SOREN

CHEMICALS
APO Group 2
 BACKGROUND
In 2006, Soren Chemicals, a leading manufacturer of specialty chemicals,
introduced Coracle, a new clarifier for residential swimming pools.
Despite high expectations and being chemically similar to another successful
Soren product for commercial pools, Coracle failed to meet sales targets and
received poor consumer reception.
This case study looks into the factors contributing to Coracle's unsuccessful
launch and provides recommendations for Soren Chemicals to improve its
product development and marketing strategies.
 PRODUCTS IN FOCUS
Kailan-MW Coracle
For Commercial Use For Residential Use
Pharmaceutical intermediates: Used
in the synthesis of active
pharmaceutical ingredients (APIs)
Personal care chemicals: Used in
the formulation of cosmetics and
toiletries
Food and beverage chemicals: Used
in the production of food and
beverages
Industrial chemicals: Used in a
variety of industrial applications
 COMMERCIAL USE CLARIFIERS
MARKET CHARACTERISTICS
MARKET SIZE: $30 MILLION (2007), RELATIVELY MATURE MARKET

DISTRIBUTION CHANNEL: MANUFACTURER-FORMULATORS-WATER PARKS & COMMERCIAL POOLS

(FORMULATORS CARRY FULL RANGE OF POOL-CLEANING PRODUCTS AND PROVIDE VALUE-ADDED
CUSTOMER SPECS)

SERVICES TAILORED TO INFLUENCERS: FORMULATORS, WATER-SAFETY CONSULTANTS, PUMP &

FILTER MFGS. THE USE, BENEFITS AND IMPORTANCE

KEY INFLUENCERS: FORMULATORS, WATER-SAFETY CONSULTANTS, PUMP AND FILTER MFGS

BUYER BEHAVIOUR: PROFESSIONAL AND UNDERSTAND OF CLARIFIERS FOR THEIR BUSINESS. SAFETY
OF THEIR CUSTOMERS MATTERS MOST.
COMMERCIAL USE CLARIFIERS
MARKET CHARACTERISTICS
 RESIDENTIAL POOL CLARIFIERS
MARKET
BUSINESS MODEL: B2C

MARKET SIZE: $67 MILLION (9000000*25%*$50*14.88/25), UNTAPPED MARKET IN NASCENT STAGE.

- DISTRIBUTION CHANNELS:

(A) MANUFACTURER-DISTRIBUTORS-RETAILERS/POOL SERVICE PROFESSIONALS-POOL OWNERS

(B) MANUFACTURER-MASS RETAILERS-POOL OWNERS

- KEY INFLUENCERS: POOL BUILDERS, CLEANING & SERVICING COS., INDEPENDENT CONTRACTORS,
RETAILERS AND WHOLESALE DISTRIBUTORS

- BUYER BEHAVIOUR: LACK OF AWARENESS AMONG POOL-OWNERS (EMPHASIS ON AESTHETICS

AND PERCEIVED CLEANLINESS)

- MAJOR BRANDS: CLEARBLU, HYDROPILL AND PURITY

RESIDENTIAL POOL CLARIFIERS
MARKET
RESIDENTIAL POOL CLARIFIERS
MARKET
ENVIRONMENTAL RESPONSIBILITY
Soren Chemicals is committed to operating in an environmentally responsible
manner. The company has implemented a number of initiatives to reduce its
environmental impact, including:

Minimizing waste Reducing energy

generation consumption

Preventing
pollution
What is the addressable market size for Coracle? Is the first-year goal of $1.5
million sales reasonable?

Total Addressable Market - 9 Million Residential Pools

Reason: We think the sale of $1.5 Million is reasonable
Number of Residential Pools - 9 M
Pool Contractors & service companies - 50,000
Price for normal residents = 9,000,000*0.8*39.06= 281,232,000
Pool Contractors = 9,000,000*0.2*33.2=59,760,000
So Soren Chemical will sell = $15*9,000,000*0.8+ $15*9,000,000*0.2 =
135,000,000
% of Market share = 1,500,000/135,000,000=0.011=1.11%
Soren needs to capture 1.11% of the market share to achieve their target since
their competitors already have captured 15-20% of the share
Why is Soren Chemical struggling to sell Coracle?
Inadequate distribution channels: Soren is using wholesale distributors to sell Coracle,
which is not as effective as the B2B channels used for Kailan MW. Wholesale
distributors are not as familiar with the residential market or as motivated to sell Coracle
as the chemical formulators who sell Kailan MW.

Ineffective pricing strategy: Coracle is priced at a premium to its competitors, which is

making it difficult for consumers to justify the purchase. The company's insistence on a
30% gross margin for distributors is also contributing to the high price.

Weak brand awareness: Soren has not done enough to promote Coracle to consumers.
The company has not invested in advertising or marketing, and there is little awareness
of the product among potential customers.

Lack of differentiation: Coracle is not significantly different from its competitors, which
makes it difficult for consumers to see the value in paying a premium price.
How would you describe the selling process for Kailan MW versus Coracle?
Strong partnership with Formulators.
Sold under “Private Label Brand”.
Product USPs are attacks organic
debris which can pass through filters,
effective for long period, lower
quantity needed
In order to reach wide and fragmented market,
adopted 2-level distributor channel
No private-labeling, focus on building Soren as
consumer brand.
New website formed during product launch
Press release in three trade journals targeting
KAILAN professionals and retailers.
Good enquiry system adopted- receiving queries,
sharing technical data with them and passing on
the interested customers information to
appropriate wholesale distributors.
Aggressive pricing vis-à-vis competitors.
CORACLE Soren’s target is $1.5Million in thelaunch year
i.e.$1.5/$67.5 Million = 2.2% market share which is a
very reasonable and achievable market share for
the first year.
Survey conducted in 6 months after product
launch to gauge customer feedback.
What is the highest price Soren Chemical can set for Coracle?

