Xiameter
Executive Summary Silicon and silicon-based materials can be formulated to deliver unlimited range of uses. Silicon Is durable enough for long lasting uses In the construction Industry, yet can be gentle enough for uses In the healthcare and medical devices. DOD Corning has been pioneers In the development of silicone for commercial uses for the last 80 years, founded as a joint venture between DOD Chemical Company and Corning Glass.
They became a global leader in manufacturers of silicon-based products with a 40% worldwide market share.
DOD Corning was a pioneer producing fit for purpose arrest leading products. Around late 1990 DOD Corning encountered major performance and financial losses, customers were defecting to low-priced suppliers which eroded DOD Corning’s volumes and margins. In 2001 after another dismal year and DOD corning not living up to Its capabilities and layoffs proved Inadequate, a fresh start was required. After numerous strategic deliberations DOD Corning decided on a dual brand strategy going forward, resulting In a ‘new business unit Clatter ‘a disruptive Innovation’ being formed.
Examiner flirts mover advantage was starting to erode according to some pessimists, e need review current marketing plan, and chart a future for the business. Introduction The purpose of this report is to investigate decisions that shaped the business model and marketing strategy, Interrogate the segmentation, discuss the product, pricing and competitive environment and possibly make recommendations to malting the current market share Cellmate Is enjoying. Slather’s present model was centered on high priced advanced products with high quality service offerings.
Customers Analysis Customers are spread worldwide in more than 80 countries within 6 concentrated industries, serving 25 000 customers with more than 7 500 products. Industries include from healthcare to automobiles and household products to electronics.
(Examiner Case Study) Customer paid premium prices for the innovative high quality product that Included value add services Like customized application testing, training custom blending packaging and recycling. Customer had long term relationships based on making DOD Corning Interest the customers Interest. Clatter Case Study) digit growth on unique products. In the late sass’s their healthy business performance came to an abrupt end. The main contributor was DOD Scorings’ marketing strategies have not change with the market (Examiner Case Study).
Marketing Environment The marketing environment comprises the micromanagement as well as the macro environment. Actors on the micromanagement affect the market directly, while actors on the macro environment affect the marketing environment indirectly.
The factors and decisions that shape the business model and strategy is depict in the micromanagement Political In all chemical manufacturing environments there are the challenges of environmental regulations as specified by the authorities, DOD Corning was no exception. Rising demand for “Green” projects, DOD Corning participate in the Responsible Care Program of the American Chemist Council (AC) Economic Global leader in silicone based product with a 40% worldwide market share, with its closest rival with only 26% market share.
DOD Corning achieved double digit growth in its initial years. Social All manufacturing, development and testing is conducted ethical and ecological friendly environment, as they are suppliers of silicone products within the healthcare industry Technological DOD Corning is innovative and produces high quality products supported by the Meany’s strong service offering.
This include customize application testing, training custom blending packaging and recycling and formulation.
They earned the reputation as the world’s inventive supplier of silicone products Competitive Environment Threat to new entrants Minor local players with no R and low overheads offered rock-bottom prices on silicone products to bulk customers Large global and regional rivals were boosting supply chain efficiencies, undercutting DOD Corning’s prices Power of suppliers Contamination trend from rival suppliers were denting DOD Corning’s financial reference Suppliers with no R could afford to sell at cheaper prices Bargaining power of Buyers Customers defecting to low-price suppliers Price seeker segment was at odds with DOD Corning’s’ core strengths Availability of Substitutes Cheaper imitator products flooded the market Competitive rivalry Regional, global and local players took advantage of the changing markets SOOT Analysts Herewith an extraction of the findings of the internal and external audits which draws attention to DOD Scorings strengths and weaknesses, opportunities and threats facing the company’. (Kettle et al. (p. 135)) STRENGTHS Constant Innovation Leadership in Poly-silicon Market Geographical Diversity Extensive Range of Offerings WEAKNESSES On-going Legal Proceedings 5 consecutive years of stagnation Same business model for the last 60 years Rising Demand for Green Projects Growing Applications of Semiconductors Expansion in Key Growth Markets New Product Launches THREATS Challenge of Environmental Regulations Shift in Technology Infringement of Intellectual Property Fig 02.
High-level SOOT analysis on DOD Corning The analysis indicate that the business model for Examiner was shaped based on the allowing factors The current customer analysis influenced specifically by the customers that defected to the competitors, The Competitive environment as illustrated using Porter’s Five forces model SOOT analysis, specifically the weakness where DOD Corning was bleeding cash on law suits and Stagnation performance for 5 years The company did not live up to its capabilities and that is bad for a market leader. Segmentation No company has the resources to cater for every customer in every market. By going after segments instead of the whole market, companies have a better chance to liver value to the consumer and receive maximum rewards.
Through market segmentation companies divide customers into groups, based on location, buying attitudes, needs buying practices in order to service customers’ needs efficiently and effectively with products and service for their unique needs. A marketer has to try different segmentation variables, alone and in combination to find the best way to view the market structure.
(Kettle et al, 2008) DOD Corning segmentation was based on 6 industries which sold to their customers within the industry segment from healthcare to automobiles, from household products to electronics. The company had their own marketing-, sales-, and technical service department per industry. (Examiner Case Study).
This is a typical ‘end-user segmentation approach. Initially this segmentation worked for DOD Corning, in my opinion due to the marketing department per industry, they obviously did not see they should revisit their segmentation.
