Is Kathon Mwx a Good Product?

Is Kathon MWX a good product?

Yes. The development of the product was the request from customers loyal to the Kathon 886 MW product asking for a maintenance biocide for metal working fluid reservoirs smaller than 1K gallons.

Rhom and Hass created a unique package design that was a plastic packet that was designed to hang into the metal working fluid reservoir by a strap suspended on a plastic hook and could treat 25‐75 gallons of metal working fluid for 2‐4 weeks. The customer could remove the packet after one month and was safe to handle and dispense. There was an estimated 150K potential customer with a significant amount of metal working machines; >1.7M in need of maintenance biocides.

In comparison to the competition it meets the needs of the metal working fluid concerns better than the competition. It lasts longer; it’s easily removed and disposed of, and effective against bacteria and fungus without leaving an odor.

Product Size

Gallons Treated

Cost to Distributors

Cost to End

Users Notes Kathon MWX

2oz 25‐75 Vol disc / 1‐2

boxes (144 packets) $180.00

$2.00‐$6.00 Easily to dispose and remove packet; lasts 2‐4 wks, no smell and kills bacteria and

fungus

Sump Saver

2oz 25 $4.00 8 tabs $7.75 8 tabs Tablet dissolves; lasts 3 days, ineffective against fungi and less against bacteria

Dowicil 75

2.5 lb. 500 $2.34 / lb. $10.00 / lb. Water soluble packages, worked well against both bacteria and fungi, but had a heavy

ammonia odor, released formaldehyde, and could not be used safely in reservoirs with capacities <500 gallons.

2. Should the new product have the same name as the old product?

No. The survey results noted that 50% of users used products ranging from household disinfectants to metal working biocides. Even though it was not effective, they continued to use these products. When they used a biocide they couldn’t remember its name. There is no brand recognition or brand equity for the target market because the primary product Kathon 886 MW was rebranded and repackaged by distributors so end users were unaware of the name. Joan Macey should change the name to be similar to what the end user is purchasing and note the benefits accordingly. Another suggestion would be to provide free samples.

3. Compare the markets for Kathon MW and Kathon MWX and discuss the marketing policy implications.

Kathon 886 MW Kathon MWX For metal working fluid reservoirs >1k gallons For metal working fluid reservoirs <1k gallons Primary distributors rebrand, repackage, resell Primary distributors cannot rebrand and

therefore lost a distributer because of this

The sales force for both products have three primary objectives:

● New account activity

● Market penetration

● Quantity sold in pounds

With 20‐30% of time spent on all biocide customers and only 1/3 of this time spent on metal working fluid formulators (the primary distributors), and rest of time spent visiting users jointly with the formulator’s sales people.

This multi‐level channel approach to sell both products to non exclusive distributors is proving not effective.

Because they were using non exclusive distributors, they ran into the issue where the distributors made more money by selling the less effective product, Tris Nitro, because the end user had to purchase multiple times because of its effectiveness only lasted three days. This product gave the distributors 7x more profit.

In addition, the Kathon MWX product eroded sales of metal working fluid.

This superior product Kathon MWX keeping tanks cleaner longer and cannibalizing the distributors other products, led to an ineffective marketing strategy.

4. Perform a competitive analysis of the market.

Rohm and haas has 15‐20% market share in the maintenance biocides market

The remaining 80‐85% is distributed among other competitors equally ( no one has dominance )

Direct competition: competitors Angus and Dow chemicals

Other competitors: Olin, millmaster onyx, RT Vanderbilt, Merck

Though Kathon MWX is proven more functional and thereby more cost effective , customers are unaware and relatively unconvinced of benefits as compared with competing brands

This lack of consumer awareness means that customers also dip into the non‐biocide industries, such as disinfectants, bleaches, and other household cleaning products. Though these products have been ineffective in stopping microorganism growth, and are often detrimental to production, customers continue to use them. This consumer behavior takes market share away from Kathon and other biocides (though also presents an opportunity to capture this low awareness market)

Two additional competitors also plan to enter the maintenance biocides market in the near future (Union carbide and ICI)

However, after testing, kathon mwx has still been shown to be the most effective product

Main requirements for kathon: gain competitive advantage by addressing issues of distribution, brand recognition, and market awareness

Though this is a niche market, there is room for expansion. Superior product, more cost effective

Main issue is the cannibalization of the distributors and the metalworking fluids companies who will sell less fluid if it lasts longer.

Issues with competitors:

Olin's triadine10: well received, but not as cost effective as kathon

Tris nitro: most commonly used, but actually less effective with fungi and stops working after 3 days

­­­­­­­­­

Product Compatibility with concentrate Increases life of metalworking fluid,

( by Effectiveness against bacteria and fungi )

Kathon MWX 70% 2‐4 weeks Good

Tris Nitro 45% 3 days Poor

Dowicil 75 45% 2 weeks (assumed) Poor

Annual cost for a small machine shop :

When no biocide is used $20,951

When Kathon MWX is used $10,740

When Tris Nitro is used $19,673

Good to perhaps attempt bundling with the fluids companies, as was done with kathon mw. Kathon MW was bundled with formulator’s products (so end users never really saw the product), and similarly Kathon MWX can be bundled with the product of a metalworking fluids company that addresses a similar market.