Soren Chemical

Q1. What is the addressable market size for Coracle? Is the first year goal of $1. 5M sales reasonable? Ans. Coracle is one of the clarifiers developed and produced by Soren Chemicals targeting residential pools which have smaller size than commercial pools and water parks, that are served by other clarifiers like the Kailan MW produced by Soren Chemicals. Very small quantities of Kailan MW are sufficient to treat large volumes of water but it is unsuitable for smaller-scale applications such as residential pools due to the fear of misuse and safety risks. The targeted residential pools of Coracle have a lower volume of water, a lower volume of swimmers, and a less intense maintenance program. It is estimated that there are 9 million residential pools in the United States. According to what illustrate in the last paragraph of the case in page 7, the frequency of usage of residential pools and residential pool chemicals will be largely increased from May. Also as introduced by the Table A in the page 5, the average months of pool usage are 5 months, which makes great sense because normally people will swim in summer time from May to September, and less people will swim in cold whether from October to April. Currently, Coracle has three leading competitors for residential pool-use clarifiers: Keystone Chemical, Kymera, and Jacson Laboratories, and each of the competitors has a 15% to 20% share of the residential pool clarifier market. So, the remained reasonable and addressable market share for Coracle is 40% to 55% maximally if we do not consider the competition and market share of other smaller competitors. Considering the facts like distributors typically carried tens of the thousands of products from many suppliers, including the regional formulators that sold Kailan MW, at least two of the formulators sold Kailan MW with a diluted version as a private label clarifier, and the competition from leading competitors and small competitors, we suggest that 15% should be market share of residential pools market for which Coracle needs to struggle and address. Therefore the addressable market size for Coracle should be $7,846,373 based on the 15% of market share. Based on the above analysis, although it seems that the first year goal of $1. 5 million sales is quite reasonable if we decide the addressable market size $7,846,373 by 5 (it means Soren Chemical generates their sales revenue mainly in 5 months from May to September for Coracle), which is around $1. 57 million and higher than the target, but it is not the case, and it is not reasonable if the marketing team study it carefully. The $1. 5 million sales goal is too aggressive for the first year for Coracle. Q2. Why is Soren Chemical struggling to sell Coracle? a. What are the implications of the channel structure for pool chemicals? b. How would you describe the selling process for Kailan MW vs Coracle? Ans. Soren Chemical launched Coracle only in September 2006, which is the last busy and most suitable month for swimming. The sales team for Coracle did not consider following effects, which will impact the sales revenue extremely for the first year: 1. Consumers, wholesale distributors, pool service professionals, pool specialty retailers, mass retailers need to take time to know the new Coracle brand and the value they can get from Coracle if they buy it. 2. The stocks in the consumers sides, pool service professionals sides, pool specialty retailers sides, and mass retailers sides will also impact the sales of Coracle, especially in the last busy maintenance month of a year. Especially till the end of September, if the consumers decide not to use the pool until next May, they may not maintain the pools because in the beginning of next May, they need to clean again for the pools for swimming after a long time of non-use. 3. Soren Chemical did not position the good product Coracle in the most appropriate position to its customers. Consumer market of residential pools emphasized more on aesthetics and perceived cleanliness. This is a risk for Soren Chemical to bring Coracle to the market without a suitable emphasis focusing on what the consumers concern more. 4. As indicated in the case, 30% of the respondents recalled receiving the Coracle materials that Soren Chemical had sent in response to their inquiries. Furthermore, 70% of the respondents stated that their distributors had not offered Coracle. All these suggest that Coracle’s sales team did not do sufficient work before they bring the Coracle clarifier to the market and this also weakened their sales revenue. . There is unclear gap between Kailan MW and Coracle even though Kailan MW targets at the segment of commercial pool and water parks, while Coracle targets at the segment of residential pools. There are still at least two formulators who dilute Kailan MW with a private label and sell to distributors for consumer market and this will compete with Coracle clarifier. Q3. How would you rate Coracle pricing strategy? Any opportunity? Ans. The pricing strategy is OK; the retail price for Soren per container of 0. Gallons has been settled as $25. This is based on a manufacturer price of $14. 88, which Soren has ascertained for a 35% gross margin. Opportunity exists in terms of margins for the distributers and retailors. The model must be slightly more flexible if they decide to sell the diluted product. Q4. What action plan do you recommend for Coracle? Ans. In my understanding the pool cleaning professionals are not well or properly aware about the product. So most of the actions must be concentrated around the marketing of the product: 1. Increase the marketing budget to the level where we can advertise to all channels not only DIY. 2. Clear message to the users – who are not technically sound, and make then aware about the facts the product are offering. A clear distinguishing must be established which clearly demonstrate a compression between the inferior products which just make the water look clear. 3. Clear margins for the distributers who may sell the diluted product.