Introduction
Dependence on consumers’ behaviour and changes in the demand brings us to the question of not only how to choose strategy and tactics but how to combine all important and applicable features in one suitable plan for decisions and implementations. On example of Soren Chemical company it shown that the difference of targeted segment may create a major loses and question management team in how to identify problems, issues and modify the entire strategy of marketing plan (Rangan & Yong, 2011). Statement of major problems
Strategic Problem
The main goal of the Soren Chemical was focused on developing consumer brand. Wrong development of go to market strategy was the major problem, which resulted the failure in launching new product on the market. Tactical Problem
Identification of go to market approaches and correct combination can be achieved only through completed steps. Management team did not fully define the market value proposition. Marketing department did not evaluate full consumer based research before launching the product. They did not understand consumers’ needs and their demand behaviour(Rangan & Yong, 2011). As a next step, the exploration of distribution channels, was not fully accomplished because of limited knowledge about the targeted market. As a result the positioning of the product as well as distribution and pricing approaches were not suitable for that case. Identification of issues
In order to identify the major mistakes which have been done by management it is important to understand company’s vision and their main goal. Provided background of the company and information about the product Coracle introduced not only the vision of Soren Chemical but allowed to understand reasons behind the decisions of management team. Moreover, chronological presentation of steps applied by the marketing department of the Soren Chemical allowed highlighting of most important symptoms of failed launching. Identification of possible issues which occurred the problem to happen, will be the fundament for developing possible alternative approaches (Brown & Pope, 2008). Issue 1: Development of B2C
Soren Chemical had a success in B2B concept behind in their history; however company decided to invest in new products, which will target consumers directly. In order to develop the strategy of multi-branding through introducing new product company is required analysis of macro- and micro-environment, in order to identify consumers’ needs, evaluate competitors and analysis of other factors which may affect the process of launching the product (Rust, Lemon & Zeithaml, 2004). B2B experience provides Soren Chemical more strength in targeting new segment, because the company has already some knowledge of the market and environment. It is experienced with the product development and its distribution at some part. However, Soren Chemical did not use their experiences in gathering more research and exploration of consumers’ need and distribution channels specifics. Even though, they have proceed with survey later after failure. Moreover, it means that marketing spending were wrongly allocated and further financing is limited. Issue 2: PUSH vs PULL
As the main goal of the company is focused on developing their own brand which will be recognized by customers and will be asked they want to continue investing in new products which will be easier to position on the market. Application of Push or Pull strategies depends on different factors. Push approaches applied through positioning brand through encouraging distribution channels to push the product to consumers. This approach is more suitable for companies which have some control under the demand. It requires close relation with distribution channels and strongly based on supply system. While Pull strategy is more about advertising the product directly to consumers in order to build recognition of the product and pull consumers to purchase.
To increase the demand through Pull strategy it is important to totally understand the targeted segment needs and behaviour (Leiht, 2011). Marketing team of Soren Chemical applied Push strategy in order to differentiate the Coracle product, while the micro-environment analysis showed that competitors have around 15-20% of market shares each. This also negatively affected their further decisions in choosing promotion and pricing approaches. Issue 3: Sales Promotion Tool
As all other steps in marketing plan sales promotion also can be developed in different directions. Company may focus on customer or trade promotion as well as business promotion. Selection of one or the other direction requires to identify what are the actual promotion tools will be used. It includes targeted participants, identification of promotion size, conditions offered by manufacturer and the time frame of the whole promotional process (Hwang & Chi, 2005). Coracle’s main benefit of including and therefore replacing other products for clearing the water was the main idea of marketing message. The team have decided to announce this benefit on the package of the product, what refers to low cost customer promotion tool. At the same time the team also focused on trade promotion through providing product description to distribution channels in order to push it further to customers (Rangan & Yong, 2011).
