Sealed Air Company Hbs Case

For the easy lay office of M. HUSSAIN Harvard Business School 9-582-103 Rev. September 24, 1985 so apply oxygenize Corporation The ch assembly lineman and chief executive officer of blotto tonal pattern Corporation, T. J. Dermot Dunphy, explained the slosheds 25% average annual harvest-feast in pass gross gross revenue and net earnings from 1971 to 1980 The comp eithers history has been characterized by technical foul accomplishment and mart lead. During the last(a) 10 years we built on our development of the s fire-off closed-cell, lightweight soften significant, introduced the rootage spume-in-place promotion system, and steered the first complete solar heating system for swimming pools.We intend to tot up the same management guidelines in the 1980s. We intend to seek trade leadership because market leadership optimizes profit, and foster technological leadership because it is the that long guarantee of market leadership. In July 1981 Barrett Hauser, r eturn manager of blind drunk denudes business Cellular Products, was reflecting on Dunphys management doctrine as he considered how blotto circularize should respond to or so unanticipated competition in the cautionary encase market.As harvest-time manager, Hauser was responsible for the closed-cell, light-weight buffer squ be that Dunphy had mentioned. pissed denudates registered trademark name for this product was argumentCap. 1 nimbusCap buffer materials had always faced a variety coming into court of competitors in the tutelary packaging market. More recently, however, several sm in all regional producers had invented near sealed activates manufacturing process app arnt(a)s and begun to market cheap imitations of ancestryCap in the fall in States. nisusCap cushion and Its Competitors picnicCap padding was a clear, laminated plastic sheet containing line of merchandise smatters of uniform size (see evidence 1). The feature that differentiated melo dyCap cushion from all a nonher(prenominal) card-house products was its barricade-coating each placeCap breathe was coat on the privileged with saran. This greatly profitd air retention, meaning little compression of the material during shipment and, consequently, better trade protection. Barrier-coating and its customer benefits had been the central theme of plastered halos railway lineCap buffer merchandising effort for 10 years. Sealed aureole, AirCap, and Instapak atomic number 18 registered trademarks of Sealed Air Corporation. solar Pool Blanket is a TM trademark of the same corporation. Robert J. Dolan, associate professor, prepared this case as the soil for class discussion rather than to illust regularise either effective or ineffective handling of an administrative situation. Certain nonpublic data dumbfound been disguised. Copyright 1982 by the President and Fellows of Harvard College. To order copies or request authorization to reproduce materials, abuse 1-800-545-7685 or write Harvard Business School Publishing, Boston, MA 02163.No part of this publication may be reproduced, stored in a convalescence system, used in a spreadsheet, or transmitted in any form or by any meanselectronic, mechanical, photocopying, recording, or otherwisewithout the permission of Harvard Business School. 1 This document is veritable for use just by Md. Saquib Hussain in merchandise ? nal taught by Suresh Ramanathan from October 2012 to October 2012. For the unshared use of M. HUSSAIN 582-103 Sealed Air Corporation Between 1971 and 1980 Sealed Air and Astro promotional material of Hawthorne, juvenile Jersey, were the still air bubble packaging material producers in the join States.Sealed Air licensed Astro to use Sealed Airs secure technology. Astro produced deuce types of bubbles a barrier bubble similar to AirCap,2 and an un surface bubble. Its gross gross gross gross revenue were split near evenly between the two. In 1980 Astros t otal U. S. sales were nigh $10. 5 million, compared with $25. 35 million in U. S. sales for AirCap cushioning. Sealed Airs market education had made customers sensitive of the advantages of coated bubbles consequently, uncoated bubbles had never get hold ofd greater than a 15% one long horse bill share of the U.S. market before 1980. In July 1981 uncoated bubble trading operations were being set up in Ohio, California, and untried York. GAFCEL, which served the metropolitan New York market, was the only competitor yet to achieve significant sales volume. 2 GAFCEL salespeopleone full clipping, the other approximately half timehad reached a $1 million annual sales rate. Several of AirCaps distributers had dumbfoundn on the GAFCEL line. Hauser was preparing to recommend Sealed Airs reaction to these slightly unanticipated competitors.The unanimous could produce an uncoated bubble as stingily as GAFCEL indoors a month with no study uppercase investment it could ru n on machines used for a nonher Sealed Air product. If Hauser were to recommend that the historic champion of barrier-coating offer an uncoated bubble, he would bemuse to secure timing, the merchandising program for the sassy 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 Sell against Uncoated cardhouses. The safety-related(p) Packaging Market The three major use segments of the safety-related packaging market were 1. Positioning, blocking, and bracing These protective materials had to secure large, heavy, usually semirugged items in a container. Typical applications included shipment of motors and computer peripherals. 2. pliant wraps These materials came under less pressure per squarely foot. Applications included glassware, small spare parts, and light medical checkup instruments. 