Rohm and Haas Case Study 2

Topics: Marketing, Term, Time Pages: 6 (1589 words) Published: May 8, 2015

Rohm and Haas
Sayali Suryawanshi
John F. Kennedy University
Marketing Management
April. 26. 2015
No. Words: 1604

1. What is Kathon MWX really worth to users (answer needs to be a dollar value that is supported through your reasoning, show formula for value) Kathon MWX’s primary benefit is that it keeps metalworking fluids in tanks clean for a longer period of time. Other competing alternatives when compared to Kathon MWX’s are less powerful and would need to replace the metalworking fluid very often which will result in user spending more. Below is the example that supports my above reasoning:

Kathon MWX vs Tris Nitro:
Tris Nitro, another product that was available at the time when Kathon MWX was introduced into the market. However, Kathon MWX comes with a pack that supports 25 gallon fluid tank whereas the Tris Nitro supports 50 gallon fluid tank for the same price. Also, the products were designed differently. Tris Nitro is effective only 3 days whereas Kathon MWX is effective for 21 days. Let’s consider users have a 50 gallon fluid tank that needs to be cleaned. One Kathon MWX packet = 1.1 $, One Tris Nitro packet = 2.2 $ One Kathon MWX packet is designed for = 21 days for 25 gallon fluid tank, One Tris Nitro packet is designed = 3 days for 50 gallon fluid tank. Money spent by Kathon MWX user for one year:

365 days/21 days * 2 * 1.1 $ = 17.38 * 2.2 $ = 38.23 $
Money spent by Tris Nitro user for one year:
365 days/3 days * 2.2 $ = 121.6 * 2.2$ = 267 $
Total money saved by Kathon MWX user for one year is 267.67 – 38.23 = 229.43 $ Hence it is always advantage for user if they use Kathon MWX product when compared to other competitor such as Tris Nitro. Standard Formula that can be used to calculate the annual spending for both products are: Kathon MWX:

365/21 days * 2 * ($ price of each packet)
Tris Nitro:
365/3 days* ($ Price of each packet)

2. Why isn’t Kathon MWX not selling? How would you describe the user environment? Kathon MWX has been specifically designed to meet the needs of individual metalworking fluid systems operators who have reservoir capacities of less than 1,000 gallons. However, it isn’t selling as expected due to several reasons. 1. Wrong pricing for a superior product: As explained above, Since both Tris Nitro and Kathon MWX sold each packet for $2.2 and users needed to purchase Tris Nitro 7 times more often (21/3), in any given time period the distributor would have made 7 times more profit by selling Tris Nitro to users rather than by selling Kathon MWX. An additional factor was that, because Kathon MWX kept tanks clean for a longer period, sales of Kathon MWX cannibalized the distributor’s sales of metalworking fluid. It led to failure in the marketplace, even though it was a superior product. 2. Bad Advertising of the product:

Many users are unaware of the usage of biocides and the related benefits and they rather relied upon household disinfectants to bleach to deodorants to kill odor casing bacteria in their machine sumps. Further, of those who have used a biocide at least once, only 50% recall the brand name of the Kathon MWX biocide.  Also, there was lack of awareness of the product’s ability to resolve rancidity problems and potential cost benefits. 3. Limited Size packaging:

Kathon MWX with its 2-ounce pack can effectively treat 25-50 gallons of diluted metal working fluid. The current packaging size makes it inconvenient for usage by customers with tank size larger than 100 gallons because multiple packs will be required to cure the tanks. For example, a 500 gallon tank would potentially need 10 packs. Hanging more than 2-3 packs is definitely cumbersome.  4. Additional maintenance: Lack of water solubility of the product and the requirement of special care while installation and disposal raises safety concerns. Because of the difficulty in disposing the product midway due to high concentration levels, customers would now have...
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