The segmentation worked for 60 years, the problem is, the market then changed, their DOD Corning only used the single segmentation, of which the disadvantage is that they potentially overlooked buying behavior in another industry. “A task force concluded, the past segmentation did not fully address the ray different segmentation variables, alone and in combination to find the best way to view the market structure. (Kettle et al, 2008).
Despite companies segmentation practices, customers decide for themselves what their required needs are, once this was realized by DOD Corning, evident from their self-audit, and 5 years of customer surveys and discussions with sales force. They reviewed their segmentation to a needs-based segmentation scheme (Examiner Case Study). Target market The major advantage of the needs-based segmentation open a ‘new differentiated target market coverage strategy, DOD Corning could now target several market segments with separate value added offerings for each, if required.
This evidently, resulted in higher product sales and a stronger positioning, and a greater market share within each market segment. Product and price strategies A product can be a product or a service.
If your product provides sufficient value to customers, they will buy – no matter how good or bad the economic situation is, if they perceive value they will pay the price (Wood, 2010). All products consist of three levels, the most basic core product, which is the problem solving benefit the consumer seeking. The second level is called actual product which s the quality, branding, features etc. Of the product.
The third level off product is the augmented product, which is the aftertastes services, installation warranty. (Kettle et al. 2008). Fig 03. Three levels of a product Source: Kettle et al. 2008 Through application of the above theory about product levels to products sold by Examiner, the above figure has been created to demonstrate what Examiner consumers are actually buying into, in terms of product levels.
Examiner has strip down and changed the augmented product level to fulfill the needs specifically for the price seeker segment, who wanted the lowest price and not al the services and support. Examiner initial product range was 350 products from the 7500 from DOD Corning The current pricing model was based on a high-priced innovative product and service package. They had to develop a fundamentally lower price structure with standardize service Differentiation and positioning pricing. Based on all the evaluation and analysis completed in the self-audit as well as the industry knowledge of the 450 strong sales force, the key differentiators is brand image and history, excellent high quality products, product mix over several large industries.
Examiner is obviously adopting all these differentiators, but as a dual brand can introduce the pricing differentiator because of the “no-frills” offering. Branding Branding form part of the product mix.
Examiner have introduced “dual branding”, the standard DOD Corning brand and the “no frills” brand. Dual brand offers some advantages. Dual brand open ‘new untried segments in the silicone based market. With DOD Corning already the major player, buyers associate with the same level of quality, innovation and development. Of course there is the possibility of brand unbalancing where Examiner brand would over shadow DOD Scorings brand or the other way around.
It would also increase marketing cost. (Examiner Case Study).
Pricing Strategy Pricing is the major factor affecting buyer choice and also the most flexible marketing mix element, because it can be change quickly. (Kettle et al. 2008) DOD Corning have been selling product at premium price for their innovative value add of their products.
This was value-based pricing. Examiner on the other hand introduced market related pricing, by having the “no- frills products offering, being in a monopolistic market Examiner have to continually evolve differentiated offers to different customer segments to maintain market share. (Kettle et al, 2008) I believe, Examiner can review the penalty rules to be more lenient to build that segment and gain market leader then, introduce the penalty system, gradually. There are trying to serve a declining segment.
From the case study Examiner turnover has increased dramatically, but there is no indication of the profitability of the business. I would suggest Examiner change their pricing strategy to a cost based pricing strategy, because o Sellers are more certain of costs then sales demand.
Silicone prices are on the increase that would affect the margins on the entire market. O Cost-based pricing strategy will reduce daily adjustments, thus efficiency o it will minimize price competition, and it is fairer to both seller and buyer. (Kettle et al, 2008) There is also the threat that competitors will very soon catch on to web- based offering that was pioneered by DOD Corning.
Recommendations silicone based market, they currently have the competitive advantage by offering great value to it consumers using lower prices and other instances providing high quality value added services. To be able to maintain the market leader spot, the company needs to continually review on its close competitors’ information and compare its marketing strategies, products, prices and promotions. In this way the company can identify any advantages or disadvantages it has.
There are several things the market leader can do to protect its position. They can always fulfill their value promises; its price must remain consistent with the value of the brand and keep strong relationships. (Kettle et al, 2008) Examiner will continuously have to do a self-audit to determine its vulnerabilities and enforces the weak areas.
Like in the case of DOD Corning, the segmentation became suspect after 60 years of using the same segmentation. (Examiner Case Study) There is constant change in the market place and customers’ needs change accordingly therefore the market strategy must change as well. Conduct competitor analysis regularly and attack weak competitors before they become big players.
Examiner provide superior value by leading the industry in pricing and convenience. If it can reduce it cost by creating an efficient delivery channel that can service customer with reliable good quality products. Kettle et al, 2008) The innovation and R must definitely proceed, to produce high quality products.
With the increase in “green” awareness, Examiner must not forget to take the ecological and ethical issues in consideration when developing and testing new products (Wood, 2010) Logically, if Examiner and DOD Corning use the same factories, producing similar products, utilizing the same raw material, the cost of manufacturing will be reduced. I therefore suggest that the pricing strategy should be based on cost-based pricing and not market based pricing. This will also minimize price adjust administration hush more efficiencies.
I suggest the product range must be extended to additional 350 products, specifically products that is nearing its end of life cycle and try and re-launch the product by making modifications to the augmented product level and go to market with it.
More intelligence needs to go into the web-enabled offering, by offering blanket Just- in-time contracts, which can enable customer to get deliveries whenever they require it, without the hassle of renegotiation on price and quantities, this can be achieved by interrogating of the historic buying behavior of the customer. Leniency must be instituted on the order penalty system.
