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Soren Chemical: Why Is the New Swimming Pool Product Sinking?

Autor:   •  November 2, 2017  •  668 Words (3 Pages)  •  1,014 Views

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Coracle 5.859 11.718

Number of treatments per annum 10 10

Margins offered by Coracle per treatment 0.5859 1.1718

Based on computation made above, it can be noted that the retailers and distributors are has a net benefit/ (loss) of (.54) and (.10) on selling Coracle products respectively. Contributing to the loss is the reduction of their sales on other chemical products. It is notable that Coracle can reduce the need for additional chlorine, shock treatments and enzymes, which were also distributed by the distributors and retailers. It is estimated that an average of 25% sales reduction will be incurred. This is also the reason why they are not creating shelf space for Coracle.

As response to the distributor/retailer issue, we can revise the selling price for Coracle. Since the annual average cost of clarifiers at retail price is 50, we can still increase the selling price to cover up the net loss the distributors and retailers had incurred as follows:

Retailer Distributor

Suggested Selling price per treatment 4.72 3.60

Soren Chemical price per treatment 3.60 2.32

Reduction in margin needed to cover up -1.13 -1.28

Annual Cost of Clarifiers 47.20

Annual average cost of clarifiers at retail prices 50

Moreover, it is noted also that the issue is not imposed by pricing only. There are also other problems that Soren Chemical must address. The customers’ awareness must also be increased. It is stated in the case that the company failed to deliver the safety and cost-saving benefits of Coracle. Being new to consumer market, Soren Chemical must understand the different consumer behavior of their target. Since they are residential pool owners, they are not fully aware of the technicalities of the products presented compared to large facility owners. Further, the customer inquiry response rate is also low in which the company has not directly attended to customers; inquiry. In addition to giving brochures, notes and material safety data, the company must think of other ways on how to directly reach to customers and address their issues. They must also consider on investing on marketing activities on presenting the product’s benefits to the consumers. In addition, despite the increase in selling price, it is also important to note that the annual cost for using Oracle product is much lower compared to competitor’s price (Table A in case).

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