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Rohm and Hass (A) New Product

Marketing Strategy

Introduction

Rohm and Hass was a reputable company dealing in the chemical industry. In 1983, the

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company had gross sales of more than $ 2 billion around the globe. These sales came from four

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segments; (1) polymers, resins and monomers, (2) Plastics (3) Industrial Chemicals (4)

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Agricultural chemicals. However, the industrial products consisted of three product groups
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including Fluid Process Chemicals, Petroleum Chemicals and Specialty Chemicals. The specialty
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chemicals group had two main products; Kathon 88 MW and Kathon MWX. Kathon MWX was
previously introduced in order to resolve the issue of lesser capacity; less than 1000 gallons.
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However, the division experienced slow growth despite of great market potential.
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Problem Statement
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Rohm and Hass availed the opportunity of entering in small capacity metalworking systems
through the formulation of Kathon MWX. However, they had budgeted sales of $200,000, but
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they could only get $12,000 in initial five months. It was found that the customers did not have
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product awareness as well as brand awareness. They did not know if the product could resolve
the issue of rancidity for smaller metalworking systems. Moreover, the distributors (formulators)
sold it by private branding leaving no information for customers about Rohm and Hass. Macey,
the market manager for micro biocide application in the metalworking fluid had to create a new
marketing plan/strategy in order to increase the sales and avail the market opportunities.

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Analysis

The product had the market potential to succeed because there was merely a product which could
resolve the issue of rancidity in small capacity metal working systems. However, the product
could not get enough sales during the first five months. This was basically due to low product
awareness among customers as they did not know if Kathon MWX resolved the issue of
rancidity. There was a potential in the market for the growth of maintenance products in the
market. However, the end users specifically preferred economical but not cheap products.
Moreover, they took more interest in the products which were safer to handle. It is also evident

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from the case that demand of Kathon MWX was greater than Kathon 886 MW. It is because that

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most of the metalworking systems were small capacity systems. Moreover, the private branding

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by the distributors was another problem faced by the company. The formulators or distributors

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purchased the product directly from the company and distributed it forward. This decreased
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brand awareness and furthermore, changed the prices dramatically. The economical prices by
company could end up high prices in the end. For more understanding SWOT analysis has been
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done below:
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SWOT Analysis

STRENGTHS
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Kathon MWX had a great market potential of more than $ 38 million. Moreover, similar to the
customers’ preference, the product was really easy and safe to use. What is more in its
advantages, the customers did not have to check its maintenance again and again. It was highly
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effective for the small capacity systems and there was rarely an alternative available for it.
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Furthermore, there a great customers surplus; the number of customers for Kathon MWX were
far greater than Kathon 886 MW.

WEAKNESSES

The product awareness was very low among customers; many customers did not know if there
was an effective solution available for the treatment of small capacity containers. There was also
a lack of need recognition among customers. Also, the customers did not know about the

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company; they did not know if MWX were the products of Rohm and Haas. The distributors
took advantage and sold it to the customers at a greater price. Furthermore, few distributors felt
that there was no incentive for them to sell the product.

OPPORTUNITIES

The product had great market potential and it was estimated that the number of end users for
MWX won’t run out. Moreover, the new market campaigns and strategies presented a lot of
opportunities for the success of the product. It is beneficial for the customers as it can cut costs
for customers because by using Kathon MWX the customers can hold the fluid longer than ever.

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THREATS

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Major threats for the company are the threats of competition. There are other companies which

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have nearly equal market share as of Rohm and Haas; 15-20 %. There is no substitute available
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at this time; however, there would be likely threat of substitutes in future.

The customers’ survey also revealed that there was less need recognition in the customers for the
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dermatitis. Most of the customers were either not aware of Kathon MWX or they did not know
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the benefits of the MWX. There were many customers who did not have tried it one either.

Recommendations
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For the resolution of the current issue, I would quote following recommendations for Macey:
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 Macey should allow private branding for the formulators in the short term. For instance,
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for the increased sales of the Kathon MWX, the private branding by formulators would
cast an immense increase in the sales. However, this is not a good idea for the long term
because when product awareness would increase, the company would need to have it
brand name on the product to survive in the competition.
 Macey should produce a new pricing strategy and increase the prices of the product. This
would attract the customers towards the product. The customers would deem it as a
premium product and most likely buy it.

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 The customers are not aware of benefits of the product; for instance, using it they can
hold the fluid for 2-5 weeks and save up to 33,000 to 55,000 dollars. The company needs
to run a promotional campaign in which their main focus should be on the safety features
and the cost cuts.
 Furthermore, the company can increase benefits for the distributors and offer them the
products at a lower price until the success of the product. The discount for the distributors
might attract them and they might also stop bothering about private branding.
 Another option for the company is to have their private distribution department or they
can hire a third party to sell the products with the company’s brand name; however, this
would need a larger investment.

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 Last but not least, I would recommend Macey to give free samples to the customers so

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that they get to know the advantages of the product.

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(1) Is it a good idea to base the pricing of the MWX on value?
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It does not seem to be a good idea to base the price of MWX on the value factor. The reason
behind is that the consumers are not aware of the value of the product. There is no value
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recognition of the Kathon MWX among the customers of specialty group chemicals. Thus, if the
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company bases the price on the value, it might seem overpriced to customers.
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(2) What are the main obstacles to the development of the MWX?
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There are several obstacles which hinder the growth of the Kathon MWX. First of all, the
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company did not allow formulators to privately brand Kathon MWX. It made it less attractive for
formulators and thus, hindered the development of MWX. Moreover, to some people it seemed
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overprice because of lack of value recognition. Another factor is the lack of awareness among
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people about the availability of a product which can be handy for the containers with less than
1000 galleons.

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Appendices

Figure 1: SWOT Analysis

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Strengths Weaknesses

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 Customer surplus  Low need recognition

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 Saves money for customers  Low product and brand awareness
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Safe
 Easy to use
 Highly effective
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Opportunities Threats
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 Great market potential  Competition


 Promotional campaign can help  Substitutes
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 New distribution system


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