3. Void consider These materials were added to prevent movement during exaltation when an item and its protective wrap (if any) did non fill its carton.The positioning, blocking, and bracing market was eccentric because of the heavier weights of items shipped. Flexible wrap and void fill were sometimes hard to separate because it was comfortable to use the same product for both black markets. The key distinction was that clean fills (for instance, polystyrene beads) dominated the void fill market but provided no cushioning protection and, hence, did not qualify as flexible wrap. Until 1970 well-nigh materials used for protective packaging were produced generally for other purposes. Heavy, root-establish products had dominated the market. Sealed Air was one of the first Astros barrier bubble and the AirCap bubble differed in both manufacturing process and coating material. Astro used nylon rather than saran. The basic mentation of reinforcing the polyethylene bubbles to improve a ir retention was, however, the same. 2 This document is authorised for use only by Md. Saquib Hussain in selling ? nal taught by Suresh Ramanathan from October 2012 to October 2012. For the goop use of M. HUSSAIN Sealed Air Corporation 582-103 companies to approach the market with a customer orientation, i. e. , it began product development with an assessment of packagers postulate.Since then a variety of products limitedally designed for protective packaging had appeared. Sealed Air served these markets with two products 1. Instapak froth-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 state chemicals were pumped into a shipping container. The chemicals rapidly expanded 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 worldwi de sales of $34. 3 million) primarily served the flexible wrap and void fill markets. In addition to coated and uncoated polyethylene air bubbles, there were two major competitors in these markets typography-based products (cellulose compact, single-face fold up, and indented kraft), and foams (polyurethane, polypropylene, and polyethylene). An excerpt from an AirCap promotional brochure in endanger 2 shows how Sealed Air positioned AirCap as a represent-effective substitute for these competitive products and well-situated fills.The brochure first pointed out the bell savings from AirCap cushioning, then presented results of fag and schoolmaster ponderousness retention examinations to demonstrate AirCaps protective choiceity. record 3 compares products competitive with AirCap cushioning and Exhibit 4 gives their U. S. Iist costs, which represent congener 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 easily demonstrable oecumenic 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 old newspapers. Users were a vary lot. Some bought on a scientific price/performance primer coat. They silent 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 wit, as some packaging materials suppliers put it.Price per square foot was their first consideration, delivery their second. As one Sealed Air executive commented, To these people, cushioning curves are like accounting numbers. They think you can make them differentiate anything you want. There were no systematically collected data on the g et process or the extent to which price dominated performance in the purchase decision. Based on his experience as a dominion sales manager and now product manager, Hauser guessed that a packaging engineer influenced about 40% of the material purchase decisions. 3 This document is clear 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 down 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 were Year 1972 1973 1974 1975 1976 Gross sales (in millions) $7. 10. 0 13. 0 12. 8 14. 6 Year 1977 1978 1979 1980 Gross gross sales (in millions) $16. 4 18 . 4 21. 2 25. 3 Despite 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 status in U. S. organizations not accorded them elsewhere. Packaging supplies were viewed as a productive, cost-saving resource.In contrast, recent research 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 company selling a coated product in these countries. sales figures for 1980 were Country England France Germany chalk up ruffle Sales $3,649,000 4,480,000 7,688,000 AirCap Sales $2,488,500 592,200 404,600 3 The firm alike had a manufacturing ease in Canad a and a sales organization in Japan.Sealed Air licensees operated manufacturing facilities in Australia, Mexico, South Africa, and Spain. 4 This document is true 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 display board A Differing stigmas of AirCap soften Bubble Heights SB SC ST SD 1 8 / in. high, used for surface protection when cushioning requirements were minimal. 3/16 in. high, used primarily for wrapping small, intricate items, possibly for larger items if not very fragile. 5 16 / in. igh, used in same kinds of applications as SC club, except with slightly greater cushioning requirements. Also used as a void fill. / in. high, used for large, heavy, or fragile items or as a void fill. 1 2 Plastic impression ponderousnesses Light transaction (110) each forge of consume was 1 mil (1/1,000 of an inch) thick used for light haemorrh oid. 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. superior 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. Later on, Sansetsu, a Japanese firm, began marketing a high-quality uncoated product made 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 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 marketer of un coated bubbles in France. Two major competitors, one with superior production 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 entrant (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 good 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 clans and Sales AirCap cushioning grades differed in bubble bloom and oppressiveness of the plastic scoots. Bubble heights were designated by a letter code, and the plastic fil ms came in quartet onerousnesses (see board A).Sealed Air produced eight different height/thickness combinations (see Table B). Some of the cognise end uses for each grade are shown in Exhibit 7. 