Can Bulk Products be Segmented? : A Case Study of AVFORM™L50

University essay from Karlstads universitet/Fakulteten för ekonomi, kommunikation och IT

Author: Tomas Lännhult; [2008]

Keywords: ;


Executive Summary and Recommendations

The research this thesis is based on was done during 1995. As this is a considerable time ago plenty of changes will have taken place. This is not considered in this thesis, which must be read from that perspective.

The US market for anti-icing/de-icing chemicals has a yearly demand of approximately 8,500 US tons solids and 3,330,000 gallons liquid in 1994.

The geographical locations of airports that are using large volumes are on the American east coast and around the Great Lakes. The largest single using airport is O'Hare in Chicago, IL. The easiest way to segment the anti-icing/de-icing chemicals is geographically. During the research I established that by far the main usage is taken place at the airports identified in the area described above.

The buyers on the market for anti-icing/de-icing products are focused on low prices and reliable, fast deliveries.

There is a trend for airports switching from urea and glycol to more environmental friendly anti-icing/de-icing chemicals, mostly to liquid potassium acetate-based ones. This trend is expected to continue for a long time as environment-friendly solutions gets more and more in the public eye. The most commonly used liquid anti-icing/de-icing chemicals are still glycol based.

When O'Hare Airport switches to the potassium acetate-based liquid E 36 next year this will become the most commonly used anti-icing/de-icing che­mical. E 36 is sold and distributed by Ashland Chemicals. The manu­facturer of E36 is Cryotech. When the O’Hare switch has taken place, Ashland will become the market leader in volume sold as well as revenue. Ashland's position does not appear to be strong enough to significantly block the market entry of AVI­FORM™L50.

Anti-icing/de-icing products are purchased through a formal bidding process, arranged through the airports Purchasing Department or the owners' (cities and sometimes states) Purchasing Department.

The most influencial people in the buying centre for anti-icing/de-icing are end-users and the individual that set the specifications. Staff from Purchasing Departments are involved in the buying of anti-icing/de-icing che­micals as well and can in some cases have a large input in to which products are purchased. AVIFORM™L50 must be sold face-to-face by sales representatives.

It is important that Hydro Agri North America, Inc (HANA) immediately obtains product approval from the US authorities if they want to start selling AVIFORM™L50 during the year 1996. The first bidding process starts in May and the last one in September.

To be successful in the market place it is necessary to target the right segment. I recommend that HANA targets the segment with high volume using airports which are keen to use products that minimise the environmental impact.

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