However, Soren Chemical did not create any program of persuading the resellers to introduce the new brand and actually push it towards customers. As an evidence, the survey which was developed by marketing team of Soren Chemical showed that 70% of respondents were not informed about Coracle by wholesale distributors (Rangan & Yong, 2011). The problem of low sales was caused by applying low effective tools towards different targets. Issue 4: Pricing Strategy
Statistical results of water clarifiers showed that new product of Soren Chemical will give financial annual benefits comparing to other products. However, pricing strategy has to be focused not only customers’ benefits but also on distribution channels. As a result the price was too expensive to attract customers but not enough profitable for resellers to introduce the product. According to Porter’s model of pricing strategy, there are three approaches to develop suitable and competitive pricing for the product. Cost leadership approach, which focused on providing high quality product for a lower price in order to compete on existed market. Another strategy is focused on specific segment in which other companies would not compete. Refer to the pricing comparison of Soren Chemical and their main competitors; the product was positioned according to differential strategy. The price of 25$ per unit of Coracle product was much higher than its competitors (refer to the case study data) . In terms of customers perception this could differentiate the product and make it unique if the benefit was introduced to customers by retailers or distributors. Issue 5: Launching of the product
Apart from combining different approaches and techniques of choosing distribution channels or identifying the suitable price and others, period of time when the product should be launched is crucial. The company launched the Coracle during the fall 2006 while the season for this product starts in May. Launching the product at the period of time when the demand just declined had a certain effect on low performance of sales of Coracle. As it was too early to provide information to distribution channels or consumers, the effect of techniques and strategic approaches were negatively affected. Generation of solutions
Every case may include great variety of techniques and approaches applied through the marketing processes. Therefore, there can be found many high and low important issues which have to be analysed and modified in order to achieve set objectives. Importance of understanding macro- and microenvironment of the market is the key to identify the suitable combination of strategies for launching a new product (Rust, Lemon & Zeithaml, 2004). Solution 1
Alternative: Developed Research Scheme
Management team of Soren Chemical could focus more on research of the new market they move on. The team could conduct survey for consumers before launching the product. This would help them in retrieving more information about consumers and their needs. Therefore, go to market strategy could be modified before its application. Moreover, the survey could provide the information about the Coracle product. This could combine spending of R&D and promotion of the brand. Closer analysis of distributors and competitors would provide better understanding of pricing limits for the product. Solution 2
Alternative 1: Pull Strategy
The opposite of the decision that Soren Chemical took, is to apply Pull strategy through direct building the brand recognition and increase of demand. As the competitors are strong and it is hard to gain distributors interest in selling the product attraction of consumers’ attention is the key solution. Direct contact to consumers will not only increase sales but will give possibility to manufacturer to set up even higher price. This could be more expensive than working only with partners or distributors. However, considering the long-term goal of the company of creating a branded product these expenses can will bring more profit in future product launching on the base of the created brand. Alternative 2: Combination of Push and Pull Strategies
Refer to the sales results and all survey findings it can be concluded that marketing team does not a big financial recourses to develop solid Pull Strategy towards consumers in a short period of time. Therefore, as an alternative strategy is the balanced combination of Push and Pull approaches. It is based on accurate selection of information programs and promotional techniques towards consumers with a support of distributors and suppliers. These can be promotions for consumers via distributors and sellers, with negotiated benefits. Such approach will not create extreme increase in demand but it will create stable growth of branded product within consumers and distributors. Another advantage of combining both strategies is the more possibility for management team to adopt according to latest changes on the market and environment. Solution 3
Alternative 1: Customer Promotion Tool
Sales promotion of Coracle could focus only on customers in order to strengthen the Pull strategy. Highlighting the benefits of the product through the packaging as it was decided already. Moreover, they could provide samples, promotional products or advertising articles about launched product based on previous success in B2B. This would introduce the background of the company, create the trust of consumers and spread the benefits of the product within the targeted segment. The alternative provides more advantages in developing brand recognition and further brand equity. This tool can be strong for increase in sales if the segment analysis was done correctly and vice versa.
