1. Background

Milchem, a chemical manufacturing company in Massachusetts, USA has strongly emphasised customer-oriented research during its existence of over twenty years. Fifteen percent of Milchem's 1300 strong work force is involved in research that enables the company to create new products.

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The company strives to provide high quality, longer life textile printing blankets with outstanding printing characteristics. Milchem benefits from a strong technical and marketing background gained from the development, manufacturing and sale of a wide range of polymer-fiber combinations and textile blankets. It was this strong background that lead the company's management to suggest lithographic printing blankets would represent a logical extension of its activities.

Scope: The Polyfibron offset press blanket is Milchem's offering to the Lithographic printing industry. The product has been developed in light of pre-development research conducted by the company that identified improvements to existing blankets desired by the industry. In accordance with Milchems' high standards the product aims to provide the industry with a superior longer lasting product that addresses issues identified with existing products. Milchem having developed product has the following issues:

* Identification of drivers of the market and segment identification for positioning of the Polyfibron blanket.

* Development of a customer target strategy for segments identified.

* A marketing strategy for both the short and long term life of the Polyfibron blanket. The introductory phase is considered as the short-term phase for the purpose of this report. The growth, Maturity and Decline phases will be considered as part of the long-term strategy.

* A pricing strategy for both the short and long term product life of the Polyfibron blanket.

Deliverables: This report contains analysis carried out by Enigma consulting to identify the marketing strategy for Milchem. The report is organized in the following format:

* Analysis of current industry blankets versus Milchem's polyfibron blanket.

* Positioning strategy for the Polyfibron blanket in light of company and macro-environment analysis.

* Discussion of pricing and distribution strategy for the Polyfibron blanket during both the short and long term product life cycle.

* Discussion of mechanisms to monitor the marketing plan for the Polyfibron blanket.

2. Company Objectives

Milchem's management have identified their objectives for the Polyfibron blanket as follows:

* The Polyfibron blanket should become self supporting within two years

* The company should be positioned as the leading manufacturer of offset blankets within 3 to 5 years.

To achieve this objective Milchem need to have:

* An appreciation of the features desired in printing blankets by lithographic printers and the ability of the Polyfibron blanket to provide those features.

* Understand product & pricing strategy with respect to Milchem's position in the market.

* A marketing plan that will outline how to achieve objectives based on analysis carried out.

Specifically the marketing plan outlines short, medium and long term plans for the Milchem Polyfibron blanket. The short term plan focuses on activities required for launch and activities that will occur up to the next three years; these are market identification and strategic positioning for the blanket. The medium term plan focuses on strategies required during the maturity phase of the product, segment growth and repositioning over the next 4 years. The long-term strategy deals with the decline phase of the product.

Specifically from the facts presented through various exhibits from Milchem, this report compiled by Enigma consulting presents the dynamics of the lithographic printing sector and distils the findings to identify and develop pricing and positioning strategies for the Polyfibron blanket.

3. Pre-Market Development Research:

Milchem commenced research into the offset printing blanket market ten years ago. This preliminary research prior to development of the Polyfibron blanket identified the following:

* The lithographic industry was generally content with quality and performance of existing blankets.

* Potential improvement was desired in the surface of the printing blanket; smooth surfaces led to clean and

clear images, whilst irregular surfaces affected clarity of the image.

* Company interviews identified a blanket with a tolerance of +/- 0.005 without sacrifice of other features could potentially capture the whole market.

* The rubber coating of exiting blankets (Fig.1) resulted in it being difficult to retain smoothness, as rubber is incompressible. This outer layer was squeezed about 0.002 inches between the plate cylinder and offset cylinder, resulting in a slight bulge from displacement of the rubber layer. The displacement resulted in a distortion in the image being transferred and thereby reduced clarity of the image.

* Embossing - A swelling of the rubber layer caused by absorption of oils and varnish from ink resulting in oxidation of the rubber layer and reduced the expected normal blanket life of 500,000 to 1,000,000 impressions.

* Printers commonly alternated two blankets to minimize embossing and increase the life of blankets. This work around utilized by lithographic printers increased down time as blankets had to be changed frequently.

* Lithographers were also troubled by "smashes", the passing through of foreign matter (paper clips, wood chips, staples & crumbled sheets of paper) through the press resulting in a depression of a portion of the blanket surface. Smashes either significantly diminished life of a blanket or in severe cases resulted in the need of replacement of blankets and caused a down time.

