Soren Chemical Why is the New Swimming Pool Product Sinking

Prepared by :

Iwan Kurniawan Anita Hutahayan Yan Anantakusumo Rizki Setyo P

Company Background
Founded in 1942 by Timothy Soren

Sell :
Industrial-strength cleaning solutions Industrial chemical for lubricants and

fuels Chemical solution for treating drinking water and wastewater. 350 products line 2006 revenue is $450 million.

Product Background
Kailan MW Flocculants. (Clarifier)

Flocculants can be thought as chemical nets

that works in water to filters particles as small as 0.5 microns. Effective in dealing with: Oil (deodorant, hair spray, lotion cause odoor and Cloudiness) Combat organic debris (algae, dangerous pathogens such as E.Coli and Cryptosporidium)

Product Specifications
Soren sold Kailan MW and Coracle are

flocculants chemicals that suspended particles in liquids to angglomreate into larger, heavier particles called flocs Kailand MW found in 2002 that effective in dealing with oils that come from deodorant, hair spray and lotions hiwch cause odors na dcloudiness in water (safety hazard) One gallon of Kailan MW could effectively threat approximately 500,000 gallon of water Soren estimated for 2007 US Market for specialty commercial use clarifiers to be approx USD 30 Millions

PRICING

PRICING
Pricing - Coracle & It's competitors
60 50 40 30 20 10 0 Coracle
Cost per container, retail price

Purity

HydroPill

ClearBlu
Annual cost, retail price

Cost per treatment, retail price

PRICING
Pricing Simulations Retail Price Retailer - gross margin Retailer - gross profit Distributor Price Distributor - gross margin Distributor - gross profit Soren Chemical Price Soren Chemical gross margin Soren Chemical gross profit If Distributor Margin 30% 20% 25% 25 22 23 15% 15% 15% 3.75 3.28 3.50 21.25 30% 6.375 14.88 35% 5.21 18.6 20% 3.72 14.88 35% 5.21 19.84 25% 4.96 14.88 35% 5.21

Problem Identifications
Coracle as one of clarifiers product that produced by

Soren Chemical which targetiing residential pools that have smaller size againts commercial pools The Targeted residential pools of coracle have a lower volume of water, lower volume of swimmers, and less intense maintenance program Estimated thered are 9 millions residential pools in US Currently corracle has 3 leading competitors for residential pools clairifiers (each of competitor has a 15% to 20% share: Keystone Chemical Kymera Jacson Laboratories

Problem Identifications
The first year goal for coracle is USD

1,5 Millions The frequency of usage of residential pools and residential pool chemicals will be increased from May (the average months of pools usage are 5 months), normally people will swim in summer time (May-September)

The Analysis

The Analysis
Consumers, wholesales distributors, pool

services professionals, pools specialty retailers, mass retailers neet to take time to know the Coracle brand The Stock in the consumers sides, pools services professionals sides, pools speciality retailers sides and mass retailers will also impact the sales of coracle. If consumers decide not to use the pools until next may, they may not maintain the pools, and no need to purchase the clarifiers like Coracle Consumer market of residential pools emphasized more on aesthetics and

The Analysis
30% of the renspondents recalled receiving the

corracle materials that soren Chemical had sent in response to their inquiries. Furthermore, 70% of the renpondents stated that their distributors had not offered Coracle or it seems Coracles sales team did not deliver sufficient efforts to introduce this kind product Ther is unclear gap between Kailan MW and Coracle even though kailan MW targets at the segment of commerical pool and water parks, meanwhile Coracle targets at residential segment. At least 2 formulators who dilute Kailan KW with a private label and sell to distributors for consumer market and this will compete with coracle The Retail price for Sore per container of 0,5 Gallons has been settled as USD 25, and this is based on a

Coracle SWOT
Strength Has Kailan MW advantage as product. Reducing pools owner annual chemical cost by 20% to 30% Weakness New product/Entry. Higher unit price than competitors. Distributors does not attracted enough to promote Coracle. Coracle only promotes to distributor, retailer, and profesional. End users do not realize the value of Coracle relative to other clarifier.(from price perspective and advantage)

Coracle SWOT (Contd)

Opportunity
Potential Great Demand 70% respondents had not receive Coracle material yet. 70% respondents states that coracle had not been offered by distributor.

Threat
Need additional $600,000 as advertising

budget. Different purchasing behavior between professional (from wholesale distributor) and consumers. ( buy from retailers, aesthetics

The Alternatives
Soren had launched Coracle in insuitable

month because September is the last busy month for swimming season, it can not refered as good season for sales. Accept Morrits marketing budget proposal, to promote to end user not only to distributor chain.
Consumer education. Can be add some physical evidence and free

testing.
Review the pricing and package strategy

because it has sensitive to end consumer.

Review the agreement between Soren and

distributor about differentiated Chemical Agent,

Action Plan
Priority the restructuring of pricing product

strategy.
Renegotiating with wholesale distributor about

gross margin about 20% decreasing retail price. 20% $22 25% $23
Promote aggresively to end consumer. Educate consumer about the advantage of products. Re-launch the product to the market on summer. (swimming seasons). Soren has to try to bypass the wholesale

distributors, selling limited range to wall mart and homedepot.

Conclutions and Suggestions

Opportunity exists in terms of margins for the

distributers and retailers Deliver clear message to the end users, and make then aware about the facts the product offering Define clear margins for the distributers who may sell the diluted product