The market manager of Rohm and Haas, Joan Macey, discovered that the sales of the company's latest biocide product, the Kathon MWX, were disappointingly low in comparison to its other liquid biocide product which maintained a continuing 30% market share. Joan Macey must find a way to communicate the benefits of the new product and find an effective distribution strategy to bring the Kathon MWX to the limelight and reach the company's target sales.
Susan Lasley
Harvard Business Review (587055-PDF-ENG)
August 08, 2002
Case questions answered:
- What should Joan Macey do? Specifically, with respect to pricing? Specifically, with respect to distribution?
- What is the appropriate strategy for marketing a Kath on MWX type of product?
- What role do formulators and suppliers play in taking this product to customers?
- What factors have led to the failure of Kathon MWX?
- Why is Kathon 886 MW so successful?
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Rohm and Haas (A): New Product Marketing Strategy Case Answers
1. What should Joan Macey, Rohm and Haas’ market manager, do? Specifically, with respect to pricing? Specifically, with respect to distribution?
With respect to pricing, Rohm and Haas’ market manager, Joan Macey, should consider the following:
The Kathon MWX biocide costs between $1.01 to $1.25 per packet, but these prices are not what direct consumers pay, and the organization Rohm and Haas does not mention a fixed cost to the consumers. Hence, the cost per packet for end consumers varies from $2 to $6.
The variation and differences in the price may have a different impact on its customers. If it’s priced at a lower cost, consumers might think it is a low-quality product, while the higher price may impact the number of sales and might reduce the demand.
To fix the pricing aspect, Kathon MWX has two competitors:
- Dowicil 75 – Used for tanks above 500 gallons of industrial fluids.
- Tris Nitro – Costs $18 at a similar capacity as Kathon MWX treats large tanks.
According to this, the maximum price that the Kathon MWX could be priced at is $18, while the minimum price could be approximately equal to the manufacturing cost, i.e., $0.5. And the organization should take complete authority over the prices for which consumers buy Kathon MWX by giving distributors a manufacturer’s suggested retail price.
As regards the Distribution, Joan Macey should consider the following:
The company can utilize the additional profits from increasing the price to conduct information sessions about the Kathon products to end-users, improve the packaging and advertising of the products, to train the distributors.
In this case, Rohm and Haas do not distribute directly to users, where products are first sold to distributors, and then they sell the products to tool shops and other retailers in the market.
The formulators use their packaging and give no credit to Rohm and Haas.
The company should use ways to improve the brand name and capture the market share so that end-users recognize that the Kathon products are produced by Rohm and Haas.
2. What is the appropriate strategy for marketing a Kath on MWX type of product?
John Macey should contemplate
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