Sealed Air Company Hbs Case

For the un plowd white plague of M. HUSSAIN Harvard bank line School 9-582-103 Rev. September 24, 1985 fuddled s difference out society The president and chief exe excommunicationive officer of certain(a) line of reasoning Corporation, T. J. Dermot Dunphy, explained the firms 25% average annual growth in net gross revenue and net earnings from 1971 to 1980 The comp alls memorial has been characterized by technical accomplishment and grocery store leadership. During the last 10 days we built on our enlargement of the for the first cartridge holder closed-cell, returnweight cushioning natural, introduced the first coruscate-in-place promotion system, and engineered the first masterly solar heating system for fluent pools.We intend to follow the aforesaid(prenominal) management guidelines in the 1980s. We intend to attempt merchandise leadership beca commit commercialise leadership optimizes profit, and foster technological leadership beca custom it is the e asy layly long-term guarantee of conditionetplace leadership. In July 1981 Barrett Ha ingestionr, harvest-home motorcoach of certain(a) diff make utilize ofs activate Cellular everyplacelaps, was reflecting on Dunphys management philosophy as he considered how blotto breedmanship should answer to both(prenominal)(a) unanticipated competition in the tutelar advancement ensureet.As output manager, Ha usancer was responsible for the closed-cell, light-weight cushioning square that Dunphy had menti atomic number 53d. close oxygenizes registered brandmark name for this crossing was mannerCap. 1 pedigreeCap cushioning materials had always faced a variety of competitors in the harborive packaging market. More recently, however, some(prenominal) teensy regional producers had invented around pissed airs manufacturing put to mildew patents and begun to market cheap imitations of oxygeniseCap in the unify States. communicateCap Cushioning and Its Competitor s send outCap cushioning was a clear, laminated fictile sheet containing air cardho manipulations of uniform coat (see butt on 1). The feature that tell apart glorioleCap cushioning from all separate blab products was its barrier-coating individually(prenominal) creaseCap smatter was coat on the inside with saran. This greatly increased air retention, heart slight compression of the material during shipment and, consequently, better protection. Barrier-coating and its customer benefits had been the central musical theme of sealed advertises transmitCap cushioning selling effort for 10 grades. certain(p) mental strain, AirCap, and Instapak are registered trademarks of tight Air Corporation. Solar Pool back is a TM trademark of the same corporation. Robert J. Dolan, associate professor, prepared this plate as the basis for class discussion quite a than to illustrate both in force(p) or ineffective handling of an administrative situation. Certain nonpublic e ntropy have been disguised. Copyright 1982 by the President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685 or write Harvard Business School Publishing, Boston, MA 02163.No part of this publication may be reproduced, stored in a retrieval system, employ in a spreadsheet, or transfer in each form or by any mannerelectronic, mechanical, photocopying, recording, or former(a)wisewithout the permission of Harvard Business School. 1 This document is trus bothrthy for function only if by Md. Saquib Hussain in merchandising ? nal taught by Suresh Ramanathan from October 2012 to October 2012. For the exclusive usage of M. HUSSAIN 582-103 Sealed Air Corporation Between 1971 and 1980 Sealed Air and Astro Packaging of Hawthorne, advanced Jersey, were the only air smatter packaging material producers in the United States.Sealed Air licensed Astro to use Sealed Airs patented technology. Astro produced two types of talks a barrier cardhouse equivalent to AirCap,2 and an un surface bubble. Its gross gross revenue were split about evenly between the two. In 1980 Astros total U. S. sales were approximately $10. 5 billion, compared with $25. 35 cardinal in U. S. sales for AirCap cushioning. Sealed Airs market precept had do customers aware of the advantages of surface bubbles consequently, uncoated bubbles had never achieved greater than a 15% dollar share of the U.S. market in the beginning 1980. In July 1981 uncoated bubble operations were being set up in Ohio, California, and raw York. GAFCEL, which served the metropolitan New York market, was the only competitor all the same to achieve real sales volume. Two GAFCEL salespeople hotshot full time, the other about fractional timehad reached a $1 million annual sales rate. some(prenominal) of AirCaps distri barelyors had interpreted on the GAFCEL line. Hauser was preparing to recommend Sealed Airs reaction to these somewhat unanticipat ed competitors.The firm could produce an uncoated bubble as cheaply as GAFCEL within a month with no major capital investment it could run on machines utilise for other Sealed Air product. If Hauser were to recommend that the historic champion of barrier-coating offer an uncoated bubble, he would have to specify timing, the trade program for the unsanded product, and any adjustments in policies for AirCap cushioning and Sealed Airs other products. As Hauser thought about his options, he again flipped through the training manual recently distributed to Sealed Airs sales force How to address against uncoated card-houses. The protecting(prenominal) Packaging market The three major use segments of the protective packaging market were 1. Positioning, obviateing, and bracing These protective materials had to secure bouffant, sarcoid, normally semirugged items in a container. Typical screenings included shipment of motors and computer peripherals. 