Xiameter Harvard Case Solution & Analysis

Problem Statement

Dow Corning Corporation is following e-marketing for their silicon raw material products. Silicon is used as a raw material in the making of several products. The case discusses the successful strategy articulated in Dow Corning for their marketing of silicon products, a chemical used in diverse applications. Currently, the company is facing problems related to its business to business marketing strategy. To overcome this situation the company is concentrating on its user needs and on developing a "needs-based" breakdown of the industrial customers.

Now the company is trying to manage its sales in the commodity market with the help of disruptive technological innovation. Bundling and de-bundling of technical services, hallmarking of commodity chemicals, web-based low price, or basic value proposition would also be going in vein due to some internal and external strategic factors.

Internal factors

The company was selling their products with the use of traditional selling methods and had never planned to capture global market share through the use of internet. However, its competitors are adopting new ways of marketing and spreading their product in the international market. Through this marketing strategy, companies can also explore new marketing stream which in turn will be profitable for the company. Using e-marketing for the promotion of chemicals is an unusual exercise in the chemical industry, and companies who are using this method are making considerable amount of money through this marketing strategy. Company must accept the e-marketing strategy to widen its market share in this business.

However exhibit 3 shows a steeper decline in the sales of the company regarding customer defection which in turn resulted in to an aggregated decline in the net sales of the company.

External factors

External factors that cause poor company’s performance was the product selling strategies fooled by its competitors. Xiameter sells their silicon material at low prices with after sale services to its customer. This package includes both the product and service cost. However, the existing customer does not depend on this little volume, lower-priced product with overhead-facility. The customer wants a large volume of silicon material and is so much willing to buy mass raw material at a high price. This factor has damaged Dow Corning’s customers from the manufacturing side. No matter if the company is selling its products at low price, as it is far more important to meet customer's demand. Explaining the customer detection scenario broadly was necessary because it was highly contributing to the poor performance of the company.

Xiameter was losing its share because the huge international and local competitors were enhancing the efficiency of their distribution networks and manipulating their economies of scale. Competitors were reducing their cost with mass production and selling bulk material at higher prices to challenge Dow Corning’s price range. Likewise, smaller local players were also taking advantage of this situation, the local companies entered the market and targeted huge market segments at low prices. However, local investors are viewing the big picture by observing market leaders. Without proper research and development these domestic companies were providing a range of commodity silicon products to the bulk customers at rock-bottom prices and damaging Xiameter’s market share and profitability.

Dual brand strategy

However, after analyzing the company internally and externally company has decided to make an investment on the incentive system of sales force. This incentive system will motivate them to achieve difficult sales targets. On the other hand, sales target must be revised on timely basis depending on the customer needs. Company would also use its distribution network to sell the product to its direct customer which in turn will save company’s inventory storage cost......................

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