explore the target markets and employ efficient distribution strategies of Soren Chemical

explore the target markets and employ efficient distribution strategies of Soren Chemical

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ANALYSING THE CASE

Strategic problem statement:

Subsequent to the launch of Coracle product which was deemed superior and was expected to raise high revenue by selling a lot of units, Soren Chemicals is still faced with the problem of marketing the product and raising its sales.

Tactical Problem Statement:

Soren Chemical has failed to properly launch and market their new product due to lack of comprehensive consumer research and consumer awareness as well as absence of proper strategy to explore the target markets and employ efficient distribution strategies.

Identification of issues and symptoms:

Coracle

Soren Chemical initially concentrated on business to business sales but in in 2002 they began developing brands for potential consumer market. The company decided to come up with pool water clarifier for their consumer market and the marketing manager, Moritz was to come up with go to market strategy. Coracle is a “flocculants” chemical alongside Kailan MW were made to form insoluble hydroxides that could physically trap suspended particles that cannot be removed through physical filtration alone.

The product could help in purifying water by getting rid of even smaller particles of 0.5 microns from the pool. Kailan MW proved to be superior because it could combat even organic debris such as algae, various water pathogens as well as oils from deodorant, hair spray and lotions that could perhaps make water cloudy and even smell bad. The product was also so effective that even a small quantity would work on a bigger volume of water.

U.S market is estimated to be approximately $30 million with commercial pools expected to give the highest demand of almost 300, 000 while 1, 000 water parks in U.S. The commercial facilities had a high number of clients and therefore required clarity and treatment of water than private pools. However, Kailan MW was only meant for large scale commercial facilities yet there was need to consider smaller pools in the residential which is an untapped market. This later prompted the development of a product similar to Kailan MW in chemical content but could be used for smaller pools, lower bather loads and less frequent usage known as “Coracle”. Coracle had a more fragmented consumer market with nearly 9 million residential swimming pools that needed regular maintenance and cleaning.

A two-step process to wholesale distributors that supplied specialty retailers and service professionals was used with a few numbers of suppliers. Three competitors for the residential pool clarifiers were identified including Keystone Chemicals, Kymera and Jackson laboratories with each having between 15% to 20% market shares. The product was sold for $14.88 manufacturer price in a two quart bottle. Wholesale distributors expected a 30% gross margin as retailers and professionals took 15% gross margin and leading to a retail price of $25 to consumers. With the high expectation of 50, 000 gallons, only 3, 725 were sold.

Symptoms: The product had a retail price of $25 which was higher than the price of other competitors

Issue 1: (Weakness) the price is so high for the consumers who are used to low price clarifier provided by other competitors. Other measures should be taken to curb the high cost of distribution.

Symptoms: Coracle undergoes several intermediaries including wholesalers, professionals and retailers that make distribution very expensive. This has been the system in the industry yet it is a very expensive process.

Issue 2: (Threat) Coracle incurs a lot of cost in the distribution because of the involvement of many intermediaries who charge high gross margin thus leading to its high cost.

Symptoms: Coracle is very effective and efficient compared to other products offered by other competitors but retailers are not very much aware of the effectiveness and even the product itself.

Issue 3: (Strength) Coracle is of high quality in its working compared to products offered by the competitors and sell very well if the consumers can be made aware.

Symptoms: Coracle is not reaching many consumers at the grassroots levels and the same distributors, service professionals and retailers for other competitors such as Keystone Chemicals, Kymera and Jackson laboratories are the ones Soren Chemicals uses. They are only selling what they are used to and what they find easy to sell.

Issue 4: (Opportunity) most consumers are not aware of the product because of the poor and biased distribution channels as well as insufficient marketing.

Symptoms: Soren Chemicals is not experienced in selling consumer products and they do not have a loyal customer base as other companies.

Issue 5: (Weakness) The Company only has experience in business to business transactions and therefore requires intensive marketing to reach target market

Categorizing the issues in order of importance (Long-term/Short term)

Short Term:

High cost of Coracle (Issue 1)

Soren Chemicals sells Coracle at a very high cost, $25, compared to other products and therefore Moritz should arrange with the company to ensure affordable prices.

Company lacks consumer research (Issue 4)

The company should begin research about consumer buying preferences for better and successful sales. Moritz needs proof of who would actually buy, how and when and why they would want Coracle before entering the market.

Eliminating Intermediaries (Issue 2)

Several intermediaries involved including wholesalers, retailers and pool service professionals need to be reduced or completely eliminated because they hinder sales of Coracle by hiking its price.

Long Term:

Lacking consumer base (issue 5)

Soren was initially doing business to business transactions and therefore did not have a good consumer base being that they never dealt with consumers directly. Being that competitors are already having a market share, Soren Chemicals should also strive to have a share in the industry.

Promoting the efficiency of the products (Issue 3)

Coracle is very efficient but pool owners both in the private and commercial sector seem not aware of it.

RECOMMENDATIONS

On Issue 1:

Alternative 1: The Company should endure to minimize Coracle cost through reduction of various intermediaries.

Alternative 2: The Company may reduce the packaging and insist on the effectiveness of Coracle as the benefit derived from buying it.

On issue 2:

Alternative 1: Soren Chemicals should come up with their outlets to distribute and sell Coracle

Alternative 2: the company may also deal only with a single intermediary that is deemed effective and efficient

On Issue 3:

Alternative 1: The effectiveness of the product should be done through promotions and demonstrations

Alternative 2: Soren should focus on superiority of Coracle while doing advertising and marketing

On Issue 4:

Alternative 1: Thorough market research should be done to ensure maximum domination and penetration of the market.

Alternative 2: The Company may hire a consulting firm to carry out market research and advise them on the best advertising and marketing strategies.

On issue 5:

Alternative 1: Media advertising should be increased to create awareness

Alternative 2: There should be road shows and promotions of Coracle product everywhere throughout the country