Rohm & Haas recently introduced a new product, Kathon MWX, in order to exploit an untapped portion (reservoir capacity under 1,000 gallons) of the biocide market. Even with limited competition within this segment, Kathon MWX has not been able to produce its annual target revenues, only capitalizing on roughly 6% of said target in a 5 month period. Large-scale distributors, who exhibit the most buyer power and influence over end customers in the industry, threaten manufacturer brand equity by relabeling all biocide maintenance products under their own brands. Even though Rohm & Haas does not allow distributors to change the label on Kathon MWX, the lack of end customer awareness for the manufacturer brands has detrimentally limited sales due to precedent relabeling habits in the industry. Rohm & Haas can achieve and possibly surpass its sales targets in the short-term by increasing price and incentivizing distributors with higher margins, and in the longer term by strengthening sales channel relationships with industrial supply houses and machine tool shops, as well as mitigating risk of brand cannibalization of other products by relabeling Kathon MWX.
At the end of December 1983, Rohm and Haas introduced Kathon MWX, a biocide, which is specifically geared toward smaller, individual tanks. Research shows that in best case scenario, Kathon MWX can save an end user up to 54% of annual cost when used. (See exhibit 1). However, despite Kathon MWX’s high quality and relatively low price, Rohm & Haas has been struggling with its sales of the product and establishing market share. Kathon MWX has not even reached a tenth of its targeted revenue during the first half of the year. Currently, the maintenance biocide market for small reservoir end users is near equally dispersed among a few large players, but its $20 million potential is far from realized due to the infancy stage of demand. We believe that Kathon MWX’s...