Dow Corning Old Segments (Industry Based)

Specialized Applications
Buildings
Automobiles & Aerospace
Electronics
Household Products
Healthcare

Dow Corning New Segments (encompassing all industries)

Innovative Solutions
Global companies that engaged in joint development with Dow Corning
Early Adopters
Action -> Customer panels and focus groups to find unmeet needs and
emerging trends
Proven Solutions
Companies that did not have big R&D budgets
Preferred proven products in well-established applications
Cost-effective Solutions
Customers willing to pay a premium on our product, if it helped reduce
their costs
Typically in mature markets (household detergents)
Relied on Dow Corning's vast product and application knowledge
Price Seeker
experienced purchasers who wanted the lowest price and an easy way of
doing business
25% and 35% of total market -> expected to grow even more
lengthy price negotiations and costly selling time.

For Price Seekers -> Xiameter

Low price/ no-frills products sold through the web
Differentiated from core products

The house brand, the logic went, had to be strengthened to appeal to the other
three segments who wanted the company’s innovation and value-added services

Dow Corning’s recent $100 million investment in IT infrastructure

performed integrated ordering, invoicing, fulfillment and accounting
functions.

Xiameter's decisions
an autonomous unit inside the Dow Corning organization at par with the other
six Industry organizations reporting to the Corporate Executive Committee
become a sub-brand of Dow Corning Corporation
initial product line -> a limited rage of about 350 common silicone compounds
(out of more than 7,500)
target prices expected to be on average between 10% and 15% below those
charged to Dow Corning’s customers.
Simple but strict business rules for customer interface
minimum order quantities
lead times were fixed by production scheduling
standard payment terms were 30 days
All communication was via email
E-mail enquiries had a one-day guaranteed response
Customers who deviated from the standard rules incurred additional charges.

Xiameter Economics
significant savings were found in eliminating sales and technical service
activities.
goods were produced to order and shipped directly to customers, thus
eliminating inventory and warehousing expenses
Transportation savings were also realized by full truckload shipments

In contrast with Xiameter, online competitors

had no minimum order quantities and
offered their entire product range at full price and with service support.

Should Xiameter abandon low prices?

Recent surge in demand from China and other countries had led to industry-
wide raw material shortages and rising silicone prices everywhere
Couldn’t Xiameter compete with a modified set of benefits
that included high product quality,
simplicity of ordering and
reliable delivery

Should Xiameter offer more products?

current product range could be expanded to include value-added specialty
silicones sold under the Dow Corning label