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SEALAX: A CASE STUDY ANALYSIS

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MARKETING PLAN

ContentsContents ..................................................................................................................... 2

Introduction ................................................................................................................ 3

1.0 SWOT ANALYSIS ................................................................................................... 3

1.1 Strength ............................................................................................................ 3

1.2 Weaknesses ...................................................................................................... 3

1.3 Opportunities .................................................................................................... 4

1.4 Threats .............................................................................................................. 4

2.0 MARKETING OBJECTIVES AND STRATEGY ............................................................. 5

2.1 Marketing and Financial Objective .................................................................... 5

2.2 Strategy statement ........................................................................................... 5

3.0 MARKETING MIX DEVELOPMENT ........................................................................... 7

3.1 Product Design and Development ..................................................................... 7

3.2 Distribution Strategy ......................................................................................... 8

W4 Licence 3 Multinational Companies to produce and sale the Multi sealer at an

additional premium of $ 5 Per litre sold (5 x 200,000 Litres).................................... 12

3.5 Conclusion .......................................................................................................... 12

REFERENCE LIST ....................................................................................................... 13

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Introduction

Sealax has been in operation for the last 50 years and produces sealer which is used to protect

outside items from sun damage. Its range of Sealers is specifically designed to give a protective

coat to pavers, brick walls and roof tiles. The owner, John Williams realised the sun damage to

other items that are kept outside is extensive, such as, water heater, air-con condensers, outdoor

furniture, fabric items like, cushion covers and garden umbrellas among others. He has come up

with the idea to produce a single protective sealer for anything and everything because there is

clear need for such a product that is unmet. Sealax has declined 30% the past 3 years because of

intense competition from larger sealer manufacturers. John Williams wish is that the new product

will solve the companys woes and give it a competitive edge over its rivals.

1.0 SWOT ANALYSIS

1.1 Strength

Its an established business for the past 50 years and has in-depth knowledge of the product.

The product performance is well known amongst builders, bricklayers, landscapers and

gardeners.

Capacity to produce 150,000 litres of the product

Capacity for research and development

Possibilities for price flexibility

The existing excess capacity of 50,000 litres per year can be used to produce the new sealant.

Leading innovation of a multi-surface sealant

1.2 Weaknesses

The existing product is not known by the public.

The Product is not branded

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Since Sealax does not actively market its product, but, instead relies on regular trade customers

for the past fifty years, the public is ignorant of the brand.

The product is highly unsought as it is a preservative product with no immediate tangible

benefits. It seems like there is no guarantee against future sun damage to objects.

It is impossible to set a new price for the new product as customer response is unpredictable as

the product will be the first of its kind in the market.

The new product will incur substantial cost attached to it that is sales representative costs,

travelling cost, product costs, delivery costs, advertisement costs, packaging costs, storage costs

and administrative overheads.

1.3 OpportunitiesThe idea of a single protective sealer for anything and everything will be the first of its kind

within the Australian market

It is hoped that the majority of the initial sales will be generated from home owners who want to

restore their partially faded items as the benefit is more immediate and visible.

The product is able to protect the surfaces of various objects over a period of twenty years.

The sealer can restore the slightly faded items to their original appearance and protect them for a

further ten years.

1.4 Threats

There is indirect competition from other available specialty sealers for specific surfaces from

competitors such as Wattyl Lacquer Finish for metal objects, Crommelin Natural Finish Sealer

for outdoor pavers and fabric protection like Scothguard.

The consumer attitude towards the product will determine a lot.

The technical breakthrough has no guarantee of success within the market as it is unpredictable

as to whether the new product will attract market response resulting from its marketing.

The fact that Sealax has to pursue market creation of a market with a theoretical potential of

500,000 houses in Perth, does not guarantee that every household will use the product.

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Sealax has declined by thirty per cent in the past three years due to intense competition from

larger sealers manufacturers often manufacturing better products at lower prices.

