Soren Chemical is new to developing a consumer brand (it partners with formulators to use private-label branding for its Kailan MW line). Therefore, they are relatively inexperienced with marketing consumer-oriented brands whereby they have to handle directly with wholesalers and also market to retailers, pool service professionals and consumers. This inexperience might have caused miscommunication between channels as seen when pool service professionals and specialty retailers had made inquires about Coracle but only 30% recalled receiving the Coracle material. Also 70% of them stated that Coracle had not been offered by their distributors. Also, Soren is new to the residential pool market and might not fully understand the consumer and thus unsure how to communicate Coracle’s benefits to the consumer.
Furthermore, the extensive channel structure that Soren has to go through might have hindered Soren’s efforts to communicate Coracle’s actual value to the consumers. We see that Coracle’s unit cost is more expensive than its competitors, but its annual cost is much cheaper, still Coracle’s consumers do not realize the value of Coracle relative to other clarifiers (only 25% of the consumers understand clarifiers).
Soren has to go through a distributor and retailer who demand a 30% and 15% gross margin, and this exacerbates Soren’s price from $14.88 to a retail price of $25 which consumers finds expensive. There is vertical channel conflict because of goal incompatibility. Soren want to increase market share through a low-price policy but distributors and retailers prefer to work with high margins. They understand the low annual cost of Coracle (compared to consumers who look at the unit price) and might not want to stock up on Coracle given the low gross margin.
2. What is Coracle really worth to end-users? To... [continues]
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