Peak Sealing Technologies

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B2B MARKETING

Peak Sealing Technology.

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Problem Statement:

In what ways can PST handle a low-price competitor in a competitive and price sensitive area.

Introduction:

PST is a leading company in the adhesive industry. Its product line includes carton sealing and industrial tapes, specialized adhesives, other packaging products as well as complementary packaging systems and solutions. Technological leadership and intensive R&D give it a competitive advantage over the other players in the market. K2-Tape was PST’s brand name for its pressure sensitive carton sealing tape line. K2-tape was manufactured using patented adhesive technologies with high quality materials and polyster backing unlike BOPP film. But it is competed against inferior, economy grade products. End-user pricing for these products are 25-35% below K2 tape. The industry is getting more fragmented with the entry of more number of small regional farms.

Values:

• K-2 tapes line provide leading performance in durability, materials, holding force, temperature resistance level and extreme utilization condition.
• Despite the premium pricing, K-2 product provide more competitive overall cost trough superior performance.
• K-2 sales force are the best trained and knowledgeable in the industry, K-2 sales force also provide sales and technical assistance include performing cost effectiveness studies for client.
• K-2 supported by loyal and highly selective distributor. Distributors holds multi adhesive brands but historically tend to steer customer selection to K2 products.

Issues:

• K2 superior product has no head-to-head competitor thus its often compared head-to-head with inferior product at the market.
• The acquisition of packaging system firm in 2009 diverted the sales force focus to more product line and system
• K2’s distributors tend to focus on order processing and fulfilment only and didn’t play role as brand and technical ambassador instead leave the customer service to the principal’s sales force.
• Competitor imitate K2 profile with lower price, even though the quality is unmatched but price sensitive buyer will shift their purchase and that will cost 60% of the market size
• GP48, already taking some of K2 other product’s share, GP customer segment – price sensitive spectrum

Competitive Threat

• Market is open to new low price product
• Customers are extremely price sensitive
• Lack of brand loyality

Dilemma:

Following are the dilemmas of PTS in term of market challenge versus technology they have. Should PST launched low quality or economic segment tape while inevitably it will lowering its brand positioning but in the other hand it has to maintain their market share and their premium position from the attack of low-price competitor in a competitive and price sensitive area.

Pros of introduction of the economy tape

• Get into the competition directly especially in lower segment market
• Grab more market segment and potential revenue
• Coupe more footprint in price sensitive market
• Maintain market lead in all segment
• Cons of introduction economy tape
• Lowering the brand value as premium product
• Inevitably K2 will trap in price war eventually and it will cause profitability decrease
• More competitor will be able to imitate and claim that their cheaper and better than K2
• K2 will lost loyal customer who perceived quality and performance are above other competitor
• Cannibalization of PST premium products

Cons of introduction of the economy tape

Positioning Recommendation on Decision: