Rohm and Haas: Kathon MWX

Résumé du document

Since the conception of its new product Kathon MWX, Rohm and Haas has been failing to place it successfully in the market and achieving target sales. Being familiar to a marketing strategy appropriate for large industrial buyers, the company has tried to push its new product through this same marketing model, even though its target consumers were different, who have smaller-scale operations. Banking on the four P's of marketing as a starting point (product, price, place, and promotion), we have analysed their strengths and weaknesses in the Rohm and Haas case. Concluding that the product itself is the best in the market, the following observations and suggestions for improvement are mentioned in the areas of pricing, distribution channel (place), and promotional efforts.

Kathon MWX currently lacks a consistent pricing strategy. Not only has Rohm and Haas forfeited control of the price charged for Kathon MWX by distributors, but the price ranges from $2/packet to $6/packet depending upon the number of steps required to reach the end user. However, the sales revenue received by Rohm and Haas per packet of Kathon MWX ranges from $1-$1.25. With a manufacturing cost of approximately $0.50 cents per packet, the existing pricing system is ad-hoc and inefficient for the multiple middlemen, and possibly a major factor behind the failure of Kathon MWX in the market. There is a need for a clear pricing strategy for Kathon MWX.

Extraits

[...] Firstly, Rohm and Haas needs to establish new contracts with its distributors. There must be a commitment to the sharing of information: to how many local shops does each distributor sell, how many packets of Kathon MWX do they sell and at what price? Then, Rohm and Haas must fix the maximum price that can be charged to the end user. It is very important that there are fixed rules for the entire distribution network at each level. Additionally, Rohm and Haas could remove the distributors entirely from the value chain when selling to large chain retailers, such as Home Depot. [...]

[...] Potential buyers of Kathon MWX are a completely different audience. An idea for Rohm and Haas may be to offer marketing training for its existing sales force, as most of the personnel come from technical and chemistry-related fields. If this is impossible, it is recommended that Rohm and Haas should hire sales personnel with a marketing background. As of now, most of the potential customers are unaware of the need for “biocide packets, for machine maintenance”, as the current ad states. [...]

[...] Place The distribution channel of Kathon 886 MW is not appropriate for Kathon MWX, whose target consumer uses much smaller tanks and for different purposes. Rohm and Haas has been trying to push a dissimilar product through an identical distribution chain. Each stage in the distribution network adds value to Kathon 886 MW, but in the case of Kathon MWX value is not added by using a large distributor. Kathon MWX is sold by the Specialty Chemicals sales force. It is distributed to the market through a two-level distribution network. [...]

[...] Rohm and Haas has made a new product which must be purchased and used directly by the consumer, contrary to Kathon 886 MW. That is why it is crucial to improve the way the end user has access to this product. One possible consequence of removing the distributor from the value chain in some areas is an arousal of negative sentiment toward Rohm and Haas from its distributors. Another implication for Rohm and Haas is that it will need to study the existing large chain retailers, their locations and the possibility for the firm to manage its own shelf space inside the store, as it is a good way to control place and price. [...]

[...] Most small firms which are potential targets for Kathon MWX buy their products from the local shops like industrial supply houses and machine tool shops. A main problem of this distribution network is the lack of sharing sales information between Rohm and Haas and its distributors. Rohm and Haas has no idea about the exact number of small shops where Kathon MWX was sold and at what price. The potential market for Kathon MWX is fragmented which causes big problems of distribution. [...]