Pintura Corporation: The Lena Launch Decision

(Prof. Bipul Kumar)

Submitted by: Group 9

A) Identification of the problem:

Maria Lopez has to build a business case for “Lena” (a high-performance, environmentally
friendly. Powder-based coating for hardwoods.

B) Analysis of the situation and the Problem:

Pintura develops, manufactures and distributes high-quality paint, coatings and related
products to industrial, commercial, professional, and retail customers. They have an annual
revenue of $4 billion, 20 brands and 600 items in its product portfolio. Pintura is organised
into 3 major divisions which are
1. The Industrial Finishes Group (IFG) – 25% of Pintura’s sales
2. The Consumer Product Group (CPG) – 35% of Pintura’s sales
3. Pintura International (PI) – 40% of Pintura’s sales.
In US, the market for paints and coatings is valued at $27 billion annually and the largest 50
companies accounts for 80% of this amount and the demand is driven mainly by the
construction and manufacturing sectors.
Recently, IFG has tested and developed Lena which is a new powder-based coating
specifically for woods. The benefits of Lena would be marketed as follows:
1. Lena has superior resistance to most chemicals, moisture, heat and minor scratches than
liquid-based coatings. Therefore, its increased durability translates into fewer product
defects.
2. Lena provides even finish on shaped and contoured substrates.
3. Lena does not emit VOCs
4. Manufactures may recycle up to 98% of the overspray for reuse. It also uses more energy-
efficient heating equipment.
5. Lena provides a thicker coating without running and can vary in textures and colours.

The problem ahead of the Lopez’s team is that they have to formulate marketing strategy
which includes STP, product branding, price, channels of distribution and communications.

1. STP – Currently, customer segments are furniture (30%0, flooring (25%0, cabinetry
(20%), and other wood products (25%). Lopez estimated that 20% of IFG’s total sales to
flooring and cabinetry customers would switch to power based coatings, 60% and 40% of
furniture and other wood products would switch from water-based and solvent-based
coatings respectively to powder-based coatings.
2. Branding – It is being considered that Lena would cannibalize the existing products sales
and that switching from solvent-based to water-based coatings is a safer approach. But,
Lopez has estimated a 5% increase in sales to furniture and other wood products and a 1%
increase in sales to flooring and cabinetry customers for next 5 years annually.
3. Price – Solvent-based coating’s price is $28/unit and COGS of $14.28. Water-based
coating’s price is $34/unit and COGS of $21.08. Lopez has decided to price Lena at
$38/unit and COGS of $22.04. The pricing has to take into account the customers who
 have UV curing equipment and who do not. But, it is being believed that reduced energy
and pollution would pay for the extra investments within a few months.
4. Channels of distribution – It is being proposed that Lena would a profitable product
therefore could be sold directly to manufacturers through the in-house sales force and
indirectly through a network of independent distributors. Distributors account for 51% of
all sales from wood coatings, with flooring (65%0 and cabinetry customers (70%) but
they charged 21% selling and fulfilment fee for IFG’s products.
5. Communications – The team has forecasted $2 million for first 12 months and $1
million for the next 12 months. The overall goal is to meet or exceed the sales forecasts
by the end of the year. The allocations are as follows Sales force ($500,000), Distributor
($700,000), Advertising ($600,000), Publicity ($500,000) and Electronic Media
($700,000).