Seneca Paper Company

Section A, Group 2
-Bipin Bansal (15093)
-Devanshu Yadav (15112)
-Hemanth G. (15148)
-Navneet Sadani (15215)
-Rohan Jain (15283)
-S. Sandeep Reddy (15293)

Current Situation
Seneca had standard & super standard grades of gummed sealing tapes

till April, 1957

Standard grade accounted for 80% of market sales
Seneca introduced Duratape, third grade tape in May, 1957
Duratapes share increased to 20% within 7 months of introduction
Sales of Super Standard, Standard and third grade to 20%, 60% and 20%

respectively
Seneca announced price increases across all three grades on 10

December, 1957

Competition Analysis
East Coast Competition
Phoenix & Compton sold 75% of their products in this
area
Phoenix has the strongest jobber organization
Comptons strategy of promoting its unbranded products
(90% by volume) was demotivating its jobbers
Seneca derives only 20 30% of its sales from east coast

Mid Western Competition

Seneca remains strong in the Midwest with 70-80% of its
sales in this area
Major competitors are Fletcher corporation and three
medium-size producers (~5%)

Market Characteristics
Highly fragmented market
Low entry barrier
Heavy competition
Market share of Phoenix is 15% to 20%
Jobbers are sensitive to brand promotion and advertising
Most of the sales occur through jobbers
Sales of third-grade tape remains fixed at 20% of total sales
after huge growth

Pricing Moves
Year
1955
Nov 1955

Pricing Moves
Small eastern producers cut prices by using cheaper inputs
Phoenix reduced prices from $6.6 to $6.3 for standard grade; market
followed; differential pricing maintained

March 1956

Small producers continued to cut price

Phoenix reduced prices from $6.3 to $6.1 for standard grade; market
followed again; differential pricing maintained

Markets comparatively stable; small mid-western producer continued

always selling x cents below market policy

May 1957

Seneca introduced Duratape at $5.8; small producers sold unbranded

tape at $5.7; others followed introducing third grade tape at $5.8

Pricing Moves (Contd.)

Year

Pricing Moves

10 Dec 1957

Seneca announced new base prices with 30 day protection period for
jobbers; only a small mid-western producer followed

Jan 1958
14 Jan 1948

Protection period extended till February 7, 1958

Phoenix, Fletcher and a few medium and small eastern producers
followed Senecas new prices

20 Jan 1948

Compton repositioned Atlas as third grade ($6.1) and introduced

Guardian as a standard tape ($6.4)

Three medium sized mid-western producers withdrew third grade

tapes and left the prices unchanged (Standard: $6.1 and Super
standard: $6.4)

Current Prices of competitors

Compton

Phoenix and
Fletcher
The three
firms

Third Grade
(per bundle)

Standard
(per bundle)

Super
standard
(per bundle)

Atlas
$6.10

Guardian
$6.40

$6.10

$6.40

$6.85

$6.10

$6.55

Future Pricing Moves

Industry is not financially attractive at reduced prices
Phoenix and Fletcher will stick to the increased prices
Compton will aggressively advertise to show their
superiority of third-grade tape over competitors
Other Mid-western competitors will eventually follow the
new prices owing to low margins

Senecas Future Strategy

Continue with the announced pricing decision

Focus on advertising- Phoenix has become well known purely

because of advertising. Therefore the value of advertising in this
segment cannot be underestimated

Offer incentives to jobbers to sell aggressively

Innovate in the product line- Seneca must also innovate and come
out with other superior and customized products to increase its
profits and deliver customer needs

Thank You!