Alternative 2: Trade Promotion Tool
Marketing team could focus on distribution channels and encourage resellers to provide space on shelf and push the product to customers. However, to provide information about the product is not enough and company could negotiate conditions with distributors in terms of gross margin, which will interest them in carrying the brand further. Opportunity to negotiate is a positive side of the tool as both sides can obtain their objectives. Nevertheless, this approach may affect the price and therefore sales. Apart from this manufacturer could apply short-term incentives for resellers in order to motivate them to sell the product. These can be bonuses as in cash equivalent as well as in price reduction for future orders or simple brand item gifts (pens, t-shirts etc). Solution 4
Alternative 1: Differentiation Strategy
Soren Chemical could take the risk and increase prices so the distributors’ gross margin remains 20%. This would encourage them to push the product to consumers. If the brand is unknown, manufacturer is dependent on distributor, In order to differentiate the product on shelf. In case if consumers aware of the product their perception does not change because of the higher price as there is annual cost benefits.
Alternative 2: Focus Strategy
Company should focus on specific segment and entering the market with a high price for product which remains to be hard to compete. Taking into consideration the product launching failure, management team faces more expenses to be undertaken in order to bring the project to profitability. The price should be increased in order to rapid the return on investment. Moreover higher price will be a solution in interests negotiations with distributors and provide stronger differentiation on the competitive market. Solution 5
Alternative: Product Seasonality
Time framing of the marketing plan is an important requirement for achievement of objectives. Considering that high seasons starts in May, Soren Chemical should launch the product 2 months prior. This period gives
time to introduce the brand and product itself to consumers before season starts. At the same time there are consumers which are independent of seasonality and therefor may already purchase the product. This can already build some recognition and therefore interest of distribution channels by the time of higher seasonality. Recommendation and Implementation
The analysis of the applied strategy and tactics by Soren Chemical marketing department allowed highlight the major problems and issues that caused the dramatic law results of sales performance. Understanding of vision and goals of the company provided better understanding of reasons that stood behind the decisions and therefore allowed to critically evaluate these issues. In order to modify the entire go to market strategy it is important to observe different alternatives. Selection of most suitable strategies and tactics for the action plan will be linked to theories and supported by practical examples (Brown & Pope, 2008). Decision Strategy: What? Who? How?
Considering that the main goal of the company is to build recognized brand name through launching new product on existed market. In order to achieve objectives, company should identify what product they want to deliver and who is the purchaser. The most important is to identify the strategies and tactics you want to apply in action plan. Soren Chemical targets consumers to provide developed water clarifier product. Strategies for product promotion, distribution, pricing have to be chosen from possible alternatives and mostly suited for the current situation of modifying entire strategy of already launched product (Brown & Pope, 2008). Action Plan
Combination of Push and Pull Strategies
Alternative of combining both approaches is more suitable for this case as the company does not have a market share or recognized brand. Concerning the limited finance resources for modifications accurate selection of tools for both strategies will allow management team reduce promotion expenses and increase product value for consumers and distributors. It should start from introducing the product directly to consumers and following up with involvement of distributors in promotion to consumers. Such approach will provided growth of demand and distributors interests (Leiht, 2011).