2.0 MARKETING OBJECTIVES AND STRATEGY2.1 Marketing and Financial Objective

A marketing Strategy refers to the approach or the game plan to be adopted to link the product

and the consumer whereas the objective is the intended purpose in order to achieve the ultimate

goal of the company (Sealax). Sealax has been in operation for the past 50 Years, during this

time Sealax has not marketed its product neither does the public know the brand. Up to a year

ago little or no research had gone in into Product development.

An internal and external analysis has been undertaken to help identity the key internal strengths

that can be capitalized on and weaknesses that should be eliminated or avoided, while at the

same time looking at the opportunities available from the market and threats posed by the

environment. These are the precepts of this marketing strategy.

Objective

To introduce and obtain market leadership through a pioneering multi-surface sealant that is

readily available and known to the Australian Market and new emergent markets and increase

profits of Sealax by 600% within 12 Months from time of production of the multi-surface

Sealant.

Specific Objectives

To surpass present sales by an additional 50,000 units within 12 months period to within Perth

and its environs direct production by Sealax

To bring on board 3 Multinational Companies with a global presence and perspective to be

contracted production of the multi surface Sealant under license for their target markets.

Rebrand and register the Sealax Range of product to secure future Markets

2.2 Strategy statement

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In order to achieve this Objective/(s) Sealax will apply the following strategies;

Market Strategy

Sealax will adopt a multi segment market strategy targeting 500,000 houses within Perth

comprising home owners, contractors and home builders.

Beyond Perth, 3 multinationals with a global network will be contracted to market the sealant under

license from Sealax.

The domestic market within Perth will be reclaimed and increased, a big win as the Company is

a trusted partner who has supplied the market with good quality sealants for the last 50 years.

Product Positioning Strategy

The Sealax brand is to be repositioned through rebranding and product diversification within the

Perth Market.

Being a first entrant, as a multi-surface sealant, the innovation will be patented in order to obtain

and maintain technological market leadership over the next 12 months. To maintain this

technological market lead, a dynamic operational research model will accompany the production

and marketing activities, to avoid potential risks such as go-error and drop error, while also

learning and reengineering along the way.

According to Ansoffs growth Matrix (diagram 1 below), a multi-level approach is

recommended as the product is new and targets both the existing market and new markets with a

key focus on product development and diversification. Potential risks of a go-error and a drop

error are to be continuously addressed through an adequate and dynamic operational research

model.

Ansoffs Growth Matrix

Existing Product New Product

Existing Target Market Market Penetration Product Development

New Target Market Market Development Diversification

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H.I Ansoff, Strategies for diversification Harvard Business Review 1957, p114

An aggressive personal marketing strategy will be adopted to excite uptake and command

leadership in Perth and its environs. For effectiveness, the personal marketing effort will be

through professional associations of builder, home owners, residence associations and schools

and colleges.

3.0 MARKETING MIX DEVELOPMENT

3.1 Product Design and Development

3.1.1 Product design

Keeping in mind a product has to be specifically designed for home owners to perform the task

of all in one, single protective sealer for anything and everything, that is a multipurpose product.

The product will be designed with protective functions for various surfaces namely fabric, wood,

glass, metal and various other outdoor and indoor items. This multipurpose product will aim at a

target market being mostly of Australian home owners. Furthermore, the user friendliness and

ease of using the product will also be assessed.

Product name recommended is Max-Seal, considering its capacity to cover maximum types ofsurfaces. Max-seal, will tentatively be available in one litre trigger spray bottle for smaller

surface area coverage and a four litre easy pour containers that can be used with ordinary spray

bottles that will help cover large surface areas. Considering the nature of the sealant, it will be

designed in such a way that its containers will have twisting cover tops to ensure that the left

over sealant, if any, can be used again at a later stage.

The directions of use of the product will be printed on the containers, together with the

ingredients, manufacturing and expiry dates. A warning of dos and donts should also to beincluded. Furthermore, the containers will be designed adopting the design of collapsible tubes

which will ensure that the re-use of empty containers will not be possible.