2. conciliative wraps These materials came under less force per unit area per real foot. Applications included glassware, small desolate parts, and light medical instruments. 3. idle words fill These materials were added to prevent movement during merchant vessels when an item and its protective wrap (if any) did non fill its carton.The positioning, blocking, and bracing market was unique because of the heavier weights of items shipped. Flexible wrap and quash fill were sometimes enceinte to separate because it was convenient to use the same product for both functions. The recognisestone distinction was that loose fills (for instance, polystyrene beads) henpecked the deprave fill market but provided no cushioning protection and, hence, did non qualify as limber wrap. Until 1970 most materials used for protective packaging were produced primarily for other purposes. Heavy, newspaper publisher- petty(a)d products had rule the market. Sealed Air was one of the first Astros barrier bubble and the Ai rCap bubble differed in both manufacturing process and coating material. Astro used nylon rather than saran. The basic idea of reinforcing the polythene bubbles to improve air retention was, however, the same. 2 This document is authorize for use only by Md. Saquib Hussain in marketing ? nal taught by Suresh Ramanathan from October 2012 to October 2012. For the exclusive use of M. HUSSAIN Sealed Air Corporation 582-103 companies to get on the market with a customer orientation, i. e. , it began product development with an assessment of packagers needs.Since because a variety of products specifically designed for protective packaging had appeared. Sealed Air served these markets with two products 1. Instapak foam-in-place systems (1980 worldwide sales of $38. 8 million) could accommodate any application, though their most advantageous use was for heavy items. In this process two liquid chemicals were pumped into a tape transport container. The chemicals rapidly expand to form a foam cushion around the product. Instapaks comparative advantage resulted in a majority of applications in positioning, blocking, and bracing. . AirCap bubbles (1980 worldwide sales of $34. 3 million) primarily served the flexible wrap and void fill markets. In rundown to coated and uncoated polyethylene air bubbles, there were two major competitors in these markets paper-based products (cellulose wad, single-face corrugated, and indented kraft), and foams (polyurethane, polypropylene, and polyethylene). An excerpt from an AirCap promotional brochure in evidence 2 shows how Sealed Air positioned AirCap as a approach-effective rilievo for these competitory products and loose fills.The brochure first pointed out the cost nest egg from AirCap cushioning, then presented results of daunt and original thickness retention tests to demonstrate AirCaps protective superiority. testify 3 compares products competitive with AirCap cushioning and award 4 gives their U. S. Iist determi nes, which represent relative costs for any order size from an end user. Quantity discounts were offered on all materials. Buying Influences The proliferation of packaging products and the lack of well demonstrable universal superiority caused confusion among end users.For example, products such as pewter mugs were shipped around the United States in AirCap cushioning, Astro coated bubbles, or even gray newspapers. Users were a varied lot. Some bought on a scientific worth/ exercise basis. They unders as well asd cushioning curves such as those in Exhibit 5. Sealed Air could provide independently measured cushioning curves for competitive products as well as its own. Regardless, many firms did their own testing. At the other end of the spectrum were firms with a purchasing-department mentality, as some packaging materials suppliers put it. bell per square foot was their first consideration, deli precise their second. As one Sealed Air executive commented, To these people, cushion ing curves are like depending numbers. They think you fuel make them say anything you want. There were no systematically collected data on the buy process or the extent to which price dominated consummation in the purchase decision. Based on his experience as a district sales manager and now product manager, Hauser guessed that a packaging engineer influenced about 40% of the material purchase decisions. 3 This document is authorized for use only by Md.Saquib Hussain in marketing ? nal taught by Suresh Ramanathan from October 2012 to October 2012. For the exclusive use of M. HUSSAIN 582-103 Sealed Air Corporation The U. S. Market In 1980, dollar sales by segment in the U. S. protective packaging market were Positioning, blocking, and bracing $585 million Flexible wrap $126 million Void fill $15. 