Case Study Solutions- In a Bind: Peak

Sealing Technologies’ Product Line

Extension Dilemma
1. Describe the company values at PST.
Ans. The mission of the company has been described as providing customers with the best
quality, most innovative products on the market. PST has been able to achieve this through
their leadership in the technological field and constant efforts in R&D. In the future, the
company sees itself as developers of cutting-edge technology in order to provide stronger,
more secure, efficient sealing solutions to their customers.
In addition to all this, the company had a very selective distribution policy, as a result of
which the distributors complied with them and due to their strong relations with the
company, often steered their customers to their company products. It maintained a 40-
person strong sales force that was responsible for selling all their products, including the K2-
Tape. The PST sales force was specially trained and were the most knowledgeable. Their
compensation was above the industry standard. They spent most of their time working with
end users, analysing their problems and giving solutions to cost effective use of their tapes.
PST emphasised on truly understanding customer behaviour and their challenges.
2. What arguments can be made for introducing an economy tape? What might the CEO
think of these arguments?
Ans. With the introduction of Tensile’s BOPP economy product line, a much inferior product
that lacked K2-Tape’s patented adhesive technology and high quality, at a much cheaper
price, K2-Tape was facing a threat. Some members of the executive team at PST
recommended to neutralize this upcoming threat by introducing a down-market product
with lower quality and cheaper rates. The existing tapes produced by the company were
more expensive and were relatively complex for generic uses. This was a market that had
not been tapped into by PST and considering its brand image, could easily become the
market leader.
However, this proposition went against the values of the company which relied heavily on
delivering exceptional quality products and spent heavily on R&D. They wanted to be known
for their quality and compromising on that factor did not seem very appealing to the CEO.
3. What arguments can be made against introducing an economy tape?
Ans. Economy tapes were not recommended by the company for sealing cartons. They were
not the best choice as environmental factors like excessive heat or cold could make the
tapes brittle, lead to shrinkage, decomposition of the adhesives and the general degradation
of sealing properties. This failure could cause heavy loss to the users in terms of missing,
damaged or broken products and lead to customer dissatisfaction. The users often had the
tendency of using economy grade tapes for commercial purposes and posed a threat to the
existing carton sealing tapes, which were sturdier but a little more expensive. Economy
tapes were required in much larger quantity for the purpose and thus was less cost effective
in contrast to using carton sealing tapes.
4. What would be the major issues to overcome if PST were to introduce economy
tape? Propose introductory marketing program suggestions to overcome these problems .
Ans. PST had considered to enter the economy grade tape market earlier, but looking at the
competitive scenario, had ultimately decided not to. However, the entry of Tensile into the
market made them reconsider the situation. Extensive research had already been done, and
the head of manufacturing stated that the Atlanta plant had enough capacity and the
suitable equipment to manufacture the products. The cost of production was also minimal
considering low start-up expenses.
PST could leverage its high experience and use the learning curve to produce economy
grade market at a cheaper rate. Economies of scale could be emphasised on.aq2