Panacea Chemicals Case Decoded- B2B Marketing

1. B2B MARKETING : PANACEA CHEMICALS CASE
Submitted By: Group 1 Submitted To : Dr. Sushil Chaurasia
 Aditi Mandowara - 15020241009
 Ananya Sarkar - 15020241019
 Anindita Neogi - 15020241020
 Paras Agarwal - 15020241082
 Parth Shah – 15020241083
 Suraj Raje - 15020241117
 Yashi Agarwal - 15020241125
 Yatharth Sinhal – 15020241126
 Divyang Sonchhatra - 15020241045

2. Q1. What is the right market size (total market size and retail market size)
of Coroguard101? Is the first year sales justified?

3. Coroguard-101 Sales data
2014:
Expected Revenue - ₹900 Lakh
Actual Revenue - ₹66.6 Lakh
Market Share for Coroguard-
101 : 15% - 20%
Total Market Size : ₹444 - ₹333
Lakhs
Unrealistic target : ₹900
lakhs
Total Market size = Retail
Market size
(As sale is through retail
channels only)
Remaining 40 % market
share : Diluted Chorochem
(substitute for Choroguard)

4. New product in its introductory stage should be considered a success if it
has a market share of 2% to 3% ; whereas Coroguard-101 has a share of 15-
20% .
IT’S A SUCCESS!

6. Q2. How to choose short term (three years) and long term time horizon
for the new product? Significance of channel structure for such specialty
products.

7. • Significance of choosing a horizon for a new product.
• Success of the product depends upon reach and distribution strategy being employed
by the company.

8. Short term :
•Creating a market and reach for the product .
•Leverage all channels (distributors , and specialty retailers).
•Direct marketing sales to use the private label to rope in the small application customers.
Long term :
•Increasing the sales for the product.
• Exploiting new territories.
•Focus on mass retailers and specialty retailers.
•The marketing and advertising activities to be reduced gradually.
• Increase in sales force and distributorship.

9. Significance of channel structure for specialty products:
• Network of 50 distributors covering major cities and industrial areas.
• Ensures their product is available in major target markets.
• Reduces money spent on sales force deployment & building relationship with small clients.
• Role of mass & specialty retailers :
•Ensures that the product is never out of stock
•Bundled service offering by specialty retailers
•High technical know how

10. Q3. How to compare the selling and distribution process of Coroguard-101
and Corochem101?

11. Corochem -101 :
B2B sales (Used in large scale industrial applications)
Coroguard-101 :
B2B sales not suited (Used in small scale operational purpose of
water treatment)
Recommendations for increasing sales :
• Direct marketing efforts
• Supply Agreements with distributors.
• More third party distributors
• Setting up retail outlets or partnering with third parties retail outlets.
• An additional revenue of Rs 607.2 for each container sold
• More effective online sales and promotional activities.
Pricing:
•Major challenges : Cost of raw materials & Increased vendor competition.
•Value Pricing is the best approach.

12. Q4. How Coroguard-101 pricing can be positioned relative to competitors?
Company needs to understand that the product is new to the market and thus customers require some time
to witness and understand the actual annual savings associated with Coroguard-101.
Factors Coroguard-101 Competitors
Chemk. Ferro
Cost/Container 1500 900 900
Annual cost 2815 3369 5400
Quantity/containe
r
2 1 4

13. Two unique strategies of pricing:
Reduce Container
Size to 1 Litre
container
Considering 7%
Packaging and
overhead charges:
New Price is Rs 800
Competitive Price
and Higher margins
Simultaneous
Branding and
awareness generation
Achieve competitive
Advantage
Generate Sales for 2
Litre containers
and try to attract
smaller customers
into this segment
Communicat
e annual
benefits
Identify Big
clients and
B2B
customers

14. Q5. How can you create value for channel members and consumers? What is the impact of pricing on
channel members?
Value for consumers:
 The active ingredients in Coroguard 101 is able to reduce the usage of dispersants
and other chemicals by 25%
 This acts as a huge cost advantage over Ferro 501 which in spite of being the most
effective corrosion inhibitor can reduce the usage of dispersants and other
chemicals by only 15%.

16. • Coroguard-101 is more expensive than Ferro 501.
• Distributors of Coroguard have a typical gross margin of 20%.
• They wish to maintain 30% margin on Coroguard 101 since it is a specialty chemical.
• Therefore Panacea should increase the gross margins of the Distributors and Retailers to drive value for
them.
• Currently mass and specialty retailers both have a margin of 15%.
• Panacea can selectively increase the margin of specialty retailers and make them a one stop solution for
the product.
• This would also save Panacea the application expenses for Coroguard 101 to its customers.
Points to be considered:

17. Q6. Whether to go for Marketing or Sales oriented strategy?
Option-1:
In short term they can go for sales oriented strategy, wherein they can incentivize their channel partners i.e.
mass retailers & distributors.
• Panacea have 50 distributors for Coroguard and incentivizing them will result in distributors keeping
more stock of the product.
• This will affect the sales volume which has a direct impact on the profits.
• Panacea can play in the range of 20-30% of margin given to distributor on the basis of total sales that
they put forth.
• Panacea can create clubs of dealers/levels of dealers on the basis of sales turnover and provide them
better offers in future to promote higher sales volume to capture market.

18. Option-2:
• Ferro -501 has a pull effect from contractor & distributor since it has better product features than
Coroguard.
• They are the major influencers in this category & customers will only listen to their suggestions prior to
making purchase.
• Incentivizing contractors via sales promotion for Coroguard will result into pull effect from market
• But this needs to be supported by creating enough marketing side by side as these kind of sales promotions
cannot be continued forever.
• Sales promotions like coupons for cashback, Goodies over certain purchase limit etc
Option-3:
• Since the last campaign has failed, & the channel is not able to communicate the value that Coroguard is
putting forward indicates a clear gap of awareness.
• So a clear differentiation for Corochem & Coroguard should be established, which in long term will help
Panacea to stop the dilution of Corochem for small and retail function which might hamper the sales of
Coroguard in future.