6 million Exhibit 6 breaks subdue total sales for the flexible wrap market by product type for 1975, 1978, and 1980. AirCap cushioning annual sales in the United States since 1972 w ere division 1972 1973 1974 1975 1976 Gross gross revenue (in millions) $7. 10. 0 13. 0 12. 8 14. 6 course of instruction 1977 1978 1979 1980 Gross gross revenue (in millions) $16. 4 18. 4 21. 2 25. 3 notwithstanding the high cost of coated bubbles relative to the uncoated product, Sealed Air had kept most of the U. S. air bubble market. Key factors were Sealed Airs patent protection and licensing of only one competitor, extensive market education, and the packaging mentality in the United States. Packaging engineers enjoyed a positioning in U. S. organizations not accorded them elsewhere. Packaging supplies were viewed as a productive, cost-saving resource.In contrast, recent explore by Sealed Air indicated that many European firms viewed packaging supplies as expendable commodities. The European Market Sealed Air had manufacturing operations in England and France and a sales organization in Germany. 3 It was the only phoner selling a coated product in these countries. Sales figures for 1980 were coarse England France Germany Total tattle Sales $3,649,000 4,480,000 7,688,000 AirCap Sales $2,488,500 592,200 404,600 3 The firm too had a manufacturing facility in Canada and a sales organization in Japan.Sealed Air licensees operated manufacturing facilities in Australia, Mexico, South Africa, and Spain. 4 This document is authorized for use only by Md. Saquib Hussain in marketing ? nal taught by Suresh Ramanathan from October 2012 to October 2012. For the exclusive use of M. HUSSAIN Sealed Air Corporation 582-103 circumvent A Differing stigmatises of AirCap Cushioning riffle Heights SB SC ST SD 1 8 / in. high, used for grow protection when cushioning requirements were minimal. 3/16 in. high, used primarily for peignoir small, intricate items, possibly for bigger items if not actually fragile. 5 16 / in. igh, used in same kinds of applications as SC grade, except with or so greater cushioning requirements. Also used as a void fill. / in. high, us ed for large, heavy, or fragile items or as a void fill. 1 2 Plastic Film onerousnesses watery work (110) each layer of film was 1 mil (1/1,000 of an inch) thick used for light ladens. Regular duty (120) one layer of 1 mil and one layer of 2 mils for loads up to 50 lbs. per sq. ft. Heavy duty (240) one layer of 2 mils and one of 4 mils for loads up to 100 lbs. per sq. ft. Super duty (480) one layer of 4 mils and one of 8 for loads over 100 lbs. er sq. ft. England. Sealed Air had developed the protective packaging market here and had good distribution. posterior on, Sansetsu, a Japanese firm, began marketing a high-quality uncoated product make in Germany. Prices for the uncoated bubble were 50% less than the cost of comparably sized AirCap cushioning. Sansetsu and other uncoated bubble manufacturers had chipped away at Sealed Airs one-time 90% market share. The most pessimistic Sealed Air electrical electrical distributors estimated that the firm would lose 50% of its current market share to uncoated bubbles within three years. France.Here, Sealed Air owned an uncoated bubble manufacturer SIBCO, with sales of $750,000 in 1980. In 1972 SIBCO was the only vendor of uncoated bubbles in France. Two major competitors, one with superior achievement facilities, had entered the market. Uncoated bubbles were priced about 40% lower than AirCap, and price was the key buying determinant. The major French distributor of AirCap cushioning had a 50-50 mix of coated and uncoated sales in 1978. In 1980 the mix had changed to 70-30 (uncoated over coated), with 90% of new bubble applications being uncoated. Germany.AirCap cushioning was a late crank (1973) to the German market and never held commanding share. Moreover, from 1978 to 1980, it had lost share at a rate of 20% to 30% per year. Sansetsu had an efficient manufacturing facility in Germany and sold approximately $6 million of uncoated product in 1980. (The price for uncoated was about 35% less than for coated. ) AirCap Cushioning Grades and Sales AirCap cushioning grades differed in bubble tiptop and thickness of the plastic films. Bubble heights were designated by a letter code, and the plastic films came in foursome thicknesses (see Table A).Sealed Air produced eight different height/thickness combinations (see Table B). Some of the known end uses for each grade are shown in Exhibit 7. 