XIAMETER | The past and future of a “Disruptive Innovation”

submitted to

Prof. Rajesh Pandit

In partial fulfilment of the requirements of the course

B2B Marketing

By

Rahul Thakur- 2011315

Shifas V S- 2011230

Rishabh Gupta - 2011317

Section – B2B - B

On

12-08-2021
'This submission is our group’s work and our work alone. We have not taken any help
from any internet or other sources (other than our notes, course pack, and textbook)
or from any other persons outside our group to arrive at the answer.'

Question -1 What factors were responsible for Dow Corning’s poor performance
between 1995 and 2001?
The factors responsible for Dow Corning's poor performance between 1995 and 2001 were
external market conditions and the internal inabilities to respond to the market conditions.
Externally, the markets were changing, but the same was not with the case of Dow Corning's
core business and marketing strategies. The primary factor for the declining performance was
the increasing defection of customers to low-price suppliers as large global and regional
rivals increased their supply chain's efficiency to lower their costs. Small local players with
no R&D investments and low overhead offered a range of commodity silicone products to
bulk customers at low-price. In almost all of the mature applications, product differentiation
was getting harder for the company. The commoditization of the silicone product further
resulted in a decline in Dow Corning's financial performance.
Internally, the company didn't change its core business and marketing strategies to adapt to
the changing markets, which impacted its performance. The products that were once special
silicone materials had now turned to mere commodities, and Dow Corning was losing share
to low-price competitors. The company had also missed out on a segment of customers who
purchased big volumes at very competitive prices but didn't require bundled services. The
past segmentation scheme by Dow Corning didn't fully address the emerging shifts in
consumer needs and was focused more upon the end-user application.
These reasons combined brought a stagnating performance for the company and resulted in
their poor performance between 1995 and 2001.
Question-2 What did the new segmentation reveal about the customers?
Earlier the classification made by Xiameter was application based whereas the segmentation
was now changed to need based. The inferences that can be made about the customers based
on the new segmentation are as follows:
 The customer needs were not uniform in a single industry, rather it depends upon their
business requirements
 The needs were rather similar across industries, largely driven by their business
models
 Businesses requiring innovative solutions and high performance were ready to pay a
premium and hence constitutes the profitable segment of customer portfolio
 All the customers did not focus on commoditizing the silicones
 For Experienced customers who were considering silicones as a commodity, apart
from price ease/convenience in buying cycle was also an important factor
 The customers in the “price-seeker” segment constituted between 25%-35% which
was expected to grow
Question-3 Xiameter delivered on the aspiration of Dow Corning by being a successful
model. However, towards the end of the case, it is stated that the imitating competitors
have emerged and are offering an expanded range of products beyond silicone.
Should Xiameter now expand its limited range of products to include all the varieties of
Dow Corning silicones? Provide EITHER points to support the expansion OR points
against expansion.
Xiameter should not introduce its full range of silicone products of Dow Corning as this will
potentially cause cannibalization. The customer segment still ready to pay a premium price
constituted more than 50% of the market; given the high profitability of this segment,
introducing full range on Xiameter at a low price will severely hit their profit margins.
Since Dow Corning was a market leader in silicone products and its innovative solutions are
preferred in the industry, introducing the full range of products on a platform competing for
commoditized products will cause commoditization of products recently launched from
which sufficient profits can still be extracted.
In the long term, this can also cause friction between Dow Corning’s relations with global
companies in joint ventures; since these companies are one of the earliest adopters of Dow
Corning’s new product, any new product launched will find it difficult to make its way into
the market on profitable terms with their support.
The introduction of full-range products on Xiameter can cause dissatisfaction among the sales
force of Dow Corning. Since, Xiameter involved direct web-based selling, not requiring
salespeople directly entire range of products through Xiameter will lead to a reduction of
incentives earned by salespeople. In addition to this, there will be internal competition
between salespeople and web-based platforms, which can damage the corporate culture at
Dow Corning, ultimately affecting the business.
Rather than introducing the entire range of products on Xiameter, Dow Corning can
selectively increase the product range on Xiameter, preferably the products in the mature
stage of their life cycle or the products that can be commoditized without any threat to other
product range.
Question-4 Should Xiameter positioning be changed from “Dare to compare” – a
dilemma Dow Corning is facing towards the end of the case?
Xiameter should change its positioning from “Dare to compare”. The reasons for the change
could be as follows:
 The current positioning claims to offer best price in the market, with increasing
pressure from multiple suppliers, the downward pressures on price will keep on
increasing with time and eventually the segment will cease to provide profits. Also,
lowering the prices below a threshold will result in strong friction from customers in
other segments.
 The current positioning does not include bundling of services which has historically
offered competitive advantage to Dow Corning and yielded profits. The current
position is not sustainable for long as the customer apart from favouring prices also
gives importance to factors like delivery time, ease in purchase and product quality.
Since, Xiameter is delivering well on all these factors, it can position it much better
amongst competitor leveraging better overall customer experience.