5 This document is sure 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 make sense sales JulyDecember 1979 59,128 76,349 5,036 31,912 4,369 44,252 25,202 3,138 249,386 JanuaryJune1980 48,513 81,014 4,426 42,234 3,914 43,624 21,799 1,358 246,882 Note In addition, because SB-110 could not compete in price against foams for many surface protection applicati ons, 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 available 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. set 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 generally followed this list. The price agendum entailed quantity discounts for end users. Thus, distributor moldings varied with the size of the customers individual order. Quantity price was determined by the total square footage of a single order, combining all grades, ordered for shipment at one time to a single destination. ) In some major metropolitan areas, up to 50% of AirCap business was truckload/ machine orders by end users. In this event Sealed Air shipped the material from its plant this instant 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 exploit 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 control the shipping cost of its bulky product, 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 exists and 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. 88Freight $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(prenominal). Consequently, distributors near 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 expected 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 making 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 poke cost and reduce defile in the end users particular situation. Distributors salespeople took orders on AirCap cushioning but did little to demonstrate AirCap use and application to customers.If a distributors salesperson identified a potential 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 aim 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 said they would be nub if the salesperson in their area really allocated 35% to AirCap some claimed the literal 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 Airs salespeople as among the go around trained and most knowledgeable in the packaging industry. Sales force salaries were above average. They were composed of a base salary sum commissions of 2% on net AirCap sales and 1% on net sales of all other products, including Instapak. As an added incentive Sealed Air gave salespeople $75 for each Instapak dispenser placed. 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 mid-seventies Sealed Air invested heavily in developing a selected distributor network. The firm had 370 distributors by 1980.Sealed Air considered 135 of these their first-line distributors because they collectively handled over 80% of its business. 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 tried to be full-line houses resourceful of meeting each customers complete packaging consumesso they carried a broad range of products.A survey 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 indifferent products. GAFCEL, the new regional producer, made a decent product in Hausers estimation he felt that its success to date came more(prenominal) often than not at Astros expense.The New York metropolitan market was ideal for the new producer. It was not custom er- 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 found in previous uncoated testing (see Exhibit 2). In terms of cushioning curves, the l/2 in. GAFCEL bubble was parallel 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 acceleration 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 production process would be similar to that currently used for its Solar Pool Blankets.Thus, the firm could begin manufacture of an uncoated product rapidly in its New Jersey plant. Likely distributor response to a Sealed Air uncoated product was difficult to predict. Some distributors had request 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 standoffishness 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 jolt and vibrat ion 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. spot the grade that best fits your cushioning application Protective Wrap/InterleavingAirCap is an small protective wrap material and ideal for interleaving between similarly make items. It is clean, non-abrasive, easy to use and provides superior surface protection. Lay your product on AirCap stream, fold it over and your product is fully protected Typical protective wrap/interleaving applications include china, glassware, printed circuit boards, and spare parts. Void Fill When a void in a package is not completely filled, the modify product may migrate within the shipp ing 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. Simply stuff AirCap sheeting into the carton, (left) or use an economical paradiddleed 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 pack Rubberized Hair showcase IV Resists Fatigue 50 40 0 Uncoated Bubbles Urethane sparkle Polypropolene scintillate AirCap % Increase in Shock 20 In the expatriate environment packages are subjected to many jolts, bumps, and cokes that can potentially cause damage. To function effectively a cushioning material must retain its faculty to protect over a series of repeated impacts. The pa ssing play of protective ability during repeated impact is termed material fatigue. This graph (left) indicates the increased appal an average procut (0. 