marketing scenario

In a Bind: Peak Sealing
Technologies’ Product Line extension Dilemma
G ROUP

Introduction
Positioned as an premium offering focused to lowest overall cost to end users through superior overall performance.
Leader in quality , performance and technological innovation
Product lines
Carton sealing and industrial tapes
Specialized adhesives
Other packaging products
K2 tape – Manufactured using patented technology and a brand name for pressure sensitive carton sealing tape
Very high tensile strength and sheer resistance

Positioning

High Price

K2 Products

Low Quality

High Quality
Ipack
Tensile
New Product
Low Price

Problem Statement
• K2 tape competed against inferior economy grade products in carton sealing type
• IPACK offered 25-35% lesser price
• Revenue of K2- $68.6 million IPACK – $28.5 million in 2012
• Tensile – a new competitor had $2.7 million dollar sale with one sales representative

Should PST stay with high quality product or enter the economy grade segment ?

Option 1: Enter the economy grade segment under the same brand
PROS
Access to the economy segment
Defend market share against competition
Diversification of product portfolio

CONS
Dilution of the brand image as a maker of technological superior product
Cannibalization of its own product offering
Cluttered product line

Option 2: Enter the economy grade segment under different brand
Implications for:

PROS

CONS

Customer

• Ability to fulfill need of price sensitive customers • Possibility of change in perception of being a quality leader

Distributor

• Possibility to offer a low end PST product • Even wider product range; Limited sales force

Sales Force

• Ability to offer more variety in terms of price levels

• More effort to explain product differences Brand

• No positive impact

• Negative impact on brand image

Option 2: Stay with high-quality products
Implications for: