4. Expiration of CORNING WARE®’s Patent is a Rare
Opportunity, But Loaded with Risk
• After 17 years, Corning Glass Works’
CORNING WARE® glass-ceramic cookware
patent is expiring
• We have seen a 40% decrease in our
EPS over the last six years
Situation Preview Analysis Alternatives Recommendation
• Industry trends indicate that there is an opportunity for
a CORNING WARE® competitor
- There is a high probability that we will not be the only one to
enter the market
• Corning Glass Works has signaled that they are ready to
defend its position
5. Financials Point to the Importance
of the Opportunity
Situation Preview Analysis Alternatives Recommendation
CORNING WARE®
Estimated Sales in Millions
ROE & EPS
0.0
10.0
20.0
30.0
40.0
50.0
60.0
1969 1970 1971 1972 1973 1974
CORNING WARE® Estimated Sales (in millions)
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
1969 1970 1971 1972 1973 1974
Return on Equity EPS
6. Corning Glass Works Can Defend Against
Attacks on Multiple Fronts
Situation Preview Analysis Alternatives Recommendation
7. • Total sales: $1,051M
• Strong brand equity and loyalty
• Popular with retailers; CORNING
WARE® has reputation of “selling
itself”
• Sales promotion and advertising:
$26.25M
• Experience curve: 10-20% lower
costs
Corning Glass Works
Corning Glass Works Dominates on Most Key
Success Factors
Situation Preview Analysis Alternatives Recommendation
• Total sales: $510M
• Unknown brand
• Direct distribution: Less retailer
flexibility
• Sales promotion and advertising:
$7.65M
Wilmington Corporation
8. Not Everyone Can Succeed in a
Crowded Marketplace
CORNING
WARE®
Situation Preview Analysis Alternatives Recommendation
4th
Entrant
3rd
Entrant
2nd
Entrant
1st
Entrant
9. We Missed this Chance 17 Years Ago and are
Still Suffering the Consequences
• Speed is key in order
to gain market share
and avoid
overcapacity
• Market share has
been flat since 1961
Situation Preview Analysis Alternatives Recommendation
1974 Market Share:
Heat-Resistant Glass Bakeware
58%
18%
13%
8%
3%
PYREX® American Glass
Ajay Corporation Wilmington
Others
11. A Successful Strategy Has a High Likelihood of
Success, Limited Downside Risk and Strong ROI
• Likelihood NPV is positive in five
years70%
• Minimum Average NPV$10M
• Certainty NPV > Capital Expenditure90%
Situation Preview Analysis Alternatives Recommendation
12. Our Strategy is Built on Four
Key Strategic Factors
Situation Preview Analysis Alternatives Recommendation
Conflict
Avoidance
Speed
Decisively
Allocate
Resources
Opposition
Principle
Fast-acting
strategies
dominate
Attack only
those you
can beatMust
identify the
right focus to
win
Use
strengths
against them
Stealth
Entry
Pursue Market Share that
Corning does not own
Recommendation
13. Tactics Must Focus on Appealing to
Targeted Segment
Situation Preview Analysis Alternatives Recommendation
Round
solid colorsProduct
Place
Promotion
Price
Supermarkets and
discount stores using
direct distribution
Signal market entry.
Message: “All-purpose
cookware for less”
20% discount off
CORNING WARE®
retail price$$$ $
15. Strategic Thought Process
Environment
Competitive
capabilities and
resources
Internal capabilities
and resources
Opportunities and
threats
Strengths and
weaknesses
Strategy options
Objectives Strategic principles
Intelligence
Analysis
Alternative Generation
Evaluation
Situation Preview Analysis Alternatives Recommendation
16. One dominant player
Low switching costs
Industry Rivalry:
Moderate
Factors Driving the Glass-Ceramic Industry
Point to Challenges
Situation Preview Analysis Alternatives Recommendation
Patent expiration
opens barriers to
entry
High start-up costs
Potential Entrants:
Moderate
PYREX®
Stoneware
Metal Cookware
Substitutes:
Moderate
Buyer Power: High
Distributors are loyal and only carry two to three brands
Supplier Power: Low
Inputs (raw materials & freight) are 33% of total costs
17. Understanding Market Size is a Component
of Determining the Right Strategy
1974
Total Revenues:
$1,051M
Consumer Products:
$235M
Housewares:
$117.5M
CORNING
WARE®:
$51.7M
US Sales:
$35.1
On Average:
CORNING WARE®
customers are
spending $42
(the equivalent of
$200 Today)
Personal
Use Buyers:
415k
Marriage and
Gift Buyers based
on income
distribution
1.1M
Potential Marriage & Gift
Buyers:
3.65M
US Population in 1974:
214M
Top Down Bottom Up
Total Current
Customers:
1.54M
Situation Preview Analysis Alternatives Recommendation
18. CORNING WARE® Sales Driven
Predominantly by Higher Income Segments
$0-$25K
28%
$25-$50k
27%
$50-75k
18%
$75-100k
11%
100k+
16%
$0-$25K
3%
$25-$50k
10%
$50-75k
16%
$75-100k
32%
100k+
39%
Situation Preview Analysis Alternatives Recommendation
1974 US Population
Income Distribution
CORNING WARE® Customer
Income Distribution
Situation Preview Analysis Alternatives Recommendation
19. Customer Needs are Changing
• Rise in Convenience Cooking
– Technology: Microwave Sales up 25%
• “Julia Child Influence”
– 45M Custom Meals Prepared Daily
• New Product Development
– Focus on Fashion: Color and Design
Situation Preview Analysis Alternatives Recommendation
20. The Race is on to Meet
Changing Consumer Preferences and New
Customer Needs
CORNING
WARE®
Metal Ware Stoneware Heat Resistant
Glass
• High-quality
• Use: Multi-
purpose-oven,
stove
microwave
• Expensive
• Mixed quality
• Use: Moving into
“cook-to-serve”
market
• Not
microwaveable
• Moderate to very
expensive
• Low-quality
• Use: Multi-
purpose:
“freezer-to-
oven-to-table”
• Inexpensive
• Low-quality
• Use: Not safe
for range top
cooking
• Inexpensive
21. Not All Products Equally Positioned to Meet
Changing Preferences
0
0.005
0.01
0.015
0.02
0.025
0.03
0.035
0.04
0 1 2 3 4 5 6 7 8 9 10
RelativeSalesinUnits
Time
Cook & Bakeware Industry Metal
Heat Resistant Glass Ceramic Microwave Sales
Market Growth
Current % of Sales in Cook
and Bakeware Industry
Situation Preview Analysis Alternatives Recommendation
42%
7%
21%
30%
Metal Stoneware
Heat-resistant Others
22. Others Will to Try to Capitalize on the
Patent Expiration
LowHigh 3x
Low
High
.3x .22x .14x .05x
American Glass
Pyrex®
Ajay
Wilmington
Others
GrowthRate
Relative Market Share
Sector
Growth
LowHigh
Low
High
GrowthRate
Relative Market Share
Sector
Growth
1x
Situation Preview Analysis Alternatives Recommendation
CORNING
WARE®
Heat-Resistant Glass
Bakeware
Heat-Resistant Glass-Ceramic
Cook and Bakeware
23. Current
Market
One
Entrant:
22.5%
Required
Growth
Two Entrants:
45% Required
Growth
Three Entrants:
67.5% Required
Growth
There is Not Enough Room for
Everyone in the Market
Assumes 75% Production Capacity of Corning
from New Entrants
Situation Preview Analysis Alternatives Recommendation
Market Capacity: 1Market Capacity: 1.75Market Capacity: 2.50Market Capacity: 3.25
24. The Primary Battle Will be Over
Who Wins Shelf Space
• Corning has high degree of
wholesaler loyalty
• Stores only carry two to three
lines
• Retailers do not want to carry
inventory; they want
products that fly off their
shelves
• A price discount may provide
incentive to retailers to stock
another brand
Situation Preview Analysis Alternatives Recommendation
26. The Eight Sources of Competitive Advantage
Superior
technology
Superior inputs
Superior
operations
Superior offerings
Superior access
Superior customers
Superior segments
Management
Processes & Info
Situation Preview Analysis Alternatives Recommendation
27. CORNING WARE®’s Strengths Are
Diverse and Deep
Economies of
scale
Pressed glass-
ceramic
cookware
patent
Quality Product
Two-tier distribution, loyal
wholesalers
Department stores and national
chains
White collar = disposable income
Direct labor, packaging and cover
Management
Processes & Info
Situation Preview Analysis Alternatives Recommendation
29. CORNING WARE® is a Star; PYREX® Gives
Corning Cash to Defend
?
Cow
$$PYREX®
CORNING
WARE®
CORNING WARE®:
• 25% of sales in Consumer
Product Division
• 27% sales increase from 1973-
1974; Doubled sales in last
seven years
PYREX®:
• Responsible for 10-15% of
Consumer Products Division
• Retained 58% market share
since expiration of patent in
1957
Situation Preview Analysis Alternatives Recommendation
30. CORNING WARE® Will Respond and
Protect
Wilmingtonattractiveness
Corning Glass Works Reactiveness
Glass-ceramic cook
and bakeware
Heat-resistant
glass bakeware
Potential Response:
• Price Reaction
• Increased
promotion
– “Corning Gifts that
make life easier”
• Exclusive distributor
agreements
• New design launch
Situation Preview Analysis Alternatives Recommendation
31. Corning Glass Works’ Signals: “We Will Defend Our
Position”
Signal: Specific Action Taken:
Price change Price increase three times in the last
six years
Policy changes Discontinuation of the fair trading
rules
Messaging “Gifts that make life easier”
Intent New product design may launch in
1975
Situation Preview Analysis Alternatives Recommendation
32. Deeper Analysis Reveals CORNING WARE®
Possible Weaknesses
Price
Product
Perception
Patent
Expiration
• Loss of strategic defense
mechanism
• 28% of potential customers
would only buy if cheaper
• Not seen as stovetop product
• Lack of color selection and styles
Situation Preview Analysis Alternatives Recommendation
33. Comparison of Wilmington and Corning
Highlights Different Strategies for Success
Wilmington CORNING WARE®
Message “Good value for the money” “Gifts that make life easier”
Distribution
74% through hardware stores,
discount stores, supermarkets
and chain stores
Strong relationships with
department stores
Styles
Two decorations, four colors
(Country Squire)
Two decorations, one color
Promotion
Focus on in store displays and
sales promotion
Equal split between
advertising and promotion
Situation Preview Analysis Alternatives Recommendation
34. Products Compete on Five Dimensions
Style
Flexibilit
y
PriceBrand
Quality
Situation Preview Analysis Alternatives Recommendation
35. Limited Functionality is an Issue for PYREX®
Style
Flexibilit
y
PriceBrand
Quality
Situation Preview Analysis Alternatives Recommendation
36. Metals Are Viewed as High Quality
but not Versatile
Style
Flexibilit
y
PriceBrand
Quality
Situation Preview Analysis Alternatives Recommendation
37. CORNING WARE® Brand Equity Drives Sales,
can be Beat on Price
Style
Flexibilit
y
PriceBrand
Quality
Situation Preview Analysis Alternatives Recommendation
38. Stoneware is Highly Flexible
but Viewed as Low Quality
Style
Flexibilit
y
PriceBrand
Quality
Situation Preview Analysis Alternatives Recommendation
39. Wilmington Can Compete on Style, Flexibility,
and Price
Style
Flexibilit
y
PriceBrand
Quality
Situation Preview Analysis Alternatives Recommendation
41. Do We Enter? Customer
Segment
Price
Entry Decisions Must Focus On
Who to Target and How
Yes
No
Corning
Non-Corning
Both
High Discount
Medium
Discount
Tactical Decisions
• Distribution method
• Product specifications
• Promotional activityCorning
Non-Corning
Both
Situation Preview Analysis Alternatives Recommendation
42. Limited Resources Point to Three Alternatives
CORNING
WARE®
CORNING
WARE®
CORNING
WARE®
UntappedUntappedUntapped
Onslaught Stealth Combined
• CORNING WARE®
imitation
• Two-tier
distribution
• 7-20% discount off
CORNING WARE®
• Equal split
between
advertising and
sales promotion
spend
• Round shape, solid
colors
• Direct distribution
• 7-20% discount off
CORNING WARE®
• Heavy sales
promotion
campaign, small
amount on media
advertising
• CORNING WARE®
shape, solid colors
• Direct distribution
• 7-20% discount off
CORNING WARE®
• Equal split
between
advertising and
sales promotion
spend
Situation Preview Analysis Alternatives Recommendation
44. We Win by Creating the Best Total Offering for Our
Customer
Customer
Intimacy
Compete on customer intimacy:
• “All-purpose” - cooking, baking and
microwaving
• Many colors, fashionable, round
• Price discount of 20% off CORNING
WARE® retail price
• Direct distribution - focus on
strongest existing channels
Operational
Excellence
Product Leadership
Situation Preview Analysis Alternatives Recommendation
45. Metrics Point to a Clear Winning Strategy
Situation Preview Analysis Alternatives Recommendation
Potential
Options
Year Five
Market Share
Payback NPV Probability of
Positive NPV
Terminal Value
Onslaught
Medium
Discount
17.5% Never $(6,551,237) 0.0% $133,274,036
High Discount 21.2% Never $(6,797,236) 23.7% $133,274,036
Combined
Medium
Discount
22.0% Year Five $1,583,424 60.1% $133,274,036
High Discount 24.3% Year Five $921,722 56.6% $117,175,977
Stealth
Medium
Discount
20.8% Year Five $3,322,801 71.3% $140,643,623
High Discount 29.0% Year Four $11,350,628 75.1% $180,369,641
46. By Following Our Strategic Principles We Achieve
All Objectives
Situation Preview Analysis Alternatives Recommendation
Why it will work?
• Avoids a fight we cannot win
• Moving fast prevents past mistakes
• Focuses our resources, capabilities
and messaging on terrain favorable
to us
• 20% discount over Corning’s price
will get us on more shelves
• Offers a tailored solution to an
unmet customer need in a growing
market
Objectives Outcome
NPV Positive in 5
Years > 70%
Average NPV >
$10M
90% Confidence
> ($10M)
75.1%
$11.3M
2.9%
47. Stealth High Discount Strategy Allows for a
Reasonable Payback Period
Situation Preview Analysis Alternatives Recommendation
(15.00)
(10.00)
(5.00)
-
5.00
10.00
15.00
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
NetCashFlowMillions
48. In Onslaught We are Outgunned
• Direct attack will result in
a more aggressive
response
• There will be a price war
• Product offering not
compatible with segment
needs
• Challenges to get our
product shelved where
this segment purchases
Situation Preview Analysis Alternatives Recommendation
49. Combined Fails to Concentrate Resources
• Combined strategy drains
focus from efforts
• Lack of concentration on
specific customer segment
results in ambiguous
marketing message
• CORNING WARE® will
respond aggressively
• Distribution challenges
Situation Preview Analysis Alternatives Recommendation
50. A Medium Discount Does Not Get Us in Front
of Enough of Our Target Customers
• Past history shows cuts need to
be significant to succeed
• Medium price cut does not offer
enough incentive to retailers to
shelf product
• Perceived brand difference does
not offer customers enough
reason to switch from CORNING
WARE® or other alternatives
Situation Preview Analysis Alternatives Recommendation
51. If We’re Not First, We Lose
Situation Preview Analysis Alternatives Recommendation
-10.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%
Corning Market Share Capture
WFE Share (with competitor entry)
Corning Discount
Competitor Entry
Average Growth Rate Bet 1979-1981
Average Growth Rate
Wilmington First to Enter (WFE)
52. External Factors Point to Risks of Entry
• Threat from competitors
– Other entrants beat us to market
– CORNING WARE® or other competitors discount
more than 20%
• Market growth declines
– Changes in where/how people dine
– New technological development forces heat-resistant
glass cook and bakeware product obsolescence
• Operations do not meet production capacity
Situation Preview Analysis Alternatives Recommendation
53. Signaling Enables Us to Limit Our Risk
Wilmington Signals
Prior announcement Press release announcing new factory
construction
Discussion of own
moves
Sales and advertising campaign
announcing upcoming product
Industry discussion Private communication with retailers to
get prominent placement on shelves
Product Discontinue Country Squire product
line
Situation Preview Analysis Alternatives Recommendation
54. Wilmington Entry Into CORNING WARE®
Market Request for Funding
Initial Investment: 2013 Dollars
Factory refurbishment $10 M $43,482,080
Situation Preview Analysis Alternatives Recommendation
Ongoing Annual Investment: $11,403,587 M $49,585,169
Manufacturing $2 M /yr
Advertising and promotion $700k /yr
General and administrative costs 2% of sales
58. Estimated Manufacturer Shipments of Cook
and Bakeware (1974)
Stainless Steel
23%
Glass/heat
resistant glass
17%
Aluminum
13%
Cast Iron
8%
Porcelain Clad
Metal
15%
Stoneware
9%
Copper
5% Others
10%
Percentage of Total Sales in Cookware Percentage of Total Sales in Bakeware
Stainless Steel
6%
Glass/heat
resistant glass
25%
Aluminum
14%
Cast Iron
15%
Porcelain Clad
Metal
24%
Stoneware
6%
Copper
0%
Others
10%
59. Breakdown of Cook and Bakeware Market by
Product Type (1974)
Percent ofTotal Sales
Cookware
Casserole (1 1/2 qt. or larger) 19%
Frying pans 15%
Saucepots (below 1 1/2 qts.) 8%
Subtotal 42%
Bakeware
Pans 11%
Baking Dishes 13%
Baking Trays 4%
Special Items 2%
Subtotal 30%
Measuring and Mixing
Bowls 11%
Cups 4%
Subtotal 15%
Miscellaneous 13%
Total 100%
Cookware
42%
Bakeware
30%
Measuring
and Mixing
15%
Miscellaneous
13%
Percentage of Total Sales
60. Range of Products Sold:
Cook and Bakeware
Company/Brand
# of individual
pieces
# of sets # of colors
# of
decorations
CORNING WARE® 24 10 1 2
PYREX® 56 20 5 4
Wilmington
Country Squire
31 13 7 2
American Glass 15 5 5 3
Ajay Corporation 20 2 6
61. Sizing and Slicing the Market
Existing Market
- 73% of current purchasers buy
CORNING WARE® as gift
- Non-price sensitive purchasers
- 71% of purchasers with
income 75k and above
Untapped Market
- 28% of non-owners are price
sensitive consumers
- Personal use buyers
- Consumers purchasing
microwave-safe cook &
bakeware
62. Market Evolution
PYREX® branded
ware introduced by
Corning. Heat-
resistant glass
1915
American Glass and
Ajay enter the heat-
resistant market
1957-58
CORNING WARE®
cookware
introduced for range
top cooking
1959
Wilmington enters
heat-resistant
market
CORNING WARE®
Patent expiration1977
1975
1977
Decision Point
NOW
1975
65. Corning Glass Works Financial Breakdown
Corning Glass Works (1974) ($ in millions)
Total Sales 1,051
US 714.68
International 336.32
Breakdown of Business Unit Sales
Houseware Products 117.5
PYREX® Estimated Sales (10-15%) 23.5-35.25
CORNING WARE® 58.75
(Less Electromatics) 7.05
Total CORNING WARE® Market 51.7
Total CORNING WARE® US Market 35.15
*CORNING WARE® 50% of Houseware Products
* Electromatics 12% of Housewares
66. Corning’s Trade Margins
• Fair Trading Rules had maintained prices
– Sold products to wholesale distributors at 52.5%
