Group 4 Case 5 Analysis
Group 4 Case 5 Analysis: DuPont Kevlar: Aramid Industrial Fiber
1. Why did DuPont’s management target the tire cord market for Kevlar?
DuPont’s management was influenced by a number of factors in their decision to target the tire cord market. The first was historically based. The Kevlar fiber’s development was very similar to their prior development of the Nomex fiber. Nomex was at the time, the most expensive new product DuPont had developed. Initially identified as a large impact polymer fiber, its initial sales were slow and before Nomex could develop into a financially sound polymer, it was plagued with expensive operating problems and technological issues before it was broadly accepted by the market. The lesson DuPont executives took from this was that an industrial product can be a slower, more uncertain and tedious process. It is harder for a customer to invest in an unknown product, and easier to go with the tried and true more established products. Polymers were a newer concept to the market and the market was slow to react to disruptor. Knowing this, the DuPont team made a more conservative approach with Kevlar. Rather than forecast for the unknown, and venture into a new market for the product, DuPont was focused on recouping their initial investment.
The Tire Cord Market was changing rapidly, and DuPont was in danger of losing market share with its Rayon Tire cord to the newer steel radials. The competition was developing, investing and producing steel radials. Steel is a market DuPont was unfamiliar with and had no chance to develop a similar product. DuPont saw its Tire Cord revenue stream shrinking, and made the decision to enter into that market with Kevlar. Kevlar was four times stronger pound for pound than steel radials, and could be priced higher due to its effective replacement ration of a lighter material. Kevlar had received initial praise as tire manufacturers started piloting the product in limited run quantities. Goodyear
1. Why did DuPont’s management target the tire cord market for Kevlar?
DuPont’s management was influenced by a number of factors in their decision to target the tire cord market. The first was historically based. The Kevlar fiber’s development was very similar to their prior development of the Nomex fiber. Nomex was at the time, the most expensive new product DuPont had developed. Initially identified as a large impact polymer fiber, its initial sales were slow and before Nomex could develop into a financially sound polymer, it was plagued with expensive operating problems and technological issues before it was broadly accepted by the market. The lesson DuPont executives took from this was that an industrial product can be a slower, more uncertain and tedious process. It is harder for a customer to invest in an unknown product, and easier to go with the tried and true more established products. Polymers were a newer concept to the market and the market was slow to react to disruptor. Knowing this, the DuPont team made a more conservative approach with Kevlar. Rather than forecast for the unknown, and venture into a new market for the product, DuPont was focused on recouping their initial investment.
The Tire Cord Market was changing rapidly, and DuPont was in danger of losing market share with its Rayon Tire cord to the newer steel radials. The competition was developing, investing and producing steel radials. Steel is a market DuPont was unfamiliar with and had no chance to develop a similar product. DuPont saw its Tire Cord revenue stream shrinking, and made the decision to enter into that market with Kevlar. Kevlar was four times stronger pound for pound than steel radials, and could be priced higher due to its effective replacement ration of a lighter material. Kevlar had received initial praise as tire manufacturers started piloting the product in limited run quantities. Goodyear