1. Strategic Problem Statement
Soren Chemical’s main aim to expand to the water clarifier market was influenced by the intention to build a consumer brand within the market. The company aimed at taking advantage of the residential pool market that comprises more than 9 million users in the United States. Additionally, the pools required regular cleaning and maintenance. However, the company faced problems that posed a setback with regard to achieving the set objectives. The cause of the failure was the lack of information about the product among residential pool owners.
The product was aimed at increasing the cost of saving by more than 20% (Rangan, 2011, 2). Moreover, the company believed that they would gain sales since the product was better as compared to that of its competitors. They also assumed that they would benefit from the potential market since the product would provide residential pool owners with a more effective method of maintaining and cleaning their pools. The potential demand for the product in the future created an opportunity for the residential pool market. In addition, brand building also proved to be a potential opportunity for the company, which could allow them to launch other products.
2. Tactical Problem Statement
The company intended to enter the water clarifier market with the aim of building a consumer brand by utilizing a go-to market strategy. However, it is evident that their strategy was almost a failure since it was unsuccessful in reaching the residential pools market. Additionally, their strategy was influenced by the lack of support from the distributors. Moreover, their entry to the market was also subjected to competition and additional expenditure in advertising efforts.
3. Issues/Problem Analysis
The main issue highlighted in the paper refers to the low sales of Coracle. The new residential swimming pool volume target was 50,000 gallons for the initial year of sales. However, Soren has only managed to sell 3,725 gallons during the first half of the year. Therefore, it is evident that Coracle is behind its target by more than 75%, considering that the chemical season lasts 9 months (Rangan 2011, 5).
An additional problem is the reluctance of retailers and wholesalers concerning the creation of shelf space for Coracle. Moreover, the lack of awareness among consumers is another problematic area. As a result, potential consumers lack the opportunity to learn about the company and the safety and cost saving benefits of the product. Moreover, they do not have sufficient information about Coracle and the difference in prices as compared to its competitors. Evidently, the fact that Coracle reduces the use of chemicals by up to 30% poses a problem since retailers and distributors are likely to incur losses in their revenue due to stocking other chemicals. Thus, the company and its product are conflicting with the objectives of the distributors. The fact that Soren is new to the residential pool markets presents another problem. As a new entrant, the company finds it difficult to penetrate a highly competitive market. It is notable that high competition makes building business foundations complicated for new entrants in the market. On this note, it is difficult for Soren Chemicals to gain a market share in the new markets. As a result, they are unable to communicate the benefits of the product to the end users. The lack of capacity for reaching the end users of their products poses a major challenge related to the distribution of their products in the new market. It is notable that the lack of distribution may affect the production process since excessive production, in its turn, may cause the redundancy of goods in case they are not moving to the customers. Moreover, the price of their product creates a significant problem because of the customer buying behavior. In this respect, it would be difficult for pool owners to choose the product since its price is higher as compared to that of its competitors.
4. Solution Proposal 1
The issue of price in the company can be resolved through raising the retail price since it would attribute to a significant increase in the profit margins. In this case, the positive profit margins would allow the company to generate incentives. In turn, a generation of incentives would positively influence the company’s performance by boosting their motivation.
Additionally, the company can increase their sales to ensure that they meet their objectives by developing awareness among consumers. In this case, it is important for the company to correctly define the market as well as study consumer behavior and psyche. Increasing consumer awareness is essential since it will solve several problems relating to the company’s failure as recorded in the first half of their initial sales in the residential pool market.
The residential pool market comprises more than 9 million pools. However, out of this number, 80% of the owners clean the pools by themselves. Only 25% of the 80% of homeowners who clean the pools on their own are aware of the role of water clarifiers. Therefore, the company should work towards increasing awareness among the 25% category, thereby making them active users of the product.