– Wholesaler sells to retailer at 40% discount from
retail prices
• 1975: Fair Trade Policy discontinued
– Wholesaler allowed to set price to retailer
– Retailer allowed to set price to consumer
– Corning products began selling at discounts of 20%-
40%
69. CPG Forecasted to Increase in Importance
Within Wilmington’s Product Portfolio
30%
35%
40%
45%
50%
55%
1970 1971 1972 1973 1974
PercentageofIncomeBeforeTaxes
Consumer Products Packaging
51%
34%
7%
8%
Consumer Products Packaging
Commercial Technical
1974 % of income before taxes1970-1974 % of income before taxes
70. Wilmington’s Financials 1970-1974
Operations 1970 1971 1972 1973 1974
Net Sales 363,824,800 387,705,500 422,242,800 455,493,300 509,975,200
Costs and expenses:
Cost of products sold 281,590,700 303,253,900 331,191,000 366,793,000 423,282,900
Selling and administratvie 34,547,200 36,604,600 40,311,100 44,296,800 48,993,500
316,138,000 339,858,500 371,502,100 411,403,500 472,277,400
Income from operations 47,686,900 47,846,900 50,740,700 44,403,500 37,697,800
Other Income 1,625,500 959,200 1,338,900 1,713,600 1,984,200
Interest Expense -1,531,200 -1,428,200 -1,511,400 -1,755,800 -2,418,500
Income before tax 47,781,200 47,377,900 50,568,200 44,361,300 37,263,500
Net Income 24,246,700 23,613,900 24,832,400 21,124,700 17,032,300
Financial Position Date
Working Capital 73,385,400 85,098,000 93,209,600 95,969,300 97,556,400
PP&E 2,238,244,200 232,867,700 249,155,500 270,854,700 288,970,200
Accumulated depreciation 92,596,600 97,696,600 103,783,100 116,048,000 127,883,400
Long-term Debt 26,255,700 24,837,400 23,919,100 24,468,800 22,009,400
Common Stockholders Equity 170,181,200 185,718,200 203,887,100 214,913,500 223,614,500
Statistics
PP&E Expenditures 22,845,800 17,538,500 24,025,800 24,661,200 24,679,800
Depreciation Expense 12,119,600 12,964,700 13,273,600 14,863,200 15,673,500
Weighted Average No. of Common Shares8,652,421 8,666,405 8,701,510 8,705,625 8,489,195
No. of Common Stockholders 8,140 8,522 9,139 10,114 10,253
No. of Employees 18,240 17,868 18,116 19,109 18,489
71. Wilmington Breakdown of Sales and
Income by Business Unit
Percentage of Total Sales (1974)
Consumer
Products
30%
Packaging
54%
Commercial
10%
Technical
6%
Percentage of Income Before Taxes
(1974)
Consumer
Products
51%Packaging
34%
Commercial
7% Technical
8%
72. Wilmington Sales by Type of Outlet
Percentage of Total Outlets (1974)
Department
Stores
12%
Supermarket
30%
Discount Stores
25%
Hardware
Stores
11%
Chain Stores
8%
Others
14%
Total # Outlets 32,000
Percentage of Total Sales by
Outlet(1974)
Total Sales $153m
Deparment
Stores
21%
Supermarkets
12%
Discount Stores
24%Hardware
Stores
11%
Chain Stores
8%
Other
24%
73. Wilmington Distribution
• Direct to retailers through 15 field offices in 43
states
– 13,000 retail outlets
– 175 national accounts which accounted for 9,000
locations
• Network of 87 wholesalers for areas uneconomical
to call on directly
– Provided 10,000 additional outlets (accounted for 11% of
sales)
• List Prices provided retailer with average margins of
42%
74. Percent of Total Variable Cost
Variable Cost Estimate
Raw material
8%
Direct Labor
27%
Packing and
cover
25%
Freight
23%
Other
17%
Raw Material 0.23
Direct Labor 0.73
Packing and cover .70
Freight .62
Other .48
Total Variable Cost $2.76
Two-Quart Saucepan with Decal Decoration
75. Variable Cost
Wilmington vs. Corning
Wilmington Corning
Raw Material 0.23 .23
Direct Labor 0.73 .62