5 This document is authorized for use only by Md. Saquib Hussain in marketing ? nal taught by Suresh Ramanathan from October 2012 to October 2012. For the exclusive use of M. HUSSAIN 582-103 Sealed Air Corporation Table B Eight Different Height/Thicknesses by Sealed Air Thickness Height (inches) SB-1 8 110 X 120 X X X 240 X X X 480 / SC-3/16 ST-5 16 SD-1 2 / / X Table C AirCap Sales by Grade Sales in 1,000 Square Feet Grade 1/8 in.SB-110 3/16 in. SC-120 SC-240 5/16 in. ST-120 ST-240 1/2 in. SD-120 SD-240 SD-480 Total sales JulyDecember 1979 59,128 76,349 5,036 31,912 4,369 44,252 25,202 3,138 249,386 Jan uaryJune1980 48,513 81,014 4,426 42,234 3,914 43,624 21,799 1,358 246,882 invoice In addition, because SB-110 could not contend in price against foams for many surface protection applications, Sealed Air introduced an A-100 grade in January 1980. The A-100 bubble was 3/32 in. highthe shortest coated bubble Sealed Air could make with obtainable technology. January to June 1980 sales of A-100 were 17,802,000 sq. ft.Sales by grade for the last six months of 1979 and the first six months of 1980 are shown in Table C. Pricing All AirCap cushioning was sold through distributors. Prices reflected Sealed Airs costs and the prices of competitive products. Variable costs and prices to the distributor are shown in Table D. Sealed Airs suggested resale price list is shown in Exhibit 8. Largely because of its selective distribution policy, distributors mostly followed this list. The price schedule entailed quantity discounts for end users. Thus, distributor margins varied with the size of th e customers individual order. Quantity price was determined by the total square footage of a single order, combining all grades, lucid for shipment at one time to a single destination. ) In some major metropolitan areas, up to 50% of AirCap business was truckload/ car orders by end users. In this event Sealed Air shipped the material from its plant directly to the end user the distributor received a 10% margin and handled user credit and technical service. In some markets the percentage of direct shipments was as low as 10%. 6 This document is authorized for use only by Md. Saquib Hussain in marketing ? al taught by Suresh Ramanathan from October 2012 to October 2012. For the exclusive use of M. HUSSAIN Sealed Air Corporation 582-103 Selling Effort Sealed Airs U. S. operation consisted of 7 regional manufacturing operations, 62 salespeople (each selling AirCap cushioning, Instapak, and other Sealed Air products), and 370 distributors. To reign over the shipping cost of its bulky p roduct, Sealed Air had regional manufacturing operations in three eastern states, Ohio, Illinois, Texas, and California. The regional presence, however, had proven to be an effective sales promotion device as well.Table D AirCap Variable cost and electrical distributor Prices (in dollars per 1,000 sq. ft. ) (1) Total Variable monetary value $13. 78 16. 01 20. 56 32. 47 30. 65 38. 12 36. 31 44. 45 70. 81 (2) Price to Distributor for Truckload Deliverya $20. 60 30. 25 43. 50 56. 30 51. 40 65. 35 65. 35 78. 60 140. 90 (2) (1) Sealed Air Dollar Margin $6. 82 14. 24 22. 94 23. 83 20. 75 27. 23 29. 04 34. 15 70. 09 Grade A-100 (3/32 in. ) SB-110 (1/8 in. ) SC-120 (3/16 in. ) SC-240 (3/16 in. ) ST-120 (5/16 in. ) ST-240 (5/16 in. ) SD-120 (1/2 in. ) SD-240 (1/2 in. ) SD-480 (1/2 in. ) Manufacturing $12. 46 14. 02 17. 92 29. 83 25. 36 32. 83 28. 38 36. 52 62. 88 payload $1. 32 1. 99 2. 64 2. 64 5. 29 5. 29 7. 93 7. 93 7. 93 a Less than truckload shipments were priced 15% to 20% higher. Co nsequently, distributors almost always ordered in truckload quantities. They were allowed to mix grades within an order. Depending on the grade ordered, a truckload could contain 70,000 sq. ft. (all SD-480) to 420,000 sq. ft. (all A-100). Before Instapak was acquired in 1976, 28 salespeople devoted 90% of their time to AirCap cushioning products. In 1981 the 62-person force was expect to allocate time as follows 60% to Instapak systems, 35% to AirCap cushioning, and 5% to other Sealed Air products. Exhibit 9 shows Sealed Air sales by product line and other financial data. ) Part of Sealed Airs market share leadership philosophy was a consultative selling approach. Salespeople spent about half their time reservation cost studies at end-user locations. With the help of Sealed Airs packaging labs, salespeople attempted to show how their products could save on material and drive cost and reduce damage in the end users busy situation. Distributors salespeople took orders on AirCap cus hioning but did little to demonstrate AirCap use and application to customers.If a distributors salesperson identified a potentiality AirCap account, he or she would inform the Sealed Air salesperson and a joint call would be arranged. In this way the potential account learned about the product and ordering procedures simultaneously. Distributors sometimes complained to Sealed Air about the level of AirCap selling effort. Since distributors margins on AirCap cushioning were generally higher than the 10% to 12% for Instapak sales, distributors were not happy with Sealed Airs greater allocation of salesperson time to Instapak.Some distributors verbalise they would be content if the salesperson in their area really allocated 35% to AirCap some claimed the actual AirCap selling effort amounted to only 20%. Instapaks sales growth had been impressive, but some Sealed Air executives felt this had cost them some distributor satisfaction. Both distributors and end users regarded Sealed A irs salespeople as among the best trained and most knowledgeable in the packaging industry. Sales force salaries were above average. They were composed of a base salary plus commissions of 2% on net AirCap sales and 1% on net sales of all other products, including Instapak. As an added inducement Sealed Air gave salespeople $75 for each Instapak dispenser primed(p). It took back $75 for each one removed. ) In a typical week a salesperson called on 20 end users and checked in with two or three distributors. 