3.1.2 Product Development

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The sealer that has been produced by Sealax for the past fifty years only protected pavers, brick

walls and roof tiles. Almost every Australian household is affected from damage due to intense

sun exposure that failed to protect fabric items, metal and outdoor furniture. This triggered an

idea for developing a "single protective sealer for anything and everything".

The development of Max-Seal will thoroughly go through a rigorous screening process that

involves identification at an early stage the costs and benefits of developing it that is the costs of

developing the product should not exceed the benefits derived from its production, however, not

compromising its quality.

A physical prototype of the product will then be created and tested by the chemical engineers

under actual use conditions. Prior to penetration into the market, the marketing capability of the

product will be tested. It is recommended to deliver samples of Max-Seal to randomly selected

households to create awareness of the forthcoming product and, of course, collecting customer

feedback after a certain time frame. For mass users like builders, roof tilers, bricklayers,

landscapers and gardeners, larger samples are recommended and feedback collected accordingly.

3.2 Distribution Strategy

The distribution situation at Sealax

Distribution is mainly getting a product from point A to B. The process in between will be

determined by the strategies to be implemented by a company. Westwood John (2006) states that

distribution entails: marketing channels; physical distribution and customer service. Sealax does

not have an active distribution process; instead it relies on regular trade customers since its

inception. Its speciality sealers are sold directly to the trade and are used by trades people. This

means that other customers, who are a do it yourself kind of consumers, do not have access to

Sealax products. The intense competition from other larger sealer manufacturers did not make it

better therefore Sealax needs to restructure its distribution strategies. Due to the publics lack of

product knowledge of Sealax products, its left with an excess capacity of 50,000 litres and this

will not be good for its financial bottom line. The competition being larger companies who have

the advantage of providing cheaper products, Sealax needs to form a distribution strategy that

will focus on its strengths as a small company. This essay identified various distribution

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strategies and will elaborate on each and find the most appropriate for Sealax so as to gain a

competitive advantage.

There are three distribution decisions, that a company needs to make before creating a

distribution strategy: 1) channel length- how many channels the product has to go through before

it makes contact with the consumer; 2) type of intermediaries- if the company chooses to use

intermediaries, which kind will they be and 3) market coverage- will the company use intensive

coverage, selective and exclusive.

The types of channel length

Marketing channels, as explained by (Westwood, 2006) means how a company chooses to

contact potential customers. Sealax has an advantage of its product being known, although they

will need to choose the appropriate channel or channels so as to maximise on how fast and

efficient the new product will reach its customers. The channel lengths include: Direct

marketing, short, long and integrated channels.

www.marketingmo.com, state that a company needs to focus on its end- users needs so as to

create a good distribution strategy. Sealaxs new product is one that does not need a lot of

procedures to apply.

3.2.1 Recommended Distribution Channel for Sealax

Sealax will need to use an integrated type of channel, which comprises of suppliers- to-

consumers and suppliers- to retailers- consumers. This is referred to as push strategy. Given

that the product can easily be copied in two years, Sealax does not have time for trial and error

and this where the Push strategy proves efficient.

3.2.2 Recommended Intermediaries for Sealax

Sealax should form a reliable dealer network who will be the suppliers and retailers to the

consumers. They will be licensed and well informed of the product. They will act as suppliers to

the consumers who are already informed about the correct and proper use of sealant, who are;

well- versed home owners, contractors and homebuilders. They will be retailers to the consumers

who are new to the product and therefore need; advice on correct application, free support on

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guidance and post purchase service. A dealer network distribution is also necessary because as

much as the new product is easy to use, the customers need to be provided with relevant

information so as to fully utilise it.

The dealers will act as reliable local representatives to provide feedback from the customers,

who will then be used to provide them with, efficient after sales service. This is both cost

effective and product efficient for the company and the customers will be satisfied and feel

connected to Sealax.

3.2.3 Recommended market coverage for Sealax

As mentioned earlier, market coverage consists of; intensive, selective and exclusive. Since the

product is easy to apply, the coverage should be intensive. The product should be sold through

the dealers and other home product stores. The dealers should target home builders and

contractors through providing a discounted price as they will be buying wholesale, and the stores

should target the do- it- yourself home owners who want readily available products.

