achieving competitive advantage: the rise of the international latex corporation

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Achieving Competitive Advantage: The Rise of the International Latex

Corporation

By Oleg Nekrassovski

Introduction

The present paper will look at the first 15 years of business of the International Latex

Corporation (ILC). First, it will be argued that the competitive strategy followed by ILC, in the

early and mid 1930s, was that of focus. In particular, an attempt will be made to demonstrate

that ILC followed the strategy of differentiation focus. The paper will also take a look at ILC’s

technology strategy, and argue that ILC engaged in developing product technology and sought

technological leadership. Next, ILC’s move into a new market segment in the late 1930s, some

aspects of its accompanying marketing strategy, and the relevant fashion trends of the time,

will be described. And it will be argued that prior to entering this new market segment, ILC

likely engaged in careful collection and analysis of marketing information, using some tool

similar to situation analysis, and in researching the buyer behaviour of its actual and potential

consumers. Finally, it will be argued that some of the specifics of the initial marketing strategy,

that ILC used to enter this new market segment, were unethical. So, an attempt will be made to

see whether ILC suffered any negative consequences, as a result.

The Early Years

In 1932, in response to a sudden and radical drop in the price of latex rubber on the

world commodity market, an already highly successful American entrepreneur, named A. N.

Spanel, founded the International Latex Corporation (ILC) (de Monchaux, 2011). At first,

Spanel’s company focused on, and succeeded in producing and marketing latex textiles to the

consumer market, by taking advantage of the waterproof, elastic nature of latex-impregnated

fabric to produce underwear, bed sheets, bibs and sunhats, for children and infants. Spanel

chose the brand name “Playtex” for his line of consumer products (de Monchaux, 2011).

By the late 1930s, ILC’s success, in the children’s consumer market, won Spanel great

praise for his innovative production of latex textiles, and for his innovations in advertisement

packaging (even earning him a marketing award) (de Monchaux, 2011).

The Focus Strategy

Thus, based on the above, it appears that, in its early years, the competitive strategy

followed by ILC was that of focus. Focus is a generic competitive strategy which involves

selecting a segment or a group of segments of an industry, and focusing exclusively on serving

those segments (Porter, 1985). ILC’s industrial segment of choice was, of course, the market for

children’s underwear and a few related products.


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The focus strategy has two variants, the cost focus and the differentiation focus. As their

names suggest, the cost focus involves seeking a cost advantage in the targeted segment of the

industry; while the differentiation focus involves seeking differentiation in the targeted

segment (Porter, 1985). And it appears that ILC’s focus strategy, in the market for children’s

underwear and related products, was that of differentiation focus; because differentiation

focus exploits the special needs of buyers in the target segment (Porter, 1985).

So, what were the special needs of buyers of children’s underwear and related products

that ILC’s unique products so successfully met? Apparently, given that small children often wet

their underwear and bed sheets and get wet whenever moisture gets on their bibs and hats

(which is often the case), there was a strong demand for waterproof underwear, bed sheets,

bibs, and hats for children and infants. And only ILC’s new, waterproof products managed to

satisfy this demand.

All of this reflects the fact that the focus strategy can be successfully employed only

when target segments are poorly served by competitors that have a much a broader focus, and

attempt to serve multiple industrial segments simultaneously. This allows the attainment of

competitive advantage by focusing, exclusively, on providing services to the poorly served

segments of the industry (Porter, 1985). ILC’s rapid success, in the market for children’s

underwear and related products, appears to underscore this idea.

Technology Strategy

The above, brief description of ILC’s early years, also illustrates its technology strategy.

As the name implies, the way a firm approaches the development and use of technology,

constitutes its technology strategy (Porter, 1985). And in order to achieve competitive

advantage, the firm should focus on developing those technologies that would most contribute

to its generic competitive strategy. However, the type of the optimal technology strategy would

vary considerably based on the generic strategy the firm is trying to follow (Porter, 1985).

We have already established, above, that ILC’s generic strategy appears to have been

that of differentiation focus. At the same time, the above, brief description of ILC’s early years

illustrates its focus on developing its product technology, rather than process technology. And

according to Porter (1985), a firm that focuses on developing its product technology in order to

enhance its strategy of differentiation focus, should work on designing products that would

meet the needs of a particular segment of the market, better than more broadly-focused

competitors. But, while an earlier discussion suggests that this is what ILC likely did; it is hard to

say, based on the presented information about ILC, whether its founder, Spanel, first decided to

pursue a differentiation focus strategy and then decided to support it by developing

appropriate product technology; or whether he started by developing an innovative product

technology and then decided to use it to pursue the differentiation focus strategy.


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Another broad aspect, of the technology strategy, is whether or not to pursue

technological leadership. As the name implies, the strategy of technological leadership involves

a firm seeking to introduce new technological changes that support its generic strategy; while

the strategy of technological followership involves a firm consciously and deliberately choosing

not to be the first to innovate (Porter, 1985).

Pursuing the strategy of technological leadership or followership can be used to achieve

either cost advantage or differentiation (Porter, 1985). And during the period of its history,

described so far, as well as to be described next, ILC obviously pursued technological

leadership, rather than followership, and did so in order to achieve differentiation. In fact, a

strategy of technological leadership, which seeks to achieve differentiation, involves pioneering

a unique product that will be perceived as being more valuable, than the offerings of

competitors, by the buyer (Porter, 1985).

