Soren Chemical Case Analysis

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Soren Chemical Case Analysis

Jaimie DeVries
Mark Lesko
Katherine Milliken
Lori Quintavalle

Florida Atlantic University

Advanced Marketing Management – MAR 6815 – Online – Fall 2010

Dr. Gopalkrishnan Iyer

October 25, 2010
Problem Statement

Soren Chemical produces industrial strength chemicals, cleaning solutions, and chemical solutions for treating water. Since it’s founding in 1942, Soren has operated as a business-to-business company. They have recently introduced Coracle, a pool clarifier aimed at the consumer market. The goal for first year sales is $1.5 million. At 6 months, sales of Coracle are just $111,000.

For Coracle to improve sales in the second half of the year and come closer to meeting the first year sales volume target of $1.5 million, the marketing department needs to assess what the actual market is for residential pool clarifiers and if their product can compete. If Coracle is considered competitive, Soren Chemicals must then determine the most effective means for increasing distribution and reaching the consumer market using either a “push” or “pull” strategy. Situation Analysis

Our internal and external analysis is based upon Soren’s research of price and cost information for the top three competitors in the residential pool-use clarifiers: ClearBlu (Jackson Labs), Purity (Keystone Chemicals) and HydroPill (Kymera). The conclusions drawn from our S.W.O.T. analysis are presented below (see Appendix-Exhibit 1 for a detailed analysis).

We determined the residential pool clarifier market to be roughly $112,500,000 (see Appendix-Exhibit 2), with Soren Chemicals aiming to capture 1.3% with the introduction of its private brand, Coracle. Although offering equivalent or better results than other residential clarifiers and end-users a savings of $17 per year compared to the leading residential pool clarifier (Harvard Business School, Table A), Coracle has failed to achieve the required levels of awareness needed to meet Soren’s sales goal. Despite the awareness that is present for the Coracle in the form of inquiries from retailers, distributors are not offering the product, indicating a less than optimal relationship with the players on the distribution level. In the broadest sense, Soren must alter its marketing strategy to better align with both distributor and consumer demands in order to capture a greater portion of the 40-65% market share that is not controlled by the leading competitors (see Appendix-Exhibit 3). Strategic Alternatives

Soren Chemical has two strategic alternatives to consider in this case; Soren could push Coracle to distributors and retailers to stock the product or Soren could target end-users to pull Coracle through distribution channels all together. One benefit to a push strategy is that it would cost less than the pull strategy. The pull strategy would require a $600,000 marketing investment to raise awareness and increase demand among service professionals. The push strategy may initially cut into revenues but it would not cost nearly as much as the $600,000. The revenues in a push strategy will go down because a push strategy would require raising the price of Coracle to make it appealing to retailers and distributors. This would make Coracle more attractive for retailers to create space for the product on the shelf, but wholesale distributors would want 30% gross margin on Coracle as opposed to the usual 20% gross margin, thus cutting into Coracle’s profits. Soren would need to cut per container and per treatment margin to decrease the cost to distributors and retailers.

One benefit to the pull strategy is that it would create a strong awareness among end-users through the extra advertising and promotion. The greater awareness would then create more demand for Coracle among end-users and provide incentive for retailers to make shelf space for the product. The $600,000 plan to produce this benefit would be a con to a pull...
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