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Rohm And Haas New Product Marketing Strategy Case Study Solution

BUAD 880

Rohm and Haas Case Study

1. Purpose of the Report:

Joan Macey, the Rohm and Haas market manager for Metalworking Fluid Biocides, was reviewing the marketing approach for the recently introduced Kathon MWX maintenance biocide. Rohm and Haas is one of several manufacturers that develop liquid biocide chemicals for eliminating microorganisms in metalworking fluids. The company currently manufactures the Kathon 886 MW concentrate biocide, the leading biocide in the concentrate biocide market. Kathon 886 MW is a very powerful concentrate used for large-capacity reservoir systems (above 1,000 gallons) and is too powerful for small fluid reservoirs. As a result, the company developed the Kathon MWX maintenance biocide for use in small-capacity tanks (less than 1,000 gallons). The problem is the new product is not selling as expected and Joan is not sure why. The purpose of this analysis is to:

• Evaluate the strengths and weaknesses of the current marketing plan

• Recommend whether the current marketing strategy should be continued, rejected, or modified

2. Recommendations:

Continue with the current marketing strategy with the following changes:

• Establish a fixed price for end-users

• Provide product demonstrations at customer businesses with free samples

• Develop a follow-up survey for customers using free samples and develop a call back system to ensure distributors follow up on leads

• Demonstrate the product at trade shows

• Develop a new print advertisement with a cost / benefit analysis where typical household disinfectants are used in place of a maintenance biocide

o Display the savings opportunity prominently on the advertisement

o Explicitly state the safety and ease of use on the product

o Keep the advertisement short вЂ" minimize word usage

• Allow formulators to privately brand using a fixed specification that cannot be deviated from

3. Analysis:

Market / Customer Analysis:

The maintenance biocide market is a $38 million industry with competitors using all sorts of methods to treat metalworking fluids. Maintenance biocides are starting to be considered the preferred choice for bacteria and odor control and by 1993 are expected to completely replace the concentrate biocide market. The end-user for the maintenance biocides are the metalworking operators and shop foremen in the machine shops. These individuals are generally the decision making units for purchasing the product as they are the most familiar with the equipment and what is required to maintain them. The decision making process for selecting a maintenance biocide involves determining whether the product is needed for their operation and if so, what is the least expensive, most effective, and easiest to use solution available. Many consumers are unaware of the need or benefit of a maintenance biocide in small capacity fluid reservoirs so first hand customer training and education is usually required.

Industry / Competition Analysis:

The maintenance biocide industry is composed of four major manufacturers each with a 15 вЂ" 20% market share with products that range in price and fluid capacity treated. These manufactures provide biocide solutions in many different forms and it is up to the end user to determine what is best for their application. A lot of time and energy is spent developing biocide solutions therefore the barriers to entry into the market are rather substantial. The main competitors in this market utilize different marketing and sales approaches with some manufactures choosing to sell directly to end-users and others choosing to sell to formulators and distributors before passing the product on.

Company вЂ" SWOT Analysis:

Strengths

• Known for developing Kathon 886 MW, the primary maintenance biocide on the market, generally 10 times more effective than competitive biocides

• All salespeople have advanced technical degrees to support the customers

• Positive return on net assets for the past five years

Weaknesses

• Products sold to formulators and then redistributed to end-users under the formulators name (except for Kathon MWX) and not their own brand вЂ" difficult to create an identity in the market

• Financial goals not well defined вЂ" market size required to meet goals not well understood

Opportunities

• Maintenance biocide market estimated at $38 million and projected to continually grow

• 50% of consumers that use products to eliminate microorganisms use household disinfectants вЂ" many potential consumers unaware of the value or benefit of a maintenance biocide

Threats

• Competitors developing and introducing new products

• Metalworking operators use makeshift efforts to control microorganisms, unaware of the need for biocide chemicals

• Safety concerns associated with product, regardless of whether they are warranted or not вЂ" word of mouth panning the product for safety reasons

Conclusion

Rohm and Haas have a great opportunity to tap into the market of small capacity fluid reservoir metalworking systems by leveraging existing technology and the customer’s desire for the product. The company’s sales force is comprised of technically trained personnel that custom tailor solutions to fit a customer’s needs. By selling directly through formulators and distributors though, the company has made it difficult to develop their own identity. These outlets privately brand solutions derived from the Rohm and Haas products so the Rohm and Haas name is not as known in the industry as it could be. New

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Case | HBS Case Collection | August 1986 (Revised May 1993)

Rohm and Haas (A): New Product Marketing Strategy

by V. Kasturi Rangan and Lesley Susan

Abstract

Joan Macey, Rohm and Haas' market manager for Metalworking Fluid Biocides, found that sales of a new biocide, Kathon MWX, was utterly disappointing. This was all the more puzzling since sales of her other product--Kathon 886 MW, a liquid biocide used only in large-capacity tanks--was well on target and held a steady 30% market share. In May 1984, about five months after the new product was launched, Joan Macey was reviewing her entire marketing strategy with a view to bringing Kathon MWX sales closer to target. Of particular concern to her were the distribution and communication strategies used for the new product.

Keywords: Communication Strategy; Marketing Strategy; Product Launch; Distribution; Performance; Sales;

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