producers and Sansetsu?

Yes, it should introduce an uncoated product to compete with GAFCEL (Appropriate Parallels have been drawn with the European Market and the same has also been detailed below). The primary reasons being

To ward off the threats from the uncoated manufacturers.

The uncoated bubble market is still in its budding stage and it would be easier to catch up with the competition.

Several of Air Cap’s distributors were taking GAFCEL’s line.

The New York Metropolitan market was similar to European Market (detailed in the next bullet) with no customer and distributor loyalty and price being a key determinant.

Customers in the European market preferred uncoated packaging and were price sensitive as they considered packaging supplies as ‘expendable commodities’. Here market share of Sealed Air was 22% and declining.

The learning from this endeavor can be used in the European markets.

GAFCEL not only competed on price basis but also on quality (quote ‘….made a “decent product” in Hauser’s estimation’). SA could leverage its high quality production facilities. Another relevant parallel would be – In Germany and France uncoated manufacturers with better production facilities were eating into SA’s market share.

The other option of reducing price or distributor’s margin (to match GAFCEL’s offering) may have a detrimental impact on the bottom line.

Distributor Truckload Price 3/16 in ½ in

GAFCEL $31.63 $36.03

Air Cap $43.50 $65.35

In this case we have taken the minimum price offered by Air Seal.

SA could also consider entering the food packaging industry.

4. If so, what marketing program would you propose for uncoated?

Product/price specification

It should launch uncoated products matching SO-22 (3/16in) and LO-22 (1/2in) offerings of GAFCEL. It should further launch a product in the 5/16in category so that it attacks its competitors from all fronts and may also help in capturing any untapped market potential.

3/16 in ($) 5/16 in ($) 1/2 in ($)

Distributor Truck Load 30.5 32.5 35

SA Dollar Margin 11.5 12.5 14

Brand identification

These products should be marketed under the umbrella brand of SA. But an identity distinct from Air Cap should be created. Since like the European markets, New York metropolitan markets considered price as a key factor the issue of cannibalization and detrimental effect of the uncoated products on SA’s existing products do not arise (catering to different buyer groups).

Direct Sales program

In case of truckload / railcar orders by end users SA can directly ship the material from the plant at New Jersey and give a margin of 8 % to the distributor (handling user credit and technical service in turn). In all other cases sales would take place through distributors.

Selling Efforts

The prevalent programs in SA for training its sales personnel and its incentive schemes (Base salary plus 1.5% commission etc.) should be continued with as this has yielded rich dividends and the sales force of SA have a formidable image of being the best in terms of product knowledge etc. The uncoated products would however not require a huge selling effort as price is the main consideration. New sales personnel should be recruited.

Geographic markets

SA should first test-launch its products in New York Metropolitan market (here the consumers are more price conscious and look for a cheaper product with the same quality – a favorable ground for the launch of its uncoated products). With the consumers in other markets of US viewing packaging supplies as productive, cost saving resource; coated packaging should be continued in these markets.

Distributor program

For the uncoated products it should abandon its policy of selective distribution only for the uncoated product and make the product available in as many centers as possible.

Free Sealed Air Corporation (HBS 9-582-103) case analysis Essay Sample


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  • University/College: University of Arkansas System

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  • Date: 14 July 2016

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