Loctite should go ahead and launch Bond-A-Matic as an extension to its well-established brand as this represents a strategic opportunity for the company. Our recommendation is based on asking the following questions: i) Is there a demand for Bond-A-Matic and what is the right market segment for it? ii) Should Bond-A-Matic carry the Loctite brand? iii) How does Bond-A-Matic fit in Loctite’s business portfolio? iv) Will the move be strategic and how will it affect Loctite’s competitors?
We analyzed these questions by employing tools such as Ansoff’s Matrix and BCG’s growth-share framework to come up with further recommendations for the Loctite team. The instant adhesive market has been growing 10% a year and the cyanoacrylates (CAs) market, in particular, twice as fast. A Market Research Study determined that “26% of current users expect to increase their usage of instant adhesives and 51% express interest in improving dispensing technology” (Exhibit 3).
Bond-A-Matic, a non-clogging dispensing solution designed for assembly line workers who experience difficulty using standard CA bottles due to clogging, is positioned perfectly to address a problem and take advantage of a growing market. The right segmentation strategy for Bond-A-Matic is to target small to midsize companies with a low demand (below 5 pounds/year) for CAs. Exhibit 3 shows that the scale of adhesive consumption in limited on a per company basis: “11% of firms using instant adhesive purchased 10 or more pounds annually; 29% purchased between one and nine pounds”.
In addition, large companies are most likely already using the high-end Loctite dispensers and it would not make sense for Bond-a-Matic to compete with other Loctite products. As a result, to target the segment Loctite should underscore the benefits of Bond-A-Matic as an easy to use, cost-effective tool that increases productivity, which is a key consideration for small assembly line companies….