The primary concern of the company is to provide residential pool owners with workable measures to maintain the hygiene of their pools. In this case, the company should focus their marketing strategy on emphasizing the organic nature of the product and the benefits it offers as compared to its competitors. The awareness of the product is to be realized on two levels. The first level should be directed at the 9 million residential pool owners. On the other hand, the second level should focus on more than 40,000 pool service professionals.
The marketing strategies to be incorporated at this stage entail focusing on the aspects that the consumers need to know. In this case, the company should emphasize the strength of their product against that of their competitors. They should maximize their sales by reflecting the product's ability to eradicate the biological contaminants that are invisible to the naked eye. Additionally, they should focus on the long-term benefit of the product acting as a justification of the high prices. Moreover, they should underline the added advantage of Coracle by justifying that it will be cheaper in the long run. In this case, the company is bound to improve significantly in their operations regardless of the distributors' objectives limiting their shelf space.
5. Solution Proposal 2
An alternative solution to the company’s problem would entail increasing public awareness and reducing the prices to attract buyers. The solution is viable since it is bound to attribute to an increase in sales. Therefore, the company stands the chance of achieving its set targets. However, it would receive less revenue than expected due to the reduction of prices.
The company can also enhance their sales by inducing positive attitudes among the target market of residential pool owners and pool service professionals. It is also important for them to pay more attention to the issue posed by the distributors. In this respect, the distributors issue can be solved by increasing their motivation for selling the product. Evidently, they lack incentives for selling the product since it will lead to the cannibalization of other cleaning chemicals in the market. As a result, it will result in low margins among the distributors. Thus, the solution to the distributors issue is to motivate them by increasing their margin. Additionally, the company can solve the distribution issue by convincing the distributors that they will gain net positive revenue regardless of the losses on other water cleaning chemicals.
Furthermore, the company can deal with the issue of low sales by coming up with a strategic plan for addressing the pool service professionals and residential pool owners. It is important for potential customers to become informed about the difference between pathogen clean water and clean water. In this case, Coracle should engage in pool cleanliness competitions to create awareness of their product. Additionally, the company can gain the attention of the potential market by conducting pool water testing services to reflect the biological safety of their product. The company should also consider e-mail marketing as part of their marketing strategy since it is faster and cheaper as compared to traditional modes such as direct mail.
I would recommend a set of solutions in proposal 1 rather than those presented in proposal 2, because the company would retain their image through the generation of incentives. It is evident that incentives influence the company’s motivation. The solutions provided in proposal 1 revolve around the increase in their retail price to ensure that they gain adequate returns regardless of the low sales. It also involves increasing awareness among consumers through defining the market and studying consumer behavior and psyche. Finally, the proposal encourages the company to maximize the strength of their product against that of their competitors. Evidently, the solutions provided in proposal 1 are essential in building the company's brand. Additionally, they allow the company to succeed in the established market regardless of the challenges they face.
The recommendations provided in proposal 2 revolve around increasing public awareness and reducing their prices to attract buyers. Moreover, the proposal also suggests that the company can enhance their sales by inducing positive attitudes among the target market composed of residential pool owners and pool service professionals. It also suggests that the company should pay more attention to the distributors issue by creating incentives for them to sell the product. Thus, the solution is viable and bound to tackle some of the major issues that the company faces. However, it is evident that the measures provided in the proposal would involve additional costs on the part of the company as they try to gain the attention of their potential customer base.
Both proposal 1 and 2 provide the company with viable options that can be used in dealing with strategic and tactical problems. However, based on the company’s current condition in the market, I would recommend the implementation of proposal 1. This proposal is more efficient since it focuses on building the brand, which is essential in enabling the company to gain a significant percentage of the market. Moreover, building a brand will help the company to gain recurring customers from the 25% category established, thereby making them active users of the product. Additionally, the proposal is more effective since it categorizes the market into 2 groups whereby the company focuses on gaining the attention of the 9 million residential pool owners and the 40,000 pool service professionals. As a result, the company is bound to gain market value over their competitors.