Rohm and Haas Kathon Case

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Rohm and Haas: Kathon MWX I. Problem ID: Rohm and Haas sales Kathon 866 MW metalworking fluid biocide through a relatively small network of formulator/distributors who deliver Kathon 886 MW to the metalworking market as an essentially anonymous ingredient in privately branded metalworking fluid concentrates. R&H’s new specialty product, Kathon MWX, for use in low-volume metalworking systems directly targets the end-user as a stand-alone product. R&H has not built Kathon brand awareness or communicated MWX value to the end-user and also has not provided economic incentives for sales through its distribution channels. As a result, Kathon MWX sales are suffering greatly. II. Courses of Action: 1) Allow formulator/distributors to privately package Kathon MWX + Incentivizes formulator/distributors to aggressively sale Kathon MWX + Reduces R&H’s packaging and shipping costs as product can be delivered in bulk - 10 of 12 distributors already agreed to distribute Kathon MWX without private branding - Creates situation of reliance on distribution network to communicate product value to end-user - Poor sales to end-users could result in formulator/distributors terminating MWX contracts - Lack of Kathon brand awareness could mean no brand preference and allow room for new competitors 2) Do not allow formulator/distributors to privately package Kathon MWX + Gives R&H control over Kathon brand equity - Building brand equity will require more expenditure in advertisements and promotion - Less initial incentive for distribution channel to aggressively sale Kathon MWX 3) Specify a higher end-user price point + Lowers retailer risk of cannibalizing sales of competing brands which must be more frequently bought + Incentivizes retailers to aggressively sale Kathon MWX and increases margins in distribution channels + Higher price may communicate higher

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