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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 Purity HydroPill ClearBlu

Cost per container, retail price Cost per treatment, retail price Annual cost, retail price
PRICING
If Distributor Margin
Pricing Simulations
30% 20% 25%
Retail Price 25 22 23
Retailer - gross margin 15% 15% 15%
Retailer - gross profit 3.75 3.28 3.50

Distributor Price 21.25 18.6 19.84


Distributor - gross margin 30% 20% 25%
Distributor - gross profit 6.375 3.72 4.96

Soren Chemical Price 14.88 14.88 14.88


Soren Chemical gross margin 35% 35% 35%
Soren Chemical gross profit 5.21 5.21 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 preceived cleanliness, it will become a
risk to bring coracle to market without a suitable
emphasis and know what the consumers concern more
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 Coracle’s 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 manufacturer price of
USD 14,88, which soren has ascertained for 35% gross margin
Coracle SWOT
 Strength
 Has Kailan MW advantage as product.
 Reducing pool’s 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 (Cont’d)
 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 and perceived cleanlines)
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”, cause 30% gross margin.
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