7 This document is authorized for use only by Md. Saquib Hussain in marketing ? nal taught by Suresh Ramanathan from October 2012 to October 2012. For the exclusive use of M. HUSSAIN 582-103 Sealed Air Corporation U. S. Distributors During the 1970s Sealed Air invested heavily in exploitation a selected distributor network. The firm had 370 distributors by 1980.Sealed Air considered 135 of these their first-line distributors because they conjointly handled over 80% of its busin ess. The 20 largest AirCap distributors handled about 35% of the business. Larger distributors typically carried both Instapak foam-in-place and AirCap cushioning. The largest distributor of Sealed Air products had 1980 Sealed Air sales of approximately $2 million, just about half of which were AirCap. Distributors traditionally assay to be full-line housescapable of meeting each customers complete packaging needsso they carried a broad range of products.A trace of Sealed Airs firstline distributors showed that 83% carried loose fills, 65% carried polyethylene foam, and 29% carried Du Ponts polypropylene foam. Although most carried competitive products, distributors had displayed loyalty to Sealed Air and AirCap cushioning. Sealed Air, in turn, had kept to its selective distribution policy. Competing Uncoated Bubble Cushioning Sealed Air considered both types of bubbles made by Astro as inferior products. GAFCEL, the new regional producer, made a mighty product in Hausers estimat ion he felt that its victor to date came largely at Astros expense.The New York metropolitan market was ideal for the new producer. It was not customer- or distributor-loyal, and price was a key variable. Sealed Airs estimate of GAFCEL sales rates was $750,000 per year for the 1/2-in. -high uncoated bubble and $250,000 per year for the 3/16-in. bubble. Both had two layers of film 2 mils each. GAFCELs distributor prices for truckload shipments and suggested resale prices to end users for the metropolitan New York market are shown in Table E. (Astros uncoated bubble prices are in Exhibit 4. ) Sealed Air had not yet extensively well-tried the GAFCEL uncoated bubble.Although it was better than Astros uncoated, its performance would not be dramatically different from that appoint in earlier uncoated testing (see Exhibit 2). In terms of cushioning curves, the l/2 in. GAFCEL bubble was comparable to Sealed Airs ST-120 or SD-120 for very light loads, not greater than 0. 15 lbs. /sq. in. pressure. At greater loads, however, the quickening curve would increase rapidly, moving above even the SB-110 by pressures of 0. 25 lbs. /sq. in. (see Exhibit 5). 8 This document is authorized for use only by Md. Saquib Hussain in marketing ? nal taught by Suresh Ramanathan from October 2012 to October 2012.For the exclusive use of M. HUSSAIN Sealed Air Corporation 582-103 Table E GAFCELs Distributor Prices per 1,000 Sq. Ft. SO-22 (3/16 in. ) LO-22 (1/2 in. ) $36. 03 Distributor truckload Suggested resale by order size 1,000 sq. ft 20,000 sq. ft 40,000 sq. ft 100,000 sq. ft Truckload $31. 63 $56. 54 47. 12 42. 84 39. 40 34. 79 $75. 24 62. 70 57. 07 44. 68 39. 63 Sealed Air Decisions Sealed Air had conducted a good deal of research on manufacturing uncoated bubble products. It knew the best ware process would be similar to that shortly used for its Solar Pool Blankets.Thus, the firm could begin manufacture of an uncoated product quickly in its New Jersey plant. Likely distributo r response to a Sealed Air uncoated product was problematical to predict. Some distributors had requested it, but others regularly complained that there were already too many coated grades. Preliminary estimates of the variable costs for producing Sealed Air uncoated bubbles were $19 per 1,000 sq. ft. for 3/16 in. height, $20 per 1,000 sq. ft. for 5/16 in. , and $21 per 1,000 sq. ft. for 1/2 in. Freight cost depended on bubble height and distance shipped.Although GAFCELs production process was completely different, its production costs were believed to be comparable. Hauser now had to decide whether to recommend that Sealed Air enter the uncoated bubble market (with an about-face on its previous exclusive emphasis on coated bubbles), or whether to suggest some other reaction to its new competitors. 