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--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 !