Packing and cover .70 .60
Freight .62 .62
Other .48 .40
Total Variable Cost $2.76 $2.47
* Assumed 85% Experience Curve
Two-Quart Saucepan with Decal Decoration
77. Stealth Medium Discount Strategy Breakeven Point
-15.00
-10.00
-5.00
0.00
5.00
10.00
15.00
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
NetCashFlow
Millions
78. Combined High Discount Strategy Breakeven
Point
(12)
(10)
(8)
(6)
(4)
(2)
-
2
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
NetCashFlow
Millions
79. Combined Medium Discount Strategy
Breakeven Point
(12)
(10)
(8)
(6)
(4)
(2)
-
2
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
NetCashFlow
Millions
81. Market Share Capture Potential
US Income Distribution $0-$25K $25-$50k $50-75k $75-100k 100k+
28.22% 26.65% 18.27% 10.93% 15.93%
Corning Market Capture 5% 20% 30% 60% 75%
Untapped Potential 95% 80% 70% 40% 25%
Untapped Feasible Mid 28.13% 30.00% 33.75% 3.75% 0.94%
Untapped Feasible High 75.00% 80.00% 90.00% 10.00% 2.50%
Based on the percentage of the
potential market that Corning
owns, we believe it is possible
to capture 27.86% of the
untapped Glass-Ceramic Heat
Resistant Cookware Market
72.14%
12.79%
27.86%
87.21%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
100.00%
Market Potential Revenues
Existing Untapped
82. Variable Cost Analysis
COGS Likely Best Case Worst Case
Raw material $0.23 $0.21 $0.25
Direct Labor $0.73 $0.66 $0.80
Packing and cover $0.70 $0.63 $0.77
Freight $0.62 $0.56 $0.68
Other $0.48 $0.43 $0.53
PENALTY $0.30 0 $0.30
TOTAL $3.06 $2.48 $3.34
83. $700,000 Budget Promotion Options
Majority on media advertising campaign; small
back-up budget for sales promotion
• This allocation will not hold up to Corning’s
media spend
• For a media ad campaign we would have to
allocate our campaign to first obtain brand
recognition and then promote the product;
the budget may not be large enough
Spend equal amounts on advertising and sales
promotion
• A 50/50 split would not drive enough
impact to compete with Corning on either
front
• We need to focus resources where Corning
isn’t
Heavy sales promomotion at launch, smaller
amount on media advertising
• Promotion at launch can be used to signal
• Promotion can be used in stores to better
compete against other potential entrants
• Con: miss opportunity on media when
television is becoming a more popular
medium for advertising
84. Corning Leaves an Opening in Grocery
Stock Conditions Display Promo Price
Well Moderate Poor Good Poor Yes No List Above
Department
Jordan Marsh (Bos) X X X X
Jordan Marsh (Burl) X X X X
Sears (Camb) X X X X
Sears (Burl) X X X X
Coop (harv) X X X X X
Discount
Lechmere (Camb) X X X
Zayre (128) X X X
Bradlees (Wob) X X X
Turnstyle (Walt) X X X X
Variety
Woolworth (Bos) X X X X
Woolworth (Camb) X X X X
Woolworth (Harv) X X X
Kresge (Bos) X X X X
Kresge (Camb) None
WT Grant (Bos) X X X X
Grocery
Stop and shop (Walt) None
Broadway Super None
Hardware
Almys (Camb) X X X X
Tags (camb) X X X X
Dickson bros (camb) X X X X
Pharmacy Super (Camb) X X X X
85. Consumer Reactions to Product Options
Similar to CORNING WARE®
CORNING WARE®
Imitation
Solid Color,
Corning shape
See product as “Like CORNING WARE®” See product as “Like “PYREX® ware”
Prefer CORNING’s brand, warranty,
reputation
Looked “cheap” and “gaudy”
Might buy at 25% lower price if it has a
guarantee and is made by a well-known
company
Inferior to CORNING WARE® and would
buy only at a lower price
Brand name more important than price