9 This document is authorized for use only by Md. Saquib Hussain in marketing ? nal taught by Suresh Ramanathan from October 2012 to October 2012. For the exclusive use of M. HUSSAIN 582 -103 Sealed Air Corporation Exhibit 1 AirCap Products and UsesCushioning AirCap air bubble cushioning protects products against shock and vibration during handling and shipping by literally floating them on a cushion of air. This material offers consistent performance because our unique barrier-coating guarantees air retention. AirCap withstands repeated impact since it will not fatigue or take a compression set. Cushioning applications include a range of products from lightweight retail items to delicate power supplies weighing several hundred pounds. Choose the grade that best fits your cushioning application Protective Wrap/InterleavingAirCap is an excellent protective wrap material and ideal for interleaving between similarly shaped items. It is clean, non-abrasive, easy to use and provides superior surface protection. site your product on AirCap sheeting, fold it over and your product is fully protected Typical protective wrap/interleaving applications include china, glasswar e, printed circuit boards, and spare parts. Void Fill When a void in a package is not completely filled, the cushioned product may migrate within the shipping container. This movement is a major cause of damage in transit.Since large regular-duty AirCap bubbles do not compress, they fill voids effectively and eliminate product movement. exclusively stuff AirCap sheeting into the carton, (left) or use an economical rolled log. Its easy, clean, lightweight, and cost efficient 10 This document is authorized for use only by Md. Saquib Hussain in marketing ? nal taught by Suresh Ramanathan from October 2012 to October 2012. 582-103 -11- Exhibit 2 Sealed Air Presents AirCap as Cost-Effective Substitute Typical Cost-savings Comparisons 60 Cellulose set up Rubberized Hair Type IV Resists Fatigue 50 40 0 Uncoated Bubbles Urethane foam Polypropolene Foam AirCap % Increase in Shock 20 In the transportation environment packages are subjected to many jolts, bumps, and shocks that can potentia lly cause damage. To function effectively a cushioning material moldiness retain its ability to protect over a series of repeated impacts. The issue of protective ability during repeated impact is termed material fatigue. This graph (left) indicates the increased shock an average procut (0. 25 psi) will receive during a ten drop sequence from 24 inches. Test results show barrier-coated AirCap outperforms all materials tested. 0 0 1 Number of Impacts 2 3 4 5 6 7 8 9 10 BARRIER-COATING to each one individual AirCap bubble is barriercoated to retain the air. AirCap Vs. fold Inserts A distributing firm found that it needed an inordinate amount of flowable to prevent product migration. A new AirCap package (left) using a simple criss-cross technique resulted in bring down material, shipping, labor and carton costs. Item cartonful Inner packaging parturiency Freight Total Cost Savings w/ AirCap IMMEDIATE weightiness evil AirCap retains its original thickness upon the immediate application of a load (See Below). unstrain Fill package $ . 73 . 75 . 42 3. 02 $4. 92 AirCap Vs. unbend Fills Material Tested A manufacturer using corrugated inserts, cellulose wadding and polyethylene bags eliminated the need to inventory many packaging components (right) and reduced labor 84% by switching to AirCap (left). Total Thickness Loss Retains reliable Thickness Item Carton Inner Packaging Labor Freight Total Cost Savings w/ AirCap Corrugated Package $ . 55 . 80 . 83 2. 60 $4. 78 AirCap Package $ . 55 1. 05 . 13 2. 40 $4. 13 $ . 65 AirCap Package $ . 47 . 54 . 25 2. 72 $3. 98 $ . 94AirCap SD 240 14% Polypropylene Foam 30% polyethylene Foam 40% Cellulose wad 38% Rubberized Hair IV 51% Uncoated Bubbles 64% (Large) Urethane Foam (1. 25 53% * * pct) Embossed 54% * * polyethylene (Hex) *30 day evaluation not conducted due to excessive initial thickness loss. Initial Thickness Loss Upon 04 psi core 7% 19% 16% 26% 24% 14% moderate Thickness Loss After 30 Days 7% 11% 24% 12% 27% 50% When a load is placed on a cushioning material two things occur that may contribute to a deterioration in its performance. First, is the immediate compression of the material.Second, is the additional, more(prenominal) than gradual loss of thickness termed creep. Generally excessive thickness loss of a material results in increased material usage in cushioning and dunnage applications. Creep may contribute to product damage as the loss of thickness creates a void in a package, allowing the product to move, shift, or migrate. This chart (left) demonstrates how barrier-coated AirCap retains its original thickness better than all materials tested and provides product protection throughout the entire packaging, shipping, handling, and storage cycle.GRADUAL THICKNESS LOSS (CREEP) AirCaps unique barrier-coating retains the air more effectively than uncoated bubbles, eliminating creep. AirCap Vs. Thin-Grade Foams AirCap Vs. Cellulose Wadding A metering firm discovered it nee ded only half as much AirCap to achieve the same performance that cellulose wadding provided (right). In addition to lowering material costs, AirCap (left) is clean, lint free, non-abrasive, and lightweight. Item AirCap Package An electronic service amount of money employing the use of a thin-grade foam (right) required many layers of wrapping to protect against shock and vibration.Large AirCap bubbles (left) provided superior performance and lower packaging costs. This document is authorized for use only by Md. Saquib Hussain in marketing ?nal taught by Suresh Ramanathan from October 2012 to October 2012. Carton Inner Packaging Labor Freight Total Cost Savings w/ AirCap Cellulose Wadding Package $ . 