Rohm And Haas Case Analysis

When analyzing the Rohm & Haas case, it is important to understand the current situation it finds itself in vis-à-vis Kathon MWX. Rohm & Haas, a current worldwide leader in the chemical technology industry, was founded in Germany in 1906. Since its inception, the company has significantly expanded its services into the United States market, achieving sales of $2 billion in 1983, largely derived from the company’s operations in four business segments: 1) Polymers, Resins, and Monomers, 2) Plastics, 3) Agricultural Chemicals, and 4) Industrial Chemicals. The Industrial Chemicals segment is further subdivided into three product groups: Fluid Process Chemicals, Petroleum Chemicals and Specialty Chemicals. The Specialty Chemicals product division was responsible for developing, formulating and launching the two Kathon metalworking fluid (MWF) biocides: Kathon 886 MW and Kathon MWX. Kathon 886 MW, a liquid maintenance biocide developed for large central reservoir systems, enjoyed a 30% share of the $18 million market in 1983. Subsequently, as a result of the success of Kathon 886 MW in extending fluid life in these larger systems, end user customers requested a “convenient, safe-to-use version for their smaller (50- to 100-gallon) reservoirs.” (Page 4 of case) Kathon MWX was designed to keep metalworking systems free of bacteria, yeast and fungi to extend fluid life in these smaller systems.
The positioning of Kathon MWX had tremendous market potential, $20 million projected sales in 1984. Unfortunately, it significantly underperformed ($12,000 sales in the first five months of 1984) after product launch in December 1983. There are several issues Rohm & Haas should address, one of which is the distribution channels for the Kathon MWX market. Again, the end users of Kathon 886 MW initially expressed an interest in the development of a biocide for smaller reservoirs. However, Kathon MWX would be distributed predominantly through 10 large