differential
Would buy only if colors “suited the
color scheme” of their kitchen
Would buy at a cheaper price for
personal use, not as a gift
Would buy for their own use, and prefer
CORNING WARE® for gifts
86. Consumer Reactions to Product Options
Unlike CORNING WARE®
Solid Colors,
Round Shape
Decorated,
Round Shape
Similar views as respondents for “Solid
Color, Corning Shape”
Mixed reaction
Saw product as one that could be used
on top of the stove
Would use it for every day use
Looked similar to PYREX® mixing bowls Would buy only if price was cheaper
Because of round shape and colors,
most found this unsuitable for baking
More appeared to like this set than
dislike it
Most popular among blue collar
workers
Some designs seen as looking “too
much like metal utensils”
Prefer CORNING WARE® for gifts
87. Onslaught Strategy’s 4 Ps
Product Place
Promotion Price
CORNING WARE®
Imitation: Square
Shape, Blue
Decoration
Same stores as
CORNING WARE®
using two-tiered
distribution
Equal split
between
advertising & sales
promotion
7%-20%
discount off
CORNING WARE®
price
88. Stealth Strategy 4Ps
Product Place
Promotion Price
Round shape,
Solid colors
Where CORNING
WARE® is not
sold using direct
distribution
Heavy sales
promotion, small
amount on media
advertising
7-20%
discount off
CORNING WARE®
price
89. Combined Strategy 4Ps
Product Place
Promotion Price
CORNING
WARE® Shape,
Solid Colors
Current distribution
outlets using direct
distribution
Equal split
between
advertising and
sales promotion
7-20%
discount off
CORNING WARE®
price
90. Stealth High
Market Share and Profit Margin
Year 1 Year 2 Year 3 Year 4 Year 5
Market
Share
19.02% 19.94% 21.96% 23.95% 25.05%
Profit
Margin
-3.40% 10.86% 24.82% 35.49% 42.69%
91. Risk if growth rate remains parallel to the market
Median NPV: ($1,585,878)
92. Risk if we enter first with 50% likelihood
Median NPV: $3,105,051.45
93. Risk if we enter first with 25% likelihood
Median NPV: $(7,732,427.54)
94. There is Not Enough Room for
Everyone in the Market
Capacity Required Market Growth
Current state 1 22.5%
With one
competitor 1.75 45.0%
With two
competitors 2.5 67.5%
With three
Competitors 3.25 90.0%
Assumes 75% production capacity of Corning from new entrants
95. Ongoing Investment
Year 1 Year 2 Year 3 Year 4 Year 5
SG&A 983,616 1,122,266 1,261,585 1,444,731 169,642
Manufacturing 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000
Advertising and
Promotion
700,000 700,000 700,000 700,000 700,000
FCF 3,683,616 3,822,266 3,961,585 4,144,731 2,869,642
WACC 2,859,451 2,614,167 2,387,182 2,200,478 1,342,309
NPV 11,403,587
97. Financial Modeling Process
Build NPV
Determine Wilmington variable costs based on units sold
Distribute total new entrant capture between new entrants
Determine share of untapped market capture by new entrants
Determine share of current market capture by new entrants
Determine total untapped market size
Determine current Corning Ware® market size
98. Key Assumptions in Model
Likelihood that Wilmington is first to enter
Average growth rate from 1975-1978
Average growth rate from 1979-1981
Chance that competitor 1 enters market year 1
Chance that competitor 2 enters market year 1
Chance that competitor 3 enters market year 1
Avg. Non Corning Share of Existing Market Year 1
Avg. Non-Corning Share of Existing Market Year 5
Avg. Non-Corning Share of New Market Year 1
Avg. Non-Corning Share of New Market Year 5
Inflation Rate
Probable Variable Cost Year 1
