Академический Документы
Профессиональный Документы
Культура Документы
No maintenance required
Safe to handle and easy to dispose of
Compatible with ~70% of the metalworking fluids as compared to 45% for the
competition
Always in demand considering evaporative losses must be replenished in
systems
Extends fluid life an additional one to two weeks for annual savings up to
$54,000
Extends fluid life indefinitely when used in conjunction with makeup fluid does
not require a complete flush of the fluid reservoir
Weaknesses
Cannot be used for all varieties of metalworking fluids (limited to ~70%)
Must be continually replaced every 2 4 weeks
Some concerns within the industry regarding the safety of the product
End users unaware of the value or need for their product
Conclusion
Kathon MWX is a superior product to its competitors by being an inexpensive, safe,
and easy to use package. The product is more compatible with existing fluid systems
than any competitor and when used properly can virtually eliminate the need for a full
fluid system flush. The product faces stiff competition from a number of competitors
though and a misinformed market would rather waste time with household disinfectants
than using a proper chemical solution. Customers will always be concerned with safety
and price and household chemicals are seen as the easy solution, regardless of if they
actually work or not.
Price:
Strength
Discount pricing offered for purchasing in bulk
Pricing used for Kathon 886 MW demonstrates to their customers the ability of
the company to sell competitive products at a fraction of their price (26% 47% the
cost of the competition)
Weaknesses
No fixed pricing for product final price to consumer varied between $2 and $6
per packet high prices stifle interest and varying prices encourages consumers to shop
around thereby increasing the potential for a competitive product to be purchased
Low price may provide the perception of low quality or value to the consumer
Arbitrary price no budget analysis performed to determine the level of sales
and price required for the product
Conclusion
Kathon MWX is priced from $1.25 per packet all the way down to $1.01 when
purchased in bulk. These prices are very low which benefits the manufacturer by
spurring interest in consumers because it provides an inexpensive solution for treating
metalworking fluids. These prices are rarely seen by the end-user, however. Rohm and
Haas does not specify a fixed price to consumers therefore final prices actually range
anywhere from $2 per packet all the way up to $6. Prices that may seem high to the
consumer will steer them away from a product, particularly when the product is new
and unproven. At the same time though, low prices also hurt interest because the
consumer may perceive the price to mean the product is of low quality or value. Rohm
and Haas should ensure the product is sold at a fixed pricing scheme through all the
distributors so that consumers may still take advantage of bulk pricing while ensuring
they will receive the same price regardless of where they go. This will eliminate the
need for customers to shop around. Rohm and Haas also have not performed a breakeven analysis to determine the price required for a level of sales necessary before a
profit is observed. The price of the product appears arbitrarily set and without this
information it will never be known what the appropriate price or volume should be to
become profitable. It is known that the cost to manufacture a packet is $0.50 however
this price cannot be used as the selling price as the company has research and
development costs to recuperate. This information must be evaluated and a reasonable
sales goal defined before an appropriate fixed price can be set.
Promotion:
Strength
Print advertisements placed in industry journals and machinist magazines directly
targeting the end user machinists and shop managers (DMU)
Free sample provided upon request
Weaknesses
Many small customers unaware or just dont understand the need for a
maintenance biocide
Company does not sell directly to end users must rely on distributors to sell
products knowing the distributors sell competitors products as well
Kathon MWX is developed by Rohm and Haas and then delivered to formulators
who in turn provide the packets to large companies or other dealers including industrial
supply houses and machine shops. Even though there are only a handful of formulators
in the industry, each formulator has its own customer base therefore expanding the
available distribution outlet to more than 18,000 outlets with over 150,000 customers.
With distributors though comes the problem that the company loses its continuous oneon-one contact with the consumer and therefore impacts their ability to communicate
and effectively evaluate the consumers needs. By restricting the formulators from
privately branding the product the distribution potential of the product is limited as
some distributors were not interested in distributing the product if they could not
distribute it as their own. This directly impacts the potential market exposure of the
product. Rohm and Haas should reverse their position and allow for private branding
provided it is done according to a well defined specification. The company would still be
able to control all the major features of the product while allowing the formulators and
distributors to continue marketing products as their own.
Sales Goals Calculations
Sales goal $ 200,000
Cost per box $ 145
Number of boxes required to reach sales goal 1379
Packets per box 144
Number of packets 198,576
Weeks in year 52
Number of weeks before a new packet is required 6
Number of packets per year per customer 9
Number of customers 22,064
Size of market 150,000
Percentage of market 14.71%
Comparative cost of treating a 10,000 gallon system with Biocide (for one cycle)
Name Cost % Markup vs. Kathon 886 Cost of Kathon 886 Compared To Competitor
Dowicil 75 $ 269.64 277.65% 26.48%
Grotan $ 151.20 111.76% 47.22%
Kathon 886 $ 71.40
Savings Calculations
Metalworking fluid concentrate (per gallon) $ 5.68
Waste disposal (per gallon) $ 1.36
Kathon MWX (per packet) $ 2.00
Gallons of fluid treated per packet of Kathon MWX 50
Weeks per year 52
Typical machine shop size (machines) 22
Typical fluid reservoir Capacity Per Machine (gallons) 50
Typical lifespan of fluid (weeks) 4
Typical machine shop annual fluid usage w/o Kathon MWX (gallons) 14,300
Typical machine shop annual fluid usage cost $100,672
Minimum extended lifespan of fluid w/ Kathon MWX (weeks) 2
Typical machine shop annual fluid usage w/ minimum extended lifespan using
Kathon MWX (gallons, rounded up) 9,900
Typical machine shop annual fluid cost w/ minimum extended lifespan using Kathon
MWX $ 70,092
Minimum savings w/ Kathon MWX $ 30,580
Savings as a percentage of typical annual fluid cost w/ minimum extended lifespan
using Kathon MWX 30.38%
Maximum extended lifespan of fluid w/ Kathon MWX (weeks) 5
Typical machine shop annual fluid usage w/ maximum extended lifespan using
Kathon MWX (gallons, rounded up) 6,600
Typical machine shop annual fluid cost w/ maximum extended lifespan using
Kathon MWX $ 46,728
Maximum savings w/ Kathon MWX $ 53,944
Savings as a percentage of typical annual fluid cost w/ maximum extended lifespan
using Kathon MWX 53.58%