Average price of competing clarifiers is $25.00 per unit.

Manufactured Cost is $7.5(Approximately)
distributor margin of 30%.
Retailer Margin of 15%
Profit margin goal of 30%.
Maximum Retail Price = Total Production Cost / (1 - (Distributor Margin
Percentage + Profit Margin Percentage) )
Max Retail Price = $30
What is Coracle really worth to end-users?

End-user Value:
The value of Coracle to end-users is determined by the benefits it provides, including:
1. Enhanced Pool Clarity: Coracle's ability to effectively clarify pool water is a primary
value proposition for consumers.
2. Reduced Maintenance Efforts: A clear pool requires less frequent cleaning and
maintenance, saving time and effort for pool owners.
3. Improved Pool Aesthetics: Clear pool water enhances the visual appeal of a pool,
making it more enjoyable for swimming and relaxation.
4. Safe Swimming Environment: Clear water ensures better visibility, reducing the risk of
swimming accidents.
5. Environmental Friendliness: If Coracle is formulated with eco-friendly ingredients, it
appeals to environmentally conscious consumers.
Given its superior performance, how can Coracle be priced relative to the
competition? What are the constraints? What is the impact of a higher retail price
on distributors? Retailers?
Given Coracle's superior performance compared to competing clarifiers, Soren Chemical has
the opportunity to price it at a premium.
Constraints on Premium Pricing:
1. Price Sensitivity: Consumers may be hesitant to pay a premium if they are not fully aware
of Coracle's superior performance or if they perceive the price difference as too
significant.
2. Competitor Response: Competitors may react to Coracle's premium pricing by lowering
their own prices, putting downward pressure on Soren Chemical's profit margins.
3. Distributor Margins: Distributors may require higher margins to sell a higher-priced
product, which could impact the overall profitability of the product line.
4. Retailer Margins: Retailers may be hesitant to stock or promote Coracle if they perceive
the price as too high, limiting its availability to consumers.
Potential for Substitution: Consumers may opt for lower-priced alternatives if they do not
perceive the value proposition of Coracle to be worth the premium price.
Impact of Higher Retail Price:

Distributors: A higher retail price could lead to increased distributor margins, which could incentivize
them to promote Coracle more aggressively. However, it could also make it more difficult for
distributors to compete with lower-priced products.

Retailers: Retailers may be hesitant to stock or promote Coracle if they perceive the price as too
high, limiting its availability to consumers. A higher margin may offset this reluctance, but it is
important to ensure that the price remains competitive within the retail landscape.

Consumers: A higher retail price may make Coracle less affordable to some consumers, potentially
reducing sales volume. However, if the premium pricing is effectively communicated and justified by
Coracle's superior performance, price-sensitive consumers may still be willing to pay for the
perceived value.

In conclusion, pricing Coracle at a premium requires a strategic approach that balances the potential
for increased profit margins with the risks of alienating consumers and distributors. By clearly
communicating Coracle's superior performance and value proposition, Soren Chemical can
effectively justify a premium price while maintaining its competitive edge in the market.
What action plan do you recommend for Coracle? Should Soren Chemical adopt
a “push” or a “pull” strategy?

Distribution Strategy:
1. Target Pool Professionals: Instead of relying solely on wholesale distributors, Soren
Chemical should establish direct relationships with pool maintenance professionals and
pool retail stores. This will provide greater control over the sales process and ensure that
Coracle reaches its intended audience.
2. Incorporate Digital Channels: Utilize e-commerce platforms and online marketplaces to
expand Coracle's reach and provide convenient purchase options for residential pool
owners.
Pricing Strategy:
1. Consider Value-Based Pricing: Instead of solely focusing on cost-plus pricing, consider a
value-based pricing approach that highlights the unique benefits Coracle offers to
consumers compared to competitors.
2. Promotional Pricing: Implement strategic promotions and discounts during peak pool
maintenance seasons to attract new customers and boost sales.
Marketing Strategy:

Brand Awareness Campaigns: Launch targeted advertising campaigns across various

media channels, including social media, print, and online platforms, to increase brand
awareness and visibility among residential pool owners.

Educational Content Creation: Develop informative and engaging content, such as blog
posts, videos, and social media posts, that educate consumers about the importance of
pool clarity and the benefits of using Coracle.

Partnerships with Influencers: Collaborate with pool maintenance experts and home
improvement influencers to promote Coracle through product reviews, tutorials, and
social media endorsements.

Customer Testimonials: Showcase positive customer testimonials and reviews on the

company's website and social media platforms to build trust and credibility among
potential buyers.
Push vs. Pull Strategy:
We would recommend a PUSH strategy for Coracle:
Target pool maintenance professionals and distributors through direct sales
and educational programs.

Offer incentives and rebates to encourage distributors to promote Coracle

effectively.

Implement consumer-focused marketing campaigns to generate interest and

demand for Coracle.

Utilize online reviews and testimonials to build trust and encourage consumer
purchases.

Engage with consumers through social media and online communities to

address concerns and provide product support
Thanks !
Do you have any
questions?