25 psi) will receive during a ten put away 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 Each individual AirCap bubble is barriercoated to retain the air. AirCap Vs. corrugated Inserts A distributing firm found that it needed an profligate amount of flowable to prevent product migration. A new AirCap package (left) development a simple criss-cross technique resulted in reduced material, shipping, labor and carton costs. keepsake Carton internal packaging Labor Freight Total Cost Savings w/ AirCap IMMEDIATE THICKNESS LOSS AirCap retains its original thickness upon the immediate application of a load (See Below).Loose Fill software system $ . 73 . 75 . 42 3. 02 $4. 92 AirCap Vs. Loose Fills Material well-tried A m anufacturer 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 termination Retains Original 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 Wadding 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 Load 7% 19% 16% 26% 24% 14% Gradual 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 perfo rmance. First, is the immediate compression of the material.Second, is the additional, more gradual loss of thickness termed creep. Generally excessive thickness loss of a material results in increased material usage in cushioning and dunnage applications. spectre 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 needed 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 center 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 CONVENTIONAL 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. Competitive Product Information Cellulose wa dding (a paper-based product which tries to trap air between piles of sheeting) major(ip) suppliers minute 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 a lot cheaper than AirCap in thin grades will not mark item imprisoned 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) Major suppliers About 800 firms manufacturing in 47 states, including larger paper companies. Advantages/disadvantages angiotensin-converting enzyme face (cardboard with ribs on one side) appreciably cheaper than AirCap on square-foot basis labor cost of using corrugated usually very high myopic cushioning. Polyethylene foam (thin, smooth, rigid sheets of low-density foam) Maj or suppliers talent scout Foam Products, Hyannis, Mass.CelluProducts Co. , Patterson, N. C. flash bulb 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 wrap rigid product means hard to work with tendency to pull off 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 cubic foot basis messy unworthy cushioning. Uncoated bubbles (sheets of small air bubbles made of polyethylene film) Major produc er 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 geezerhood 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 Under heavy loading, nylon barrier holds up better than Sealed Airs saran barrier poor quality control (bubble heights generally 13% less than specified). . 3. 4. 5. 6. 7. 12 This document is authorized for use only by Md. Saquib Hussain i n 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 hit-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) cover 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 Film 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 proportional Cushioning Performance by Grade Engineered To Provide Superior Cushioning The test data on the graph below was developed by the Lansmont Corporation, an independent testing laboratory. The test method used closely simulates echt shipping conditions, and employs the use of an enclosed test block and shock machine.Five goat drops were executed from 24 inches at each static 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 o ver 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 Acceleration (Gs) 200 SCT-120 cl 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) Source 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 linea ment (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 therefrom less than AirCaps and Astros total U. S. sales. Exhibit 7 Grade SB-110AirCap Applications by Grade Package Contents Furnace thermostats Shorthand machines Taco shells inured glass sheets Clocks Wooden picture frames Light fixtures Overhead projector lenses information processing system components Telephone bell ringers Amplifiers Saucepans Two-way radios Exit alarms Mixers Fryers Carbonless paper rolls Oven burners Pharmaceutical bottles Candleholders Recorders Carburetors Lamps gal jugs C omputer terminals Printed circuit boards Foil wallpaper Blood coagulation timers lead glass windows Custom motorcycle seats Motor 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 March 1980 Sq. Ft. per Order per Single Destination 1,000 or more 5,000 10,000 30,000 50,000 Truckload/ car 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/rai lcar 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 $57. 25 Item (thickness in inches) A-100 (3/32) SB-110 (1/8) SC-120 (3/16) SC-240 (3/16 ) ST-120 (5/16) ST-240 (5/16) SD-120 (1/2) SD-240 (1/2) SD-480 (1/2) 16 This document is authorized for use only by Md. Saquib Hussain in marketing ? nal taught by Su resh Ramanathan from October 2012 to October 2012. For the exclusive use of M. HUSSAIN Sealed Air Corporation 582-103Exhibit 9 Selected Financial Data ($ 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 Net sales by class of product Air cellular packaging Foam-in-place packaging new(prenominal) 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 use only by Md. Saquib Hussain in marketing ? nal taught by Suresh Ramanathan from October 2012 to October 2012 .