Friday, May 4, 2012

Soren Chemical Case Study

Key Segments of Soren Chemical case

Soren Chemical: Why is the New Swimming Pool Sinking?

This Case Study Analysis is solely  my opinion and idea. Use this as are reference. Do not please copy past this article.

When the initial annual goal of $1.5 million was set, it seemed to be realistic. Of the 9 million residential pools in the United States, 80% maintain their own pools providing 7.2 million pools in the market who are maintained by the owner. Additionally, the other 20% who do not maintain their own pools use some sort of service professional, and while they are not purchasing cleaner on their own, these 1,800,000 pools are still using clarifiers and these too are still potential customers. With around 60% of the clarifier market share occupied by Keystone, Kymera and Jackson Labs, 3.78 million pool owners are using the big three products. This leaves 2.52 million pool owners not currently committed to a brand.

The target of $1.5million USD (6.25% of the total market or 16% of the remaining 40% market) is a lofty goal; but, given Coracle’s Points of Difference, it is realistic that they could have achieved it. However, the fact that they have only reached $111,000 over half of the selling season means it is highly unlikely that that Soren Chemical will make the goal for the rest of the year.
Consider the following bullets and click to see more info

  • Starting with the distribution channel structure described in the case study, there are too many avenues in which residential pool owners can receive Soren. Residential pool owners can obtain through mass retailers, pool specialty retailers, or pool service professionals. While 20% of these retailers have their pools serviced by one of the 40,000 to 50,000 pool contractor and service companies, the other 80% are purchasing through mass retailers or pool specialty retailers - both of which are taking a 15% gross margin. Therefore, Soren needs to sell exclusively through the one retail distributors who owns the higher customer base. Soren will then negotiate a smaller gross margin upcharge in exchange for the higher volume the exclusive retailor will realize.
  • Soren Chemical is struggling to sell Coracle for a multitude of reasons. Soren’s lack of experience in marketing and selling consumer products hinders their ability to inform pool users on Coracle’s safety and cost-savings benefits. Coracle needs to inform individual pool owners that maintaining their pool is not just about chlorine and filters. If Coracle were to come out and be the first to inform the masses about the complex system of pumps, chemicals, and UV or ozone technology they would have a leg-up on their competition. Of course, Coracle would need to package this in a concise and easily understandable format. Pulling this off successfully would make the competition appear less knowledgeable. Without any of this, Coracle is just another product that is not differentiated from the other pool cleaners and does not own the lowest price point. When was the last time you chose that product?

The difference in the selling process for Kailan MW versus Coracle boils down to the different end users. Kailan MW is used primarily for large recreational water park facilities while Coracle is used as a water clarifier for use in small recreational and household swimming pools. Someone purchasing cleaning supplies for a large recreational water park facility does so in a much more structured process. They will review their current inventory, forecast future need, and will purchase accordingly (generally in large quantities). This individual will choose the product that offers him the most value as he is in fact running a business.

The majority of individuals purchasing cleaning supplies for a household swimming pool will not follow this same process. When Paul Q. PoolOwner is running low on water clarifier for his pool, he will either add it to his to-do list and purchase at a future date, or he will go out at that point to purchase the product. At this point, the purchasing decision will differ between Paul Q. PoolOwner, Sally C. SwimsAlot, and even Cannonball Krisstopherson. This is where Soren needs to do their homework in order to understand what these individuals are looking for.

With tens of thousands of cleaning products lining their shelves, it’s no wonder so few of the service professionals contacted remembered receiving any information about Coracle.  In order to get back on the right track, Soren Chemical needs to employ a Pull Strategy to try and establish a strong customer base that will demand Coracle on the shelves of the pool contractors and service companies. Most survey respondents had asked for the product but 70% of distributors were not selling Coracle.  Creating demand from the consumer side will force wholesalers and distributors to provide the product.

Coracle has strong PODs, and they need to get the word out to the 80% of consumers that buy the products and clean their own pools about clarifiers (that clarifiers will make their pools look clearer and be cleaner/safe by combating organic debris).  In Coracle’s case, their product is cheaper in the long run and requires less man-hours than the competition because it is used every other day (compared to the competitor’s product which requires daily use).  As the demand for clarifiers rises, and customers start to ask for Coracle from their pool cleaner suppliers, it will force the pool retailers/contractors to remember the name Coracle, which they found rather easy to overlook in the past. 


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