Rohm and Haas
Joan Macy, Rohm and Haas (R&H) market manager for Metalworking Fluid Biocides, has the primary responsibility of marketing R&H’s new consumer packaged MWX metalworking fluid biocide aimed at the small, individual cutting fluid system market. MWX, has been on the market for the past five months, but has only $12,000 in sales when it has been projected for $84,000 during that time span. Initial surveys have shown that there is a vast potential for MWX in the market, but the end user has not been receptive to the advertisements.
Though Rohm and Haas has tied up with the formulators for the distribution of Kathon MWX, the main target segment for this product, the Individual Systems customers, rely on industrial supply houses and machine tool shops entirely for all their metalworking fluid requirements. Hence our current strategy of selling through formulators appears ineffective and maybe a prime reason for the low sales of Kathon MWX as explained by the following reasons:
Formulators primarily deal with users of large central metalworking fluid systems and not with users of small individual metalworking fluid systems, which are the target market segment for Kathon MWX.
Rohm & Haas has disallowed private branding of Kathon MWX and that can be disincentive for the formulators to promote the product.
Kathon MWX potentially increases the life of metalworking fluid by 2-4 weeks. This would cause a significant reduction in revenues for the formulators since the individual system customers would now be purchasing fluids less frequently.
For a typical small machine shop for a year they use 13,200 Gallons (22 machines * 50 gallons * 12 times a year). This is because they are currently discarding fluid every four weeks. By using Kathon MWX they increase the life span by 2-5 weeks. This would reduce the sales of the fluid by roughly 50%, the loss of which will be borne by the formulator.
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. The company estimates the market size of this segment to be about $20 million. 50% of this segment is unaware of the usage of biocides and the related benefits and rather relies upon household disinfectants to bleach to deodorants to kill odor-causing bacteria in their machine sumps. Further, of those who have used a biocide at least once, only 50% recall the brand name of the biocide.
Each 2-ounce pack of Kathon MWX 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 since 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.
After analyzing the situation, three recommendations have been put forth to address the issue of the lack of end user purchases.
Selectively redevelop the distribution network in phases to directly supply to the Industrial Supply House.
The second recommendation was to change the marketing campaign to better educate the consumer about the benefits of maintenance biocide (MWX).
The final recommendation is to change the packaging to better attract the consumer.
We will have the price of the product be retained as it is. The economic value to the customer on usage of Kathon MWX is significantly higher than those of Tris Nitro and Dowicil. This presents a strong case for a price increase, but due to the lack of awareness of biocides in general and Kathon MWX in particular, we do not recommend a price hike for the next 7 months. However, we suggest that this be considered as a long-term strategy.
We will plan to move away from the formulator channel in the...
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