Background/Problem statement:
Rohm and Haas found the new opportunity to enter to the market of small capacity metalworking system. Although they estimated the $200,000 sales revenue but they gained $12,000 for the first five months, The End users did not realize that new Kathon (MWX) can solve the problem of rancidity. Rohm and Haas does not have its own identity for its products because they sell their products directly to the formulators and formulators brand the MWX solution privately.
Customer and Product characteristic
MWX is a good product that satisfies the customer need for machine with less than 1000 gallon capacity, this product is easy to use and safer to handle, also it is the most compatible product among the other competitors. In one stage, Rohm and Hass customers are machine tools shops and industrial suppliers who sell product to the individual system machines, these customers need good delivery and high margin. Market research shows that end users have a demand for the products that can eliminate dermatitis causes, these customers are price sensitive and want safety and ease of use, which the MWX can fulfill these needs , also by using MWX, the end users don’t need to do maintenance frequently and according to table 1 they can have a good amount of saving.
Pricing
MWX is priced from $1.01 per packet($145/144) to $1.25 per packet(180/144), however these prices are not end users price, and company does not specify a fixed price to consumers. Therefore, the price for end user varies from 2$ to 6$. These prices could have two different effects on customers, cheaper one could represent the low quality for customer while the higher price may push them away from the product. For first step Rohm and Haas should fix the price for end user. MWX has two competitors, first one is Dowicil 75 but this product is not really competitor because it is just useful for tanks over 500 gallons. The other competitor is TrisNitro which according to Table 2 it would cost $18 for the same level of consumption as one MWX packet. Therefore the maximum price that company could charge it would be $18 while the minimum price is equal to the manufacturing cost ($0.5)
Promotion
the company’s advertising strategy wasn’t successful, the target for MWX are customers who are interested in low cost, ease of use and safety, Rohm and Haas should have a new advertising which can explain the value of product and the amount of customer saving. According to the case exhibit 6, by using Kathon MWX, users can keep the fluid 2-5 weeks longer, therefore according to Table 1 if customer keep the fluid just for 2 more weeks they can save up to $33,557 per year and if they keep it for more 5 weeks they can save up to $55,929. Thus, by showing this kind of cost benefit analysis on the package, they can have more influence on customer decision. The free sample was a good idea but only 20% of customer remembered they received the sample, therefore it would be more appropriate if company can attach flow up survey. in this way company can get a feedback and estimate how many of its’ customer received the sample. As there are 150,000 potential customers in 17,981 distributors, in average, each distributor should have 8 free samples, according to table 3 break even analysis shows that for cover the cost of free sample, company should sell 96,000 more packets. Position and Distribution
Rohm and Hass can continue selling the product to formulators which has low distribution cost and as formulators are responsible for 886MW, this policy could emphasize on the relationship with formulator. the other option is they can have their own distribution department or use the third party for distributing the product with their brand name. but, this strategy needs high investment on sales people. According to table 3 company should have 1360000 increase in sale which is almost equal to market capacity (1,701,000) also if we assume carrying each box would cost 50$ they
