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Pintura Corporation The Lena Launch Decision

Solution Id Length Case Author Case Publisher
2672 2734 Words (11 Pages) John A. Quelch, Katherine B. Hartman Harvard Business School : 917523
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The article talks about Pintura Corporation, which is a high-quality paint and coatings company that is looking to launch a new product called Lena. The basic need for Lena came up when the government imposed tight regulations on coating companies for environmental protection purposes, as it is known that paints and coatings have harmful materials such as lead which can be harmful to the air. So to reduce such pollutants, the government launched regulations. For this reason, Pintura came out with Lena, a powder-based wood coating that would be environmentally friendlier than solvent and liquid-based coatings that have been used and known by the market. It is a completely new product for the market, due to which careful considerations are being taken by the company through the use of the stage-gate model. The article talks about Pintura and how it has 3 divisions, and how it is planning strategies to launch Lena.

Following questions are answered in this case study solution:

  1. What is IFG’s current position in the market for general industrial coatings (GIC)? What is IFG’s current position in the market for wood coatings?

  2. What are IFG’s current objectives and strategies in these markets?

  3. Using the sales and product adoption data provided, estimate the annual sales of powder-based coatings by customer group. (Assume Lopez’s estimates for the percentage of customers who will switch to powder-based coatings are correct.) Are your estimates favorable to the product introduction?

  4. Using the estimated growth rates for IFG wood coatings by customer group, calculate a five-year sales estimate per customer group based on the expected annual growth rate and expected growth in market share. Are your forecasts favorable to the product introduction?

  5. Examine the cannibalization potential of Lena to IFG’s existing product lines. Using the contribution data provided and your estimates of powder-based coating sales by customer group (from Question 3), estimate how contributions might be affected if IFG’s existing customers switched coatings. What is your assessment of the product potential given cannibalization expectations?

  6. Consider Lena’s strategic role in IFG’s product line using your cannibalization estimates, the product/market fit, and overall product/customer fit. What is your overall assessment?

  7. What would your opinion be of the proposed introduction if you were: a. An executive from another division of Pintura? b. An independent distributor? c. An IFG salesperson?

  8. If IFG introduces Lena, what marketing program should it use? Be specific and include all the elements of the marketing mix. 4Ps and target customer segments and/or emphasis.

  9. What are the economics of your marketing plan? What are the critical assumptions in your economic analysis? Which ones are the most suspect?

  10. Should the review team move Lena forward to the full development stage? Why or why not?

Case Study Questions Answers

1. What is IFG’s current position in the market for general industrial coatings (GIC)? What is IFG’s current position in the market for wood coatings?

For Pintura, IFG is its division that sells paints, coating and similar related products to the domestic and industrial segments of the market. This means that this division sells coatings and paints to households and factories. The general industrial coatings are products used to coat or paint finished goods, and as IFG itself alone contributes to 25% of Pintura’s sales, the current position in the market for these GICs is considered good. As for the wood coatings by IFG, through examining exhibit 2, which compares US and IFG sales by substrate, we see that the US has 40% sales and IFG has 65%, which is 25% higher than the US. As for the IFG percentage of US sales, we see that they are 27.08% which shows that the current market position of IFG's wood coatings is good. Due to this, it is safe to say that IFG products are preferred and known by its customers as the sales show promising responses. As such information is not provided in the article, it would not be possible to say if Pintura is a market challenger or market leader, but with the launch of Lena, it would be safe to say that Pintura would be a market leader in the wood coating product line as no such product has been introduced in the market by any of its competitors.

2. What are IFG’s current objectives and strategies in these markets?

As the environmental regulations are increasing and the government of the US is going towards more strict state and federal regulations on environmental pollutants for coating industries to reduce and remove the use of their toxic chemicals, which will help them reduce the number of air pollutants that are caused by the solvent-based coatings. Due to this reason, IFG has been working towards establishing a powder-based coating for wood materials called Lena. Lena will not just be safer for the environment but also for the customers who are now demanding more and more environmentally safe products as the government regulations are tightening. As per table A shown in the article, we can also see that the liquid-based coatings have reached their maturity stage of the product life cycle, which means that there will not be any increase in their sales and soon, there will be declining demand for them. The same table shows that the powder-based coatings are in their growth stage, and the annual growth for them is 10% which would then be favorable for the company due to liquid-based coatings having declining demands. For this reason, Lena was formulated for which the unique chemical structure was patented as well. The product is not only environmentally friendly but also durable as it resists moisture, minor scratches and heat. Going forward, it is also shaped versatile, so the shape of finished products would not be an issue, as well as it is coating versatile, so the surface of the product is also no issue as the coating will be sprayed on. Lastly, being cost-efficient is also a great objective of the product, especially as it is energy efficient.

3. Using the sales and product adoption data provided, estimate the annual sales of powder-based coatings by customer group. (Assume Lopez's estimates for the percentage of customers who will switch to powder-based coatings are correct.) Are your estimates favorable to the product introduction?

 

Wood Coating Sales

Powder-Based Coating Sales

Furniture

30%

195

54%

105.3

Flooring

25%

162.5

20%

32.5

Cabinetry

20%

130

20%

26

Others

25%

162.5

54%

87.75

Using the estimated percentage assumed by Lopez, who saw that about 20% of the customers that used liquid-based coatings for floorings and cabinetry would switch to powder-based coatings. And as for the furniture and others, categories water-based coatings users will show a 60% switch rate and solvent-based coatings users will have a 40% switch rate toward powder-based coatings. Using these percentages, the above-mentioned percentages were drawn, which were then multiplied by the total revenues for each of the categories of wood coatings through which the forecasted revenues were calculated for powder-based wood coatings. After calculating revenues for each category, the sum of the total sales came out to be 251.55 million. Even though the annual revenue for powder-coating is estimated to be less than water-coating and solvent coatings, which are 308.75 million and 341.25 million, respectively, the estimates do seem favorable as Lena is a completely new product in the market. The estimates made by Lopez were also very conservative, and they may be too less for the market due to the products' environmentally friendly attributes.

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