2013

Soren Chemical Case Analysis

PGPM GROUP A7 SPJIMR 2/18/2013

Product Overview Coracle is a water clarifier for small recreational and personal pools. The product is priced little higher than the competitive products, but the advantage of the Coracle clarifier is the quantity that has to be used, thus bringing down the annual expenditure on the clarifier. Company overview Soren chemicals was basically a B2B concentrated business, which include more than 350 products, basically serving the large recreational water bodies and drinking and waste water. Being a B-to-B enterprise Soren never concentrated on branding of its products and creating the customer awareness, however they tried developing brands for products that had potential in consumer market, but had little success.

Distribution Network of Soren Soren generally sold its products to the customers through three sources. 1) Through Formulators, who produced other pool products and delivered it to customers with added services. 2) Through wholesale distributors, who distributed the products to pool services professionals, pool speciality retailers, who served the residential pool owners. 3) Through Mass retailers, who directly served the Pool Owners?

Competing products (In-house and external) Kailan MV: In house product, and is mainly used in large water bodies and it is not suitable for the smaller water bodies and personal pool. It is distributed through Formulators, who produce or source other pool chemicals. How Kailan MV is a threat to Coracle: Few formulators were producing a diluted version of Kailan MV, with a private label and supplying it to the smaller pools and pool maintenance people. Other competitions: Though there are similar products in the market, the main competition for Coracle came from Jackson Labs ClearBlu, which is priced low, and is of higher quality purifier. The only advantage of Coracle over ClearBlu is the quantity of the product that has to be used. Thus Coracle had a better advantage over others when it comes to customer satisfaction.

Declining sales for Coracle- Why? Only 30% of the customers who received the Coracle product recollected the name, indicating that the brand name is not familiar And 70% of the people, who approached the whole sale distributor, were not offered the coracle, indicating that the distributors were not very much interested in selling the product.

Possible corrective measures: There are two possible options for increasing the sales of Coracle, Option1 Creating more awareness about Coracle among end user, by increased advertising which would require $600 000 budget so that people know about product and its advantages and they would remember the brand name Option2 To increase the margin for the wholesalers and retailers, so that they will aggressively sell the product to the end users.

Option 1- Analysis Mortizs target is to sell 100,000 units of container for the first year of sales. Considering $5.21 of gross profit per container Soren would have 100000*$5.21=$521000 but this is not sufficient for $600000 advertising budget.

Option 2- Analysis In terms of quality Sorens Coracle is in direct competition only with Jackson Labs ClearBlu, although the dosage required by ClearBlu is more than required by Coracle which reduces Annual cost for Soren Chemical. Hence there is a considerable margin available for Soren to have retailer and wholesaler increase their per container price From the calculations shown in below exhibit1 and exhibit 2, we can see even if having retailers price as $30 per container (example), Soren is at significant advantage on annual cost and e keeping its own gross margin and thereby gross profit more or less the same.

Exhibit1* Jakson Labs Clearblu 15 15 3.75 75

Company Product Cost Per Container Cost per Gallon In $ Cost per Treatment Annual Cost Coracle 25 50 3.91 39.06

Soren Coracle with new price 30 60 4.692 46.92

Keystone Purity 15 60 2.34 46.88

Kymera Hydropil 3.5 NA 3.5 35

*All prices are in $ Exhibit 2* Cost Per container_Exisiting 25 15% 3.75 21.25 30% 6.375 14.875 35% 5.21 9.665 Cost Per container_Recommended 30 19% 5.7 24.3 38% 9.234 15.066 35% 5.2731 9.7929

Marigin Structure Retailer Selling Price Retailer Gross Marigin Retailer profit Distributor Price Distributor Gross marigin Distributor Gross Profit Soren Chemical's Selling Price Soren Chemicals gross Mriagin Soren Chemical Gross Profit in $ Soren Chemical Manufacturing Price

Recommendation We would recommend Soren to adopt option 2 in order to better the sales of Coracle in future.