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Rohm and Haas (A) New Product Marketing Strategy Case Solution

Solution Id Length Case Author Case Publisher
1096 1186 Words (3 Pages) Susan Lasley Harvard Business School : 587055
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This case study is an example of an extension failure. There have been some factors identified for the failure of the product. The new extension was a smaller unit for the same maintenance biocide used by large manufacturers. The prediction of the sales of the new extension was based on the market potential. However, the product failed due to the distributor’s low involvement and the lack of knowledge among the target audience about the usage and benefits of the maintenance product. It was recommended that the market be developed for the product and the price level be adjusted and fixed to give higher margins to the distributors.

Following questions are answered in this case study solution

  1. What factors led to the failure of Kathon MWX?

  2. What alternative strategies should Joan Macey consider? What course of action do you recommend she follow?

  3. How should this plan of action be implemented? Be specific about the pricing and distribution of the product.

Case Analysis for Rohm and Haas (A) New Product Marketing Strategy

1. What factors led to the failure of Kathon MWX?

Kathon MWX was predicted to have sales greater than the Kathon 886 MW. The reason that the company thought that the product would be a greater success was the market potential that existed because of the high level of individual customers. The estimated predictions of the sales of the new product were $0.2 million. However, these predictions were very high as compared to the actual sales of the product. First, five months of sales amounted to only $12,000, much lesser than the prediction that was in million units.

One of the main problems was that the distributors were not involved in the sales of the products. There were two primary reasons for this uncooperative attitude of the distributors. Even though these distributors were the same, who had distributed the Kathon 886 MW, their level of interest was not so high for MWX. The smaller packets for individual usage meant that the packaging cost of these packets was higher. It was 50 cents per pack. Other than that, the company decided to keep the costs low for the MWX to appeal to the individual user. This meant low margins for the distributors. Furthermore, the second primary reason for their disinterest in the product was the distributor’s manufactured biocides that they sold to the individual customers. The sale of the MWX meant that their own product’s sales would decline to result in them in losses. The low margins also contributed to this. If the margins and the profits that the distributors received on the sale of the MWX were higher than their own product’s sales, they would have been more interested in the product’s sales.

The other factor that led to the failure of the product was that the market for biocides was not developed among individual users. They did not prefer using a biocide in their metalworking machines. The general perception was that the product would not be useful in solving the problems of dermatitis and bad odor. The individual users preferred home-made and other unbranded concentrate biocides for their machines and there was no knowledge or preference for the usage of a maintenance biocide for extending the life of the concentrated biocide. The market potential estimated was for a market that did not accept the branded maintenance biocide.

2. What alternative strategies should Joan Macey consider? What course of action do you recommend she follow?

The situation is presented as a problem case. This problem has alternatives that are related to the pricing and the distribution of the product since these are the two main concerns of the product and the major factors which resulted in the product’s failure. The first alternative is to develop the market for maintenance biocides by a proper marketing strategy. This marketing of the product would create a pull factor from the consumer’s end and the distributors would have to buy to product to fulfill their customer’s demands. The marketing strategy of the individual booklets delivered would not generate interest among the customers since they would not know the features of the products and the benefits that they can derive from the product. The economic factor of savings could be emphasized in the new marketing strategy to attract individual buyers who are concerned about their costs.

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