B2b Vs B2c

Milchem LTD - Polyfibron Offset Press Blanket

Executive Summary

The objective of this paper is to analyse Milchem Ltd Company and make recommendations on the Marketing Strategy and on the introductory price for the Polyfibron Offset Printing Blanket product in the US Market. After years of research and development, with some previous doubts for launching a new product, John Keon, Marketing Manager of Milchem, has now the task for developing the marketing strategy for the new Polyfibron Off Set Printing Press Blanket.

The oligopoly US blanket market, where 5 competitors share 95% of the total market, is estimated at 2MM square yards that represent US$ 120 MM of revenues and 3,600 current customers. Milchem has developed a new product after years of research. This has been a huge effort with challenging decisions. Years before, the company stopped some developments because of high manufacturing costs, an issue that Milchem considers very carefully.

In a mature market where costs of production are higher than 80% of sales, Milchem top management has already decided to launch the product. Mr Keon has to consider the concentration of the printing US Market that is located mainly in the Northeast of the country and California. In fact, the marketing strategy needs to have geographical steps to be able to cover the national printing blanket market. In addition, pricing, in a market with standard products, is a key issue that Mr Keon is considering.

Therefore, I am a specialist consultant who has been hired by Mr Keon, in order to give specific recommendations, which are the purpose of this paper. I will analyse the new polyfibron offset press blanket produced by the company Milchem Ltd., make recommendations on its future marketing strategy, including the expected price strategy that Milchem should use in this product.

Milchem LTD - Polyfibron Offset Press Blanket

Company Overview

Milchem Ltd., US chemical manufacturing company located in Cambridge Massachusetts, is a customer-oriented enterprise that has been in the textile printing blanket market for the last 20 years. The company, that has 1,300 employees, invests on research and considers the receiving feedback from current and prospects customers in order to improve its existing products.

In order to understand the values and main objectives of the company, although there is no much information about it, I am looking at its past performance. I would say that it has a conservative approach for introducing new products. In fact, even tough Milchem is aware of the possibility of introducing new products in the printing blanket market, it had not decided before whether to launch a product that could be capable of increasing printing quality and efficiency, key elements in the cost of printer and lithographer customers. The reasons are the awareness of cost reduction and having a conservative management.

At this time, the company is looking for a star product in the blanket market. In order to achieve so, it has invested in research and development for the last ten years, with a two-year interruption, and it is ready for launching a product that will compete in a the mature US blanket market.

Product Overview

The offset blanket is a critical press component and has many characteristics, being the main ones :

- Shock absorber

- Ink and water receptive without mixing the two, and without swelling

- Transferring the ink both as solids and dots, clean and sharp without streaking

- Impression cylinder when printing blanket-to-blanket

The current blanket product has an expected life of 500K to 1MM impressions, yet an expected minimum of 100K. This considerable difference is because of the fragility of the product when having embosses and smashes.

Polyfibron is a new technique made by combining polymers and fibres. The result is a blanket that reduces embossing and extents blanket life. I would like to quote this important issue, "By far the most important is the blanket... Of particular importance is never to mix blankets from different manufacturers..."

A new characteristic is that the product is compounded by two parts: the face and the back. These two parts are thinner than conventional blankets, and the back lasts as much as five faces. As a result, the product is both taut carcass (back) and a relaxed face, and is able to be more efficient and to not develop depressed or low spots.

The graph below shows the differences between Conventional (first draft) and Compressible blankets, which is the new development done by Milchem:

Compressible Layer (draw at bottom):

Advantages:

Eliminates bulges

Increases smash resistance

Increases high packing level

With these two different parts, the outcome product has less image distortion and greater resiliency. In this case, if the face part (softer) has some damage, it is possible to change it and maintain the backing part in use.

Analysis

EXTERNAL ANALYSIS

Customer Definition

The potential customers for the polyfibron offset press blanket are operations managers, superintendents, and foremen of printers and magazine companies in the US. Potential customers have not purchased the new product before but they know about the characteristics that it needs to have. These characteristics are basically the ones that would increase efficiency of the off set printing and reduce manufacturing printer costs.

There is a key point in the information provided that says, "although lithographers were generally satisfied with the quality and performance of existing blankets, there were indications that a number of product characteristics might be improved". In sum, the main positive reaction for the customer for a new problem is to give him a product that can improve the quality and efficiency of