B2B Soren Chemical Case Solution

Case Analysis Soren Chemical: Why is the new swimming pool product sinking?

 About Soren Chemical Company – Founded in 1942, generated revenue of $450 Million in 2007 – Over 350 products, wide range of Industrial chemicals and water-cleaning solutions – Kailan MW and Coracle are two types of water-clarifiers. – Historically Company had concentrated on B2B sales but now it is investing selectively in developing products for consumer markets.

 About Kailan MW and Coracle products – Kailan MW is used primarily for cleaning large commercial pools and water parks (B2B) while Coracle is used for cleaning residential pools (B2C).

– Revenue of kailan MW: $6.1 Million in 2006, 7% growth expected in 2007 – Revenue of Coracle: $0.111 Million (in 6 months) against annual target of $1.5 Million (85% short of target)

 Commercial-Use Clarifier Market Characteristics – Market Size: $30 Million (2007), relatively mature market – Distribution Channel: Manufacturer-Formulators-Water parks & Commercial Pools (Formulators carry full range of pool-cleaning products and provide value-added

services tailored to customer specs) – Key Influencers: Formulators, water-safety consultants, Pump & Filter mfgs. – Buyer Behaviour: Professional and understand the use, benefits and importance of clarifiers for their business. Safety of their customers matters most.

Marketing strategy for Kailan MW • Strong partnership with Formulators. • Sold under “Private Label Brand”. • Product USPs are attacks organic debris which can pass through filters, effective for long period, lower qty needed.

 Residential Pool Clarifier Market Characteristics – Business Model: B2C – Market Size: $67 Million (9000000*25%*$50*14.88/25), Untapped market in nascent stage.

– Distribution Channels: (a) Manufacturer-Distributors-Retailers/Pool Service professionals-Pool Owners (b) Manufacturer- Mass Retailers-Pool Owners – Key Influencers: Pool Builders, Cleaning & Servicing cos., independent contractors, Retailers and Wholesale Distributors – Buyer Behaviour: Lack of awareness among Pool-Owners (emphasis on aesthetics and perceived cleanliness) – Major Brands: Clearblu, Hydropill and Purity

 Marketing Strategy for Coracle – In order to reach wide and fragmented market, adopted 2-level distributor channel with margins as per industry norms. – No private-labeling, focus on building Soren as consumer brand.

– Packaging highlights product benefits and potential savings. – New website formed during product launch – Press release in three trade journals targeting professionals and retailers. – Good enquiry system adopted- receiving queries, sharing technical data with them and passing on the interested customers information to appropriate wholesale distributors. – Aggressive pricing vis-à-vis competitors. – Realistic target of $1.5 Million (2.2% market share) – Survey conducted in 6 months after product launch to gauge customer feedback.

What went wrong??

 Reasons for failure – Lack of support from Distributors: Distributors are focused on selling unbranded products/ diluted kailan thereby earning better margins. Also, since use of Coracle will reduce the consumption of other pool chemicals by 20%-30%, its promotion will result in reduction of their overall revenue. – Lack of awareness among Pool Owners: Customers are happy with pool looking clearer and hence get satisfied with compromised products at lower price. – No exclusive demand of Coracle from Pool Service Professionals and contractors

 Recommendations (for immediate 3 months) – Create Pull Demand by aggressive marketing campaign targeting 40-50K Pool Service Professionals and independent contractors(a) Aggressive Mailing campaign (b) Huge advertising in trade journals

(c) prominent display counter in trade-shows (d) Message should be centered around 20-30% savings of pool chemicals by use of Coracle resulting in higher profits for professionals and contractors. (e) Focus on Lower annual cost compared to ClearBlu ($39.06 vs $56.25)

 Recommendations (considering long-term results) – Impart education to Pool Owners regarding adverse affect of waterborne diseases: Live Demos in societies, buzz around rewarding cleanest pool in city etc.

This will increase the % of customers using clarifiers regularly – Made Pool Owners aware about potential savings and economic benefits of using Coracle.

– Price revision to $30: Survey indicates acceptable treatment price of $50/annum. Retail price of $30 will lead to treatment price of $46.8/annum, hence acceptable. Soren will have cushion to bear the marketing expenses and additional distributor margin to promote sale.

Thank You !