Customer Promotion
Company should focus on customer promotion tools. Negotiations with distribution channels have a strong impact on price of the product which further can strongly effect the customers’ perception. Therefore, customer oriented tools are focused on development of the brand and actual demand on the market. Further development of the website will increase customer loyalty and simplify the way to inform consumers. Moreover, consumer promotion should be according to the target. It means to provide promotion not in general for all residential pools market but for separately for the owners self-maintained and maintained by professional services. This would help to deliver the use simplicity and cost benefits of the Coracle product. Direct promotion may be in the form Point-of-Purchase (POP) as demonstrations, samples. Involvement of distributors into these promotion programs can slightly cover trade promotion; therefore encourage distributors and professional services. This could be done on the contract basis of partner distributor. Manufacturer will distribute product only through chosen distribution partners what will automatically differentiate the reseller as the only chain who sells that product. This would encourage reseller to be involved in the consumer promotion programs in order to build its own brand and the brand of Coracle product. It is a creation of unit long-term goal for this partnership. As a result of it is fast-forwarding the growth and development of the brand. Focus Pricing Strategy
Recommended alternative solution for pricing strategy would be to focus on specific segment and highly differential price from competitors. Stronger input in customer promotion will build the customers’ expectations of the product which further will be supported. At the same time it will increase the gross margin of distributors and their interest in pushing the product of Soren Chemical instead of its competitors. Apart from this, pricing strategy should provide some flexibility to consumers. For professional services agencies that work for residential pool market would be designed separate pricing of products with discounts according to obliged minimum amount to be purchased. This will attract this segment as the annual cost would increase even more and provide the word of mouth promotion process.
However, the pricing strategy cannot be confirmed from the plan as there should be negotiated agreements with distributors. Timeframe and seasonality
According to the segmentation of consumers this will allow to separate the promotion in two stages before the season starts. Through the whole promotion program involvement of distributors and their contribution will support the growth of consumers’ interest and therefore demand. As for the pricing strategy, it can be overlooked according to changes in demand during the seasonality. This based on the actual product use. It refers to product use description and therefore replacement cycle. Short-term promotion program should be fully accomplished prior the season starts in order to adopt pricing accurately.
The complexity of the action plan requires full involvement of marketing department and partial participation of three major departments . These are: R&D department: to maintain the process. Especially this may occur in case of modifying the packaging in order to estimate suitable price for market (closely related to possible issues in negotiations with distributors). H&R department: in order control the labour force of promotion in terms of company vision and limited financial allocation for the project. Finance Department: involved in every decision making process of the developing and implementation of the strategy (as the project has failed before) Conclusion
The critical analysis of the case identified the problems and issues that caused it. Implementation of theories and flexibility of strategies allowed to provide recommendation for alternative action for go to market strategy for Soren Chemical. However, all these strategies cannot be observed separately as they are all linked between in order to obtain the set goals. Variety of combinations is the key instrument in marketing strategy (Hayes, Pisano, & Nichols, 2012).
References
Brown, G. F., & Pope, A. V. (2008). Get-to-Market Plans : From Strategy to
Successful Implementation. Retrieved from http://www.bluecanyonpartners.com/wp-content/uploads/downloads/2012/03/Get-to-Market-Plans.pdf BusinessPlanningHQ. (2013, 10 29). BusinessPlanningHQ. Retrieved from BusinessPlanningHQ: http://www.businessplanninghq.com Hayes, R. H., Pisano, G. P., & Nichols, N. A. (2012). MANAGING INNOVATION IN THE INFORMATION AGE THE FALL AND RISE OF STRATEGIC PLANNING. Harvard Business Review. Hwang, I., & Chi, D. (2005). Relationships among internal marketing, employee job satisfaction and international hotel performance: An empirical study. International Journal of Management, 22(2), 285–294. Retrieved from http://scholar.google.com/scholar?hl=en&btnG=Search&q=intitle:Relationships+among+Internal+Marketing+,+Employee+Job+Satisfaction+and+International+Hotel+Performance+:+An+Empirical+Study#0 Leiht, P. (2011). Balancing Push and Pull Strategies (pp. 1–2). Retrieved from http://www.justenough.com/thought-leadership/JustEnough-Thought-Leadership-Balancing-Push-and-Pull-Strategies.pdf Melillo, L. (2011, 10 28). Office Mocrosoft. Retrieved from Office Microsoft: http://office.microsoft.com/en-us/word-help/create-a-go-to-market-plan-HA001207235.aspx Rangan, V. K., & Yong, S. (2011). Soren Chemical : Why Is the New Swimming Pool Product Sinking ? Harvard Business School, 1–8.
Appendix
Business Process Table