3.3 PRICING STRATEGY

Knowing the aggressiveness of marketing strategy that can develop a boost in

promoting a new product, but considering the most important factor which is the

customer, we should not ignore the fact that customers react almost immediately tothe price .Both internal and external factors affect the pricing of the product , which

should also be open to adjustments over time.

Sealax range of sealers have never been marketed for the past 10 years. The new

product namely MAX-SEAL has to be priced in such a way that the price should be

an indicator for quality assurance, since the public does not know the brand. With

its competitors often offering better products and/or lower prices, Sealax has to

come up with a pricing strategy such that its quality is not compromised and that it

generates a profit making revenue.

For a more sustainable long term advantage, and to combat potential competitorsfrom taking advantage of the market share, Sealax should patent its product .It may

initially be hard for the business, but even harder for its competitors to penetrate

and take over its market share.

However, introductory price discounts and increased promotion can be used in the

beginning but may only have a short term impact on sales due to the fact that the

customers get used to obtaining regular discounts and this will no doubt increase

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sales volume with very minimal profit margins, sometimes even leading to

breakevens and selling at a loss.

The pricing decision of Max- seal obviously also depends on the target markets with

different customer groups responding to price differently based on their ability or

willingness to pay. Since Sealax is a well established firm for the past 50 yearsproducing a range of sealers, the assurance of quality to the customer may not be

questioned, however, Max-Seal has some unique features which include protection

of objects from sun damage for up to 20 years, restoring the original appearance of

slightly faded objects and protecting them for a further 10 years and spraying on

blue but drying clear in 30 minutes ensuring that the object is completely sealed

with no missed areas. Taking the above into consideration, consumers expect and

are expected to pay more for more features because additional features and

functions cost more to provide. It can also be assumed that the potential buyers of

Max-Seal will be willing to pay more for its quality after its user experience.

Sealax will have to promote Max-Seal which may initially push up advertising costsand therefore the prices, but, advertising stimulates consumer demand which in

turn can lead to price increase. Increased product knowledge reduces the risk of

buying the wrong product. Consumers will be prepared to pay for such certainty

and quality assurance.

3.4 PROJECTED INCOME STATEMENT

SEALAX LIMITEDPROJECTED INCOME STATEMENT (FOR MAX-SEAL) FOR YEAR ENDING 20XX

$000 $000

Sales (W1) 1,500

Direct Cost of production (W2) (150)

Contribution 1,350

Licence fees (W4) 1,000

Gross profit 2,350

Expenses

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Packaging, storage and delivery expenses (W3) 75

Sales representative 50

Promotion costs 200

Travelling costs 20

Administrative overheads 30 (375)

Net Profit 1,975

Workings

W1 Assuming selling price per litre of $30. Therefore for 50,000 litres a salesrevenue of $1,500,000

W2 Cost of sales of $ 150,000 (50,000 litres x $3)

W3 - Packaging, storage and delivery expenses $1.50 X 50,000 litres = $75,000

W4 Licence 3 Multinational Companies to produce and sale the Multi sealer

at an additional premium of $ 5 Per litre sold (5 x 200,000 Litres).

3.5 Conclusion

Sealax as Sealer producer has a lot of potential especially due to its new product which is an all

surfaces sealer. The company should utilise the results of its SWOT Analysis to optimise its

strengths, reduce and learn from its weaknesses, develop its opportunities and ensure its threats

do not ensue. This marketing plan will enable Sealax to strategise on how the new sealer product

will fare from the beginning (product design and development), to when it is marketed and

distributed to its consumers and the projected income from it.

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REFERENCE LIST

Ascoff, H.I, Strategies for diversification Harvard Business Review 1957, p114

http://www.marketingmo.com/strategic-planning/how-to-develop-your-distribution-channels/

Westwood, John How to Write a Marketing Plan, Kogan Page, 2006,

http://www.ecu.eblib.com.au/patron/FullRecord.aspx CategoryBusiness / Management,Literature

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