1) What is Loctite's distribution strategy? What are the different distribution channels which are used by Loctite?
Loctite's distribution strategy is to reach a worldwide sale capability in the chemical adhesives industry. Loctite wants to offer a full range of sealant and adhesive products which meet the different needs of its customers. The company provides a great support to distributors, training the distributor's salespeople, demonstrating new products in seminars, and explaining cases where the product has been used. The different distribution channels are through independent distributors, representative offices, exports agents, joint ventures, acquisitions of others distributors and subsidiaries.
2) How does Loctite's channel strategy differ between the domestic North American market and international markets?
In North America, Loctite sells approximately through 1,600 outlets across all over the country. Distributors ranged from small outlets to Loctite's biggest customers. Loctite focused in selective distribution that is the reason for not being represented in most of the 50,000 potential outlets.
The selective distribution allows a superior level of service for its customers, adding more value to the product. Loctite always looked for two or three distributors representing the same market, so its customers had the choice of a different supplier. Distributor had a attractive return, which is between 30% to 35% of margin. The industrial distributors were structured into 12 regions.
The international market strategy was in some cases made by shipments under licensing agreements, e.g. in Japan. All products sales were made by overseas sales before the constructions of manufacturing plants. Some acquisitions and joint ventures helped to achieve a faster international expansion. Loctite acquired equity interests in its distributors around Europe. Loctite's strategy was to penetrate in a country market with a relationship with a distributor, and increasing stake in this market, and eventually getting the business ownership.