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
Company Soren Keystone Kymera Labs
Coracle with new
Product Coracle price Purity Hydropil Clearblu

Cost Per Container 25 30 15 3.5 15

Cost per Gallon In $ 50 60 60 NA 15

Cost per Treatment 3.91 4.692 2.34 3.5 3.75

Annual Cost 39.06 46.92 46.88 35 75

*All prices are in $

Exhibit 2*

Cost Per Cost Per

Marigin Structure container_Exisiting container_Recommended
Retailer Selling Price 25 30
Retailer Gross Marigin 15% 19%
Retailer profit 3.75 5.7
Distributor Price 21.25 24.3
Distributor Gross marigin 30% 38%
Distributor Gross Profit 6.375 9.234
Soren Chemical's Selling Price 14.875 15.066
Soren Chemicals gross Mriagin 35% 35%
Soren Chemical Gross Profit in $ 5.21 5.2731
Soren Chemical Manufacturing Price 9.665 9.7929

Recommendation

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