Case Analysis on Rohm & Haas

        Rohm and Hass (RH) was reconsidering its distribution and marketing strategy for its new maintenance biocides product, Kathon MWX(MWX), which was launched in December 1983 together with Kathon 886MW(886), yet largely lagged behind its targeted sales volume. Biocides are chemicals that kill the microorganisms in metalworking fluids without affecting fluid performance. While 886 was mainly suited for large-scale manufacturing with 70-80% market share of the nonferrous metals and about 15-20% market share of the ferrous metals, MWX was developed specifically for smaller-capacity reservoirs as a more convenient and safer-to-use version than 886.

            MWX’s disappointing sale performance was mainly attributable to its low customer recognition, weak control on distribution, poor pricing, ineffective promotion and lack of pretest marketing. MWX and 886 were sold through formulators who were also the first level of distributors in this industry. They purchased the biocide with a discount of list price and sold the metalworking fluid with maintenance package under their private brand names to large industrial companies directly as well as small companies through second level distributors—supply houses and machine tool shops. The privately branded distribution channel and the limited access to the second channels and end-users made MWX’s sale largely relied on formulators’ purchase, which in turn led to its low brand recognition and low control on distribution. On the other hand, MWX failed to clarify its value propositions to its users and its unified price of $1~$1.25 per packet was too low compared with its EVC of $10 per packet (Appendix 1).

        Given large market potential and MWX’s capability to meet customer need, RH should continue to sell MWX using a marketing strategy with a combination of Push/Pull tactics. First, RH needs to create incentives among formulators to promote MWX while reaching secondary networks directly since ferrous metalworking industry is numerous and fragmented. Second, it should continue with its reader service coupon and develop other promotion activities to help build MWX’s brand appeal. Moreover, efforts on advertising MWX’s cost and effectiveness benefits over competitors’ products would also enhance its customer acceptance. On top of that, RH should strengthen its sales team and concentrate its sales force on target customers. This will enable it to realize higher value by price differentiation.

...