Sealed Air- AirCapSealed Air- AirCap

Sarthak Shah Julia Kim

Inggi Winata

Aurelie OperiolAlexandre BonnierNelly Tanizar Abe Feng

History

Bubble history Growth Uncoated bubble wrap threat European markets

Translation (English

English) I love AirCap

bubbles, they always protect and I can pop them when I’m done!

(French English)

Look, this product made it through shipment well! It only has a few bruises on it!

US Market Recommendations

Part 1: Increase sales force Part 2: Enforce 35% Part 3: Educate end users Part 4: Test uncoated with

distributor

European Recommendations

England: Launch SIBCO Under the Sealed Air umbrella

France: Continue SIBCO Watch AirCap

Germany: Launch SIBCO Watch AirCap

SWOT, Strengths

Market leadership Innovation Good Marketing and Sales Loyalty of distributors

SWOT, Weaknesses

How to market uncoated bubbles Selective distribution Inconsistent sales representatives

SWOT, Opportunities

Uncoated bubble sales increasing Europe becoming more price

sensitive Further AirCap growth in US

SWOT, Threats

GAFCEL in US, uncoated bubble maker

Sansetsu in Europe, Germany Quality uncoated bubbles Lower price

Declining coated bubble market (Europe)

US Market Recommendations

Part 1: Increase sales force Part 2: Enforce 35% Part 3: Educate end users Part 4: Test uncoated with

distributor

US Part 1: Increase sales force

4 additional salesmen More distributors = More sales Maintain Loyalty

First line distributors 6:1 Distributor/Salesmen ratio

Distributor capacity: 370 – 394 Makes financial sense

US Part 1: Increase sales force

Income of around $40,000 Adjusted for inflation ~ early 80’s

Fixed costs from salaries Increase 3.72%

Sales Increase 6.57%

US Part 2: Enforce 35%

Time: Instapak 60%, AirCap 35% Salesman currently ~ 20% to

AirCap Distributors currently unhappy Incentive

Increase AirCap Commission ~ 2.5% Happy distributors = more sales

US Part 3: Educate end users

Distributors not educating end users

End users don’t know AirCap advantages

End users will pull sale from distributors

Pamphlets 1 for every 5,000 sq ft

US Part 4: Testing uncoated

Test with large client on trial basis Large client: 2-3 first-line

distributors Less risk than in open market

Trial basis: 1 year trial

Uncoated Test Implications

Successful Uncoated

penetration Readiness

Not successful AirCap

dominance Hold US Market

European Recommendations

England: Launch SIBCO Under Sealed Air umbrella

France: Continue SIBCO Watch AirCap

Germany: Launch SIBCO Watch AirCap

Europe- England

AirCap still strong 68% Market Share

Good distribution Competitor: Sansetsu Uncoated cost

50% less than AirCap Uncoated bubble growth

Europe- England Launch SIBCO SIBCO unprofitable alone Under Sealed Air umbrella

Uses Sealed Air salesmen Uses AirCap distribution No additional investment

Expectations AirCap down, SIBCO up

Europe- England MARKETING SIBCO

Already buyingAlready buying Don’t mention SIBCO SIBCO still in

catalogue Emphasize AirCap

performance

Not buyingNot buying Briefly mention

SIBCO Alternative

SIBCO lacks AirCap’s performance

Europe- France SIBCO’s home Sealed Air – 31% Market Share

17% SIBCO 14% AirCap

Uncoated growth expected 1978- 50% coated, 50% uncoated 1980- 30% coated, 70% uncoated

Uncoated- 40% less than AirCap price

Europe- France

SIBCO Natural growth

Expect AirCap to lose market share AirCap no longer profitable

Pull the plug

Europe- Germany

AirCap late into market Never did well, Losing ground Sansetsu Domination

78% market share AirCap- 5.2% market share

Coated bubbles unpopular Uncoated cost- 35% of AirCap price

Europe- Germany

AirCap unprofitable Pull the plug

Introduce SIBCO SIBCO to use AirCap distribution,

sales No additional cost

Realistic Expectations

Financial Analysis Overview

Part 1: Increase sales force by 4 Part 2: Enforce 35% through

increased commission (2.5%) Part 3: Educate end users

through pamphlets ($0.50 pamphlets)

Sales Forecasts

6.5% Sales Increase 370 distributors w/ 713,000 sq ft. avg

volume per distributor 62 sales representatives 370/62 = 6 distributors per rep 4 new sales representatives 4*6 = 24 new distributors 24*713,000 -> 6.49% more business

Important Variables

Pamphlet Amortized Cost ($0.50 pamphlet) [variable]

Commission increase [variable] Number of new employees at

$40,000 salary [fixed]

Decision Possibilities (Exhibit 1)

Pamphlet Cost (Amortized)

Commission Number of Sales Reps ($40,000 salary)

Break-Even Point

Estimated Profit Increase

$0.10 2.50% 4 3.72% 2.75%

$0.10 2.50% 5 4.41% 2.07%

$0.10 2.50% 6 5.10% 1.38%

$0.50 3.00% 6 7.60% -1.07%

$0.50 3.50% 4 6.73% -0.22%

$0.50 3.50% 5 7.44% -0.91%

$0.50 3.50% 6 8.16% -1.59%

Break-Even (Exhibit 2)

AirCap Break-Even vs. Projections

0

2,000

4,000

6,000

Model/Grade

Volu

me

(100

0 sq

. ft.)

Break-Even Point

Projected Point

In-Depth Analysis (Exhibit 3)

Original contribution: $22.16 New contribution: $21.95

Extra commission Pamphlet cost

Break-Even: 3.72% Retain last years profits and cover the

$160,000 fixed costs Projected Sales Increase: 6.5%

Profits: +2.75%

Profit Estimations (Exhibit 4)

Profit Gain

5,700,000.00

5,800,000.00

5,900,000.00

6,000,000.00

6,100,000.00

1980 (jan-jun) Projected (6 months)

Year

European Market (Exhibit 5)

Fixed Costs: $0 Contribution

Germany: $10.94 France: $9.76 England: $2.66

Break-Even: 0 (profitable from the very first sale)

Conclusion

US Market US Market RecommendationsRecommendations

Part 1: Increase sales force Part 2: Enforce 35% Part 3: Educate end users Part 4: Test uncoated with

distributor

Conclusion

European RecommendationsEuropean Recommendations England: Launch SIBCO

Under Sealed Air umbrella France: Continue SIBCO

Watch AirCap Germany: Launch SIBCO

Watch Aircap

Overall Goals

Europe Market share in France, Germany

Sansetsu

US Maintain AirCap’s strength Monitor uncoated penetration

http://www.urban75.com/Mag/bubble.html

THE END