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Case Review: Rohm and Haas: ENGM 181
Case Review: Rohm and Haas: ENGM 181
Case Review: Rohm and Haas: ENGM 181
11/4/2010
Background
2
Industrial
chemicals
Plastics
Fluid Process
chemicals
Specialty
chemicals
Kathon 886 MW
Agricultural
chemicals
Petroleum
chemicals
Kathon MWX
11/4/2010
Background
3
US
Biocides kill microorganisms in metalworking
Product name K 886 MW
K MWX
fluids
Treatment
capacity
1,000 gal
50-100 gal
reservoirs
$18M
$20M
Sale Volume
$5.4M (1983)
$0.2M (target in
1984)
Actual sale
during 1st five
Thayer School of Engineering
month
$2.1M
$12,000!!!
Market
potential
11/4/2010
share
Several advantages:
Easy to use
No maintenance
Safe
Higher effectiveness
Large customer surplus
Thayer School of Engineering
11/4/2010
consumers
11/4/2010
Using MWX
Fluid Concentrate
Purchase
Fluid Disposal
EVC Reference
Value Differenti
alValue
Thayer School of Engineering
11/4/2010
Assumptions
Maintenance biocides extend fluid life indefinitely
1 Gal Undiluted Fluid 25 Gal Diluted Fluid
1 Packet of MWX 50 Gal Diluted Fluid
Typical Small Machine Shop
11/4/2010
$249.92/cy
cle
1galconcentrat
e
25galdilute
1cycle
Fluid concentrate purchase cost per
cycle for small machine shop
11/4/2010
$1,496.00/
cycle
1galdilute
1cycle
Fluid disposal cost per cycle
for small machine shop
11/4/2010
EVC Reference
Value Differenti
alValue
Not Using
Biocide
Using Kathod
MWX
Fluid Concentrate
Purchase
$249.92
$249.92
Fluid Disposal
$1,496.00
$1,496.00
100%
0%
Risk of Needing
Disposal
Reference Value
(Price
11/4/2010
EVC $249.92
$1,496.00
$1,745.92/
cycle
$1,745.92
1cycle
50galdiluted
$79.36/pac
ket
1cycle 1,100galdiluted 1packet
Cost small machine shop is willing
to pay per MWX packet
11/4/2010
Concentrate &
MWX
Fluid Concentrate
Sales
MWX Sales
$0.00
Total Sales
$+X
11/4/2010
Assumptions
Same as previous
Yearly Based Calculations
1 Distributor 1 Small Machine Shop
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$3,248/yea
r
1cycle 1 year
Revenue per year for distributor selling only fluid to small
machine shop
$249.92
(13x)/year
1 year 1cycle 1 year
Revenue per year for distributor selling fluid & MWX to small
machine shop
Thayer School of Engineering
11/4/2010
Only
Concentrate
Concentrate &
MWX
Fluid Concentrate
Sales
$3,248.00
$249.92
MWX Sales
$0.00
13X
Total Sales
$3,248.00
$249.92 + 13X
X $230.62/cy
cle
Revenue distributor will earn for selling MWX to small machine shop per
cycle
$230.62
1cycle
50galdilute
$10.48/pac
ket
1cycle 1,100galdilute 1packet
Break-even price a distributor will charge per MWX packet sold to small
machine shop
Thayer School of Engineering
11/4/2010
NPD Process
16
1. Idea
Generat
ion
Is the
Idea
worth
considerin
g?
2. Idea
screening
Is the
product
idea
compatible
with
companys
objectives,
strategies,
and
resources?
3.Concept
developm
ent and
testing
Can we find
a good
concept
consumers
say they
would try?
Opportunit
y Analysis
Thayer School of Engineering
4.
Marketing
Strategy
developm
ent
Can we find
a costeffective
affordable
marketing
strategy?
5.
Busines
s
analysis
Will this
product
meet out
profit
goal?
6. Product
Developm
ent
Have we got
a technically
and
commerciall
y sound
product?
7.Market
Testing
Have
product
sales met
expectation
s?
8.
Commercializ
ation
Are product sales
meeting
expectations?
Launch
Product
Design
Marketing Mix
11/4/2010
4.
Marketing
Strategy
Developm
ent
2. Idea
screening
1. Idea
Generat
ion
Is the
Idea
worth
considerin
g?
Is the
product
idea
compatible
with
companys
objectives,
strategies,
and
resources?
Thayer School of
3.Concept
developm
ent and
testing
Can we find
a good
concept
consumers
say they
would try?
Engineering
Can we find
a costeffective
affordable
marketing
strategy?
5.
Busines
s
analysis
Will this
product
meet out
profit
goal?
6. Product
Developm
ent
Have we got
a technically
and
commerciall
y sound
product?
7.Market
Testing
Have
product
sales met
expectation
s?
8.
Commercializ
ation
Are product sales
meeting
expectations?
11/4/2010
7.Market
Testing
Have
product
sales met
expectation
s?
2. Idea
screening
1. Idea
Generat
ion
Is the
Idea
worth
considerin
g?
Is the
product
idea
compatible
with
companys
objectives,
strategies,
and
resources?
Thayer School of
3.Concept
developm
ent and
testing
Can we find
a good
concept
consumers
say they
would try?
Engineering
4.
Marketing
Strategy
developm
ent
Can we find
a costeffective
affordable
marketing
strategy?
5.
Busines
s
analysis
Will this
product
meet out
profit
goal?
6. Product
Developm
ent
Have we got
a technically
and
commerciall
y sound
product?
8.
Commercializ
ation
Are product sales
meeting
expectations?
11/4/2010
11/4/2010
Thank you!
20
References
Kotler, Philip, and Kevin Keller. Marketing Management. 13th ed. Upper
Saddle River, NJ: Prentice Hall, 2009. 574. Print.
Rangan, V. Kasturi; Lasley, Susan; Rohm and Haas (A): New Product
Marketing Strategy, HBS No. 9-587-055. Boston: Harvard Business School
Publishing, 1993.
11/4/2010