Milchems research prior to development of the Polyfibron blanket concluded that a new product which could minimize smashes, embossing and displacement of the outer rubber layer of current industry blankets whilst increasing surface tolerance to +/- 0.005 without significant sacrifice of other features would be ideal for market entry.

4. The Polyfibron Blanket

Milchem research concluded that the primary reason for blanket failure was the development of depressed spots on existing printing blankets, caused by foreign objects passing through the press. These spots developed on the backing fabric and not the rubber surface.

Driven by the managements' desire to develop a new improved blanket Milchem scientists worked to produce what they believed to be a superior quality blanket.

The main advantage of the developed blanket over current offering was that the synthetic rubber coating face, cemented fabric and rubber impregnated fibres body and pressure sensitive adhesive core were separate entities. The backing, about half the thickness of standard blankets, could be mounted in the normal manner on to an offset cylinder; the face could then be rolled on to the backing under pressure of printing plates. Adhesive was used for binding, therefore enabling the face to be changed by peeling off the backing and replacing it. Importantly the backing of the Polyfibron blanket was developed to last 5 times longer then backing currently used in printing blankets. The advantages offered by Milchem's Polyfibron blanket are therefore:

* Being white in colour the Polyfibron blanket allowed more efficient checking of proofs by printers.

* The Polyfibron blanket could be used for various types of paper and ink, unlike conventional blankets that required printers to use different blankets.

* Minor smashes normally resultant from printing operations could be withstood by the blanket.

* The blanket resisted oil absorption and embossing, therefore it did not require resting. This eliminated the need for alternating printing blankets and the down time associated with the process.

* The body underneath the rubber surface was compressible and hence offered resistance to displacement, leading to less image distortion and wear on image plates.

Milchem's developed Polyfibron blanket tackled displacement, smashing and embossing issues lithographic printers faced with conventional blankets. In addition the Polyfibron blanket provided ability to use different papers and inks and allowed better checking of proofs.

5. Introduction Phase Strategy

5.1 Segmentation

To arrive at their overall Market positioning Milchem need to cater for particular market segments. Milchem's Polyfibron blanket cannot appeal to all buyers in the market place. The lithographic market is widely spread out and varied in their needs and buying practices. Rather then attempt to compete in an entire market against superior competitors, Milchem must identify parts of the market it can best serve profitably.1

Milchem solicited 30 companies to market their product, of these companies blankets were sold to 29 and 60 % of printers gave repeat orders. The 60% repeat order signifies that of the companies targeted, 60% found a usage for the new product. Milchem need to investigate why the remaining 40% did not place repeat orders; if research into this matter indicates these 40% of companies will be using the blanket for a period over 2 months and have hence not had a need to place replace orders Milchem can segment the market based on usage. However if the lack of repeat orders is owed to an issue with the product Milchem need to be aware of the issues and should address them to capture a greater market share. Issues the companies may be facing could include:

* Lack of technical ability to set up the new blankets- Although Milchem did make themselves available on call, perhaps training sessions for the printers could prove more useful.

* Companies may not wish to disturb their current settings and risk their current customer jobs. These customers may need to be convinced of the benefits of the blanket through further promotions, demonstrations and publicity of feed back from satisfied printers in the industry.

The 60% of companies that have placed a repeat order are likely to be companies that have faced issues with smashes or to whom better printing quality is a desirable commodity for their business. This would imply Milchem can segment the market based on consumers looking for quality and those looking for cost savings, as a consequence of reduced smashes. Another group of customers, heavy users of blankets, will be attracted to the ease of replacement of the face offered by the Polyfibron blanket to customers; downtime will be a crucial issue to such consumers. An issue that needs mentioning here is that Milchem carried out sales at one backing with two faces, this strategy failed to highlight to consumers the benefit of one backing lasting through five faces, which is one of the Polyfibron blanket's key strengths. Hence in future promotions Milchem need to market one backing with five faces, to ensure the benefit is apparent to consumers. Finally we also note that of the 30 companies Milchem targeted, 29 purchased the product, this confirms that Milchem's chosen market was correct and that these companies ,with greater then two presses, should be targeted.

Milchem's customer targeting is correct; however Milchem need to sell 5 faces with every backing to ensure customers are made fully aware of the Polyfibron blankets' strengths and need to identify why 40% of customers did not place a replace repeat order in two months.