Peak Sealing Technologies

Peak Sealing Technologies (PST), a manufacturer of premium carton sealing tapes, stresses technological innovation as the company's core value. But when a new regional competitor introduces a less expensive and inferior product, PST is faced with a decision that could conflict with their values. Product manager Emma Taylor must decide if the company should augment its existing high-quality product line with a cheaper, less effective product to compete with their competitor. However, this decision could cannibalize PST's premium line. Emma is faced with a key issue in product line management--determining the variety of products in the line that serve the same function. Students are introduced to the problems of "trading down" the product line and must consider whether the company's corporate values are a strength or liability. This case can be used effectively in a first-year MBA course on marketing management to illustrate concepts associated with the risk and strategy of introducing a product line extension. It also allows for more complex analysis that would be appropriate in an Executive MBA program or advanced MBA elective courses in Product Management, Business to Business Marketing, Sales Management or New Product Development.

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Background

issue was that, since the acquisition of a packaging systems rm in "223, PST realigned its sales force, shifting its initial focus from !"#Tape products to all their current products 4ue to this, some distributors complained that PST sales team were too busy with other products and did not spend much time servicing e5isting !"#Tape customers and developing new business1nalysing the position of PST through

Porter’s 5 forces

 model&

Bargaining Power of Suppliers:

 It is generally low, since the supply materials are fairly simple and easily available

Bargaining Power of Buyers:

 'oderate Sealing tape market does not have a loyal customer base There are many di.erent options available 6owever, PST is known for its advance technology and high quality products and some customers value this the most because sealing tapes are an important component in packaging and manufacturing sectors

Threat of New ntrants:

 6igh (arriers to entry in very low Technology to create packing tape is fairly simple

Threat of Substitutes:

 6igh %ven though the quality of PST-s products is superior, there are many other options in the market for customers who don-t require the best of quality

!ompetiti"e #i"alry:

 6igh %ven though PST is a reputed company, factors such as low prices allow rivals to break into the market easily

$anagement %ilemma

(ecause of the above issues, PST had to decide whether to stay the course with advanced technology, high quality products or enter the economy grade segment

<ernati"es

74esign a new product in the economy grade segment& This new product would utilize a simpler, non#patented formulation with ()PP backing and would be a direct alternative to the availableeconomy grade products like those of Ipack and Tensile The production wouldn-t require any ma8or capital investment and can be set up with minimal start#up e5penses (ut for a company known as a technology leader in high quality premium grade products, there is a chance of dilution of brand equity 1lso, PST would have toput in a lot of time and e.ort to position it as a good quality economy product There is also a chance of cannibalization of its own product line since many customers who would buy from PST forgeneral purpose uses because of the brand value would move to its cheaper alternative in the same line"Stay course with advanced technology, high quality products& The quality of products of closest competitors in the economy segment # Ipack and Tensile were not at all up to PST-s standards Initial test results proved that Ipack was vastly inferior while Tensile proved to be halfway decent for uncomplicated, regular duty