ILC’s First “Girdle”

Spanel’s initial focus on children’s wear also happened, in no small part, because latex

had a tendency for sudden failure, by splitting along the grain of its manufacture – something

that adult wearers would not tolerate (de Monchaux, 2011). However, soon after 1937, along

with the new investments in production, Spanel developed and patented new methods of

shaping and curing of thin latex surfaces, which solved the problem of sudden failure of latex-

based textiles. This innovation allowed ILC to introduce its first foundation garment for women

in 1940 (de Monchaux, 2011).

The foundation garment that ILC introduced in 1940, was the “girdle” – a new

alternative to older corsets. ILC’s introduction of a girdle in 1940 did not happen by accident.

Instead it was clearly done because it was a very opportune time to do so (de Monchaux, 2011).

In fact, despite a move away from corsets in the 1910s and 1920s, constriction of women’s

waists and hips again became very popular at the end of 1930s. Not surprisingly, most

contemporary women were unused to wearing traditional constrictive corsets and were scared

of experiencing discomfort from this “new” fashion trend (de Monchaux, 2011). So, ILC’s

advertisement for its girdles successfully exploited this fear by claiming that its new product

wasn’t a corset, but a new, revolutionary method of curve control. Hence, women were

promised the stylish figure of a corset without the corset’s discomfort. And this marketing

strategy soon proved to be enormously successful, even though the actual experience of

wearing ILC’s girdle was far from comfortable (de Monchaux, 2011).

Collecting and Analyzing Marketing Information

ILC’s success in marketing its first girdle clearly stemmed from its successful collection

and analysis of marketing information relevant to its proposed new product. Marketing

information is often collected and analyzed using the situation analysis, which evaluates the


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internal environment of the firm, its customer environment, and its external environment

(Ferrell and Hartline, 2014). In its collection and analysis of marketing information relevant to

its girdle, ILC must have focused on the issue of why customers do (or will) select their products

(an aspect of customer environment), as well as on sociocultural trends (an aspect of external

environment), especially in women’s fashion. After all, properly assessing the issue of why

customers do (or will) select company’s products requires identifying unsatisfied or

undersatisfied customer needs, as well as potential current and future changes in these needs

(Ferrell and Hartline, 2014). At the same time, the renewed popularity of constricted women’s

waists and hips was clearly a ‘new’ sociocultural trend in women’s fashion.

Buyer Behaviour

ILC also must have researched the buyer behaviour of its actual and potential

consumers prior to introducing its first girdle. One of the key issues in understanding buyer

behaviour is the ability of the firm to recognize the needs and wants of its customers (Ferrell

and Hartline, 2014). And as has already been described, ILC did an excellent job of finding out

the needs and wants of consumers who may be interested in its new product. Another key

issue in understanding buyer behaviour is the ability of the firm to understand how its

customers evaluate alternatives (Ferrell and Hartline, 2014). ILC has clearly managed to

understand that, since its advertisements successfully exploited contemporary women’s

tendency to choose any foundation garment which promised comfort to the wearer, over any

competing product which made no such promises. However, the fact that this promise was

false, indicates that ILC’s marketing strategy ignored every firm’s implied ethical responsibility

to its customers. And since research indicates that firms who ignore ethical responsibilities can

destroy the trust of their stakeholders and even provoke government intervention (Ferrell and

Hartline, 2014), did ILC suffer any such consequences?

The 1940s

In the years immediately following the introduction of its first girdle, ILC nearly went out

of business, in no small part because Japanese takeover of Malaysia in 1942 cut off the US from

its major source of latex. And by 1944, the company was able to remain afloat only because it

managed to land contracts for producing inflatable boats and life rafts for the US Navy (de

Monchaux, 2011). However, even when the company returned to production in 1946, its

owner, Spanel, decided to create a separate branch of ILC, which would be dedicated to

developing products targeted at the government, rather than mass consumers. Also, while ILC

continued to advertise its girdle in the years following WWII, its marketing strategy shifted

towards making assertions, which customers would not be able to dispute even after trying

their product – such as the alleged connection of ILC’s girdles to contemporary fashion (de

Monchaux, 2011).


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Thus, it appears that ILC did suffer some loss of customer trust, and was apparently

aware of that. However, confounding variables brought about by WWII make it difficult to

judge the consequences and magnitude of that loss of customer trust.

Conclusion

Thus, we have seen that the differentiation focus strategy can be very effective

whenever certain segments of the industry are poorly served. And that the development of

appropriate product technology can further enhance the effectiveness of this strategy. Also,

ILC’s success illustrates the effectiveness of technological leadership strategy in achieving

differentiation; as well as that successful collection and analysis of marketing information

relevant to a proposed new product, especially using the situation analysis, is essential for

successful marketing of that product. In addition, researching the buyer behaviour of one’s

actual and potential consumers, prior to introducing a new product, is also essential for a

successful marketing strategy. On the other hand, making false or misleading statements about

one’s product is likely to lead to a loss of customer trust and a consequent drop in sales, that

ILC apparently suffered from its initial, unethical approach to advertising its first girdle.

References

de Monchaux, N. (2011). Spacesuit: Fashioning Apollo. Cambridge: The MIT Press.

Ferrell, O. C., and Hartline, M. D. (2014). Marketing strategy: Text and cases. Mason, OH: South-

Western.

Porter, M. E. (1985). Competitive advantage: Creating and sustaining superior performance.

New York: The Free Press.

achieving competitive advantage: the rise of the international latex corporation

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