30 . 22 . 25 1. 35 $2. 12 $ . 22 . 12 . 08 1. 20 $1. 62 $ . 50 naturalized CELLULOSE MATERIAL UNCOATED BUBBLES Item Foam Package For the exclusive use of M. HUSSAIN Carton Inner Packaging Labor Freight Total Cost Savings w/ AirCap $ . 46 1. 33 . 66 4. 09 $6. 4 AirCap Package $ . 38 . 87 . 33 3. 94 $5. 52 $1. 02 For the exclusive use of M. HUSSAIN 582-103 Sealed Air Corporation Exhibit 3 1. matched Product Information Cellulose wadding (a paper-based product which tries to trap air between scads of sheeting) study suppliers Jiffy Packaging, Hillside, N. J. CelluProducts Co. , Patterson, N. C. Sizes available Thickness of 0. 17 in. , 0. 25 in. , 0. 37 in. , 0. 50 in. Advantages/disadvantages Much cheaper than AirCap in thin grades will not mark item wrapped heavier than AirCap (34 Ibs. per cu. ft. vs. less than 1 lb. or AirCap) meaning higher shipping cost excessive compression under heavy loads (see test results, Exhibit 2). Corrugated products (sheets of ribbed cardboard, often cut and perforated to specific sizes) study suppliers About 800 firms manufacturing in 47 states, including larger paper companies. Advantages/disadvantages Single face (cardboard with ribs on one side) appreciably cheaper than AirCap on square-foot basis labor cost of using corr ugated usually very high poor cushioning. polyethylene foam (thin, smooth, rigid sheets of low-density foam) Major suppliers Sentinel Foam Products, Hyannis, Mass.CelluProducts Co. , Patterson, N. C. Jiffy Packaging, Hillside, N. J. Sizes available 48 or 68 in. wide rolls of thickness 1/16, 3/32, 3/16, 1/4 in. Advantages/disadvantages Appreciably cheaper than AirCap in thin grades on square-foot basis does not mark item wrapped rigid product means hard to work with tendency to tear cushioning inferior to AirCap more expensive than AirCap in thicker grades. Polypropylene foam (thin, coarse, rigid sheets of low-density foam) Major supplier Du Pont Microfoam Sizes available Standard 72 in. wide rolls of thickness 1/16, 3/32, 3/16, 1/4 in. Advantages/disadvantages Basically the same as for polyethylene foam. Loose fills (expanded polystyrene beads, peanuts, etc. ) Major suppliers Many small firms Advantages/disadvantages 50% cheaper than AirCap on third-dimensional foot basis m essy poor cushioning. Uncoated bubbles (sheets of small air bubbles made of polyethylene film) Major producer Astro, Hawthorne, N. J. (Sealed Air licensee) Sizes available 48 in. wide roll standard, bubble heights 3/16, 1/4, 1/2 in. Bubbles also varied in the thickness of the films used. Generally, thicknesses were 1, 2, 3, or 4 mils with increasing film thickness giving greater strength. Advantages/disadvantages Cheaper than comparable height coated bubble excessive air loss over time (about 65% height loss under 50 Ibs. per sq. ft. pressure over 30 days vs. 15% for AirCap). Competitive coated bubble (essentially the same as uncoated bubble except nylon film coating added) Major supplier Astro, Hawthorne, N. J. (Sealed Air licensee) Sizes available 48 in. wide roll standard, bubble heights 1/8, 3/16, 1/4, 1/2, 1 in. Advantages/disadvantages low heavy loading, nylon barrier holds up better than Sealed Airs saran barrier poor quality control (bubble heights generally 13% less t han specified). . 3. 4. 5. 6. 7. 12 This document is authorized for use only by Md. Saquib Hussain in marketing ? nal taught by Suresh Ramanathan from October 2012 to October 2012. For the exclusive use of M. HUSSAIN Sealed Air Corporation 582-103 Exhibit 4 Suggested End User Prices (in dollars) for Major Competitive Products 1. Paper-Based Cellulose Wadding (Jiffy Packaging) Thickness (in. ) 0. 17 0. 25 0. 37 0. 50 2. Foams Thickness (in. ) 1 16 Price $27. 70 37. 40 50. 60 65. 00 Single-Face Corrugated $22. 75 Jiffy Packaging (polyethylene) $20. 30 25. 90 34. 15 53. 35 na Sentinel Products (polyethylene) $18. 20 24. 00 32. 70 49. 40 naDu Pont Microfoam (polypropylene) $17. 20 25. 17 34. 90 53. 86 109. 72 / / 1/8 3/16 3/8 3 32 3. Competitive Bubbles (Astro) Coated Nylon Bubble Height (in. ) 1 8 3 16 UncoatedPolyethylene a Film Thickness (mils) 1 and 1 1 and 2 1 and 2 1 and 2 2 and 4 1 and 2 2 and 4 Price $35. 25 49. 50 57. 00 71. 75 87. 75 90. 00 110. 00 Bubble Height (in. ) 3 16 Fi lm Thicknessa (mils) 2 and 3 2 and 3 2 and 4 Price $47. 00 54. 50 65. 75 / / 1/4 1/2 1/2 1 1 / / 1/2 1 4 Note Prices are per 1,000 sq. ft. based on a 50,000 sq. ft. order. a. Each bubble is made of two layers of film. Thicknesses shown are for individual layers in mils.Thicker film produces a stronger product. 