Coracle's Case

Appendix-Exhibit 4 displays Coracle's current pricing structure in addition to several alternative pricing structures created by adjusting the cost per container to customers as well as container size to better reflect those offered by competitors Keystone Chemicals and Jackson Labs (HBS, Table A). Comparing annual gross profits per customer to retailers, distributors, and to Soren, across size/price alternatives, decreasing container size from 0.5 gallons per container to 0.25 gallons per container while simultaneously, but not proportionately, decreasing the end-price per container from $25 to either $15 or $20 per container appears to be most beneficial to all members of the channel. This price range additionally competes more directly on the shelf with Keystone Chemicals' and Jackson Labs' products, encouraging retailers to create space for Coracle.

Recommendation

To establish demand and brand presence in the consumer market, Soren should move forward with the push channel strategy to flow Coracle to retailers and distributors. Reducing the container size in half to .25 gallons and adjusting the sales price to $15 would increase the annual gross profit for all members of the channel. This decision was made based upon analysis of the cost structures from Appendix-Exhibit 4, which would improve sales in the first year, allowing Coracle to come close to meeting the sales volume target of $1.5 million.