13 This document is authorized for use only by Md. Saquib Hussain in marketing ? nal taught by Suresh Ramanathan from October 2012 to October 2012. For the exclusive use of M. HUSSAIN 582-103 Sealed Air Corporation Exhibit 5 Comparative Cushioning Performance by Grade Engineered To depart Superior Cushioning The test data on the graph at a lower place was developed by the Lansmont Corporation, an independent testing laboratory. The test method used closely simulates actual shipping conditions, and employs the use of an enclosed test block and shock machine.Five bottom drops were executed from 24 inches at each unruffled stress. The last four drops were averaged to arrive at data points used to develop each cushioning effectiveness curve. This data illustrates AirCaps superior performance over a wide range of loadings, and may be used for comparison and to specify the best AirCap grade and thickness for your cushioning requirements. (SD-240 curves taken from data provided in Military Handbook 304-A). 300 SB-110 SC-120 250 SC-120 (2 layers) Peak quickening (Gs) 200 SCT-120 150 SD-120 100 ST-120 (2 layers) SD-120 (2 layers) SD-120 (3 layers) SD-240 (4 layers) 50 SD-240 (6 layers) . 05 . 1 . 15 . 2 . 25 . 3 . 35 . 4 Static Stress (psi) acknowledgment AirCap brochure. Note To be read For a product exerting 0. 25 Ibs. per sq. in. of pressure on the packaging material while at rest, the peak acceleration (a measure of shock to the product) when dropped from 2 ft. is 118 g. if SD-120 is used, 260 g. if SB-110 is used. 14 This document is authorized for use only by Md. Saquib Hussain in marketing ? nal taught by Suresh Ramanathan from October 2012 to October 2012. For the exclusive use of M. HUSSAIN Sealed Air Corporation 582-103 Exhibit 6 U. S.MarketFlexible Wraps by Product Type (in millions of manufacturers dollars) 1975 1978 23 25 1 49 11 5 6 22 22 93 1980 23 27 1 51 12 7 25 44 31 126 Paper-based Cellulose wadding Single-face corrugated Indented kraft Foamsa Polyurethane Polypropylene Polyethylene Polyethylene air bubbles Coated and uncoated (combined) Total Source Company records. b 20 20 1 41 10 4 1 15 15 71 a. Sales figures exclude nonpackaging uses, such as construction and furniture industries. b. Figures are for flexible wrap market only and are therefore less than AirCaps and Astros total U. S. sales. Exhibit 7 Grade SB-110AirCap Applications by Grade Package Contents Furnace thermostats tachygraphy machines Taco shells Tempered glass sheets Clocks Wooden picture frames Light fixtures Overhead projector lenses Computer components Telephone bell ringers Amplifiers Saucepans Two-way radios Exit alarms Mixers Fryers Carbonless paper rolls Oven burners Pharmaceutical bottles Candleholders Recorders Carburetors Lamps Gallon jugs Computer terminals Printed circuit boards Foil wallpaper squanderer coagulation timers Leaded glass windows Custom motorcycle seats ram controls Shredded paper Packaging Material Displaced (if known) 16-in. Corrugated / polypropylene foam SC-120 SC-240 ST-120 Shredded paper Corrugated Corrugated Corrugated / polyethylene foam Corrugated Urethane foam pads 3 32-in. ST-240 SD-120 Polypropylene foam SD-240 Corrugated Foam pads and corrugated Corrugated Astro uncoated bubble LP-24 SD-480 15 This document is authorized for use only by Md. Saquib Hussain in marketing ? nal taught by Suresh Ramanathan from October 2012 to October 2012. For the exclusive use of M. HUSSAIN 582-103 Sealed Air CorporationExhibit 8 Suggested U. S. Resale Price List, Effective meet 1980 Sq. Ft. per Order per Single Destination 1,000 or more 5,000 10,000 30,000 50,000 Truckload/railcar 1,000 or more 5 ,000 10,000 30,000 50,000 Truckload/railcar 1,000 or more 5,000 10,000 30,000 50,000 Truckload/railcar 1,000 or more 5,000 10,000 30,000 50,000 Truckload/railcar 1,000 or more 5,000 10,000 30,000 50,000 Truckload/railcar Same price per 1,000 sq. t. as SD-120 1,000 or more 5,000 10,000 30,000 50,000 Truckload/railcar 1,000 or more 5,000 10,000 30,000 50,000 Truckload/railcar 1,000 or more 5,000 10,000 30,000 50,000 Truckload/railcar $107. 85 97. 70 87. 55 81. 40 79. 35 72. 40 130. 75 118. 30 105. 95 98. 55 95. 70 87. 25 232. 75 210. 55 188. 35 175. 55 171. 25 $155. 60 Price per 1,000 Sq. Ft. $34. 30 30. 85 27. 45 25. 70 24. 75 22. 80 50. 00 45. 40 40. 90 38. 10 37. 05 33. 50 71. 0 64. 55 57. 40 53. 75 52. 60 47. 65 93. 40 84. 40 74. 95 70. 20 68. 60 62. 25 85. 30 77. 10 68. 50 64. 25 62. 75 $57. 25 Item (thickness in inches) A-100 (3/32) SB-110 (1/8) SC-120 (3/16) SC-240 (3/16 ) ST-120 (5/16) ST-240 (5/16) SD-120 (1/2) SD-240 (1 /2) SD-480 (1/2) 16 This document is authorized for use only by Md. Saquib Hussain in marketing ? nal taught by Suresh Ramanathan from October 2012 to October 2012. For the exclusive use of M. HUSSAIN Sealed Air Corporation 582-103Exhibit 9 Selected Financial Data ($ thousands) 1976 1977 $21,422 15,489 3,595 2,682 $43,188 35,765 $24,270 12,093 (816) 6,009 1978 $25,028 21,133 3,453 4,644 $54,258 43,410 $31,111 14,527 (738) 7,882 1979 $29,996 29,056 3,432 7,951 $70,435 54,325 $43,199 16,855 (278) 10,103 1980 $34,330 38,802 3,688 11,777 $88,597 67,344 $54,125 21,485 (119) 12,868 bring in sales by class of product Air cellular packaging Foam-in-place packaging Other packaging Recreational and energy prod.Total worldwide United States Costs and expenses Cost of sales Marketing, administration, development Other income (expense) Earnings before income tax $18,872 3,049 4,553 $26,474 $16,451 6,696 32 3,359 Source Sealed Air Annual Reports 1979, 1980. 17 This document is authorized for us e only by Md. Saquib Hussain in marketing ? nal taught by Suresh Ramanathan from October 2012 to October 2012.