BUSINESS TO BUSINESS

MARKETING
CASE WRITEUP
DUPONT (A)

GROUP 2:
ANUJ BHUGRA(MBA152008)
ARJUN TALWAR(MBA152010)
ASHESH DAS (MBA152011)
NIHIT SINGHAL(MBA152034)
VIKAS SINGHAL(MBA152061)
INTRODUCTION:

DuPont was established in the year 1802 by French Chemist, E.I DuPont de Nemours in USA.
DuPont became successful by the end of third year and it started exporting back to its continent,
Europe. In the span of these 200 years, it had shaped into a global company with variety of
enterprises like Chemical, Energy, Science Based and High Technology. It maximized its
manufacturing or processing operations in 40 countries and its products were sold in 150 places
by the end of 1990. The company’s one third revenue comes from the European market from
1960. There are 50 companies, which employed more than 19,000 people in 14 countries of
Europe. The scientists of DuPont developed the synthetic fibers industry by introducing nylon.
They were the leading manufacturer of manmade fibers in the world. The most important product
of DuPont is “Carpet Fiber”. This division was setup in Geneva, Switzerland which holds the
R&D, marketing and production areas. Products were produced in the UK and the sales offices
are in Germany, the UK, France, Belgium, Spain, Scandinavia, and Holland.

CASE CONTEXT:

DuPont’s product nylon carpet fiber is not different from other fibers available in the market;
however, they were the top players in fiber industry. The parameters like color and texture are the
factors that differ in the carpets. The fiber industry has nothing to do with these things. The
carpet industry is concerned with these directly and they in turn led to the wholesalers, retailers
and in turn to the customers. From the consumers point of view the carpet should be colorful, its
texture is important and it should be easily maintained. DuPont has done extensive research on
the customers third interest i.e. maintenance and founded the “Stain Master” that would allow to
remove the stains permanently.

With this invention, DuPont’s market share increased by 5%. This was first introduced in USA,
later on with minor changes it has been launched in Europe. It gave mixed results for the
company. DuPont’s decision is that the mills should have certain quality to use the process of
stain master. In Germany, many mills felt that they don’t have these standards set by them; hence
they didn’t show interest in the product. The UK market and France market reacted positively.
Many companied executed the same formulae by giving low quality material at lower prices.
This led to the stake of DuPont’s position in the market by 1980.

FACTS:

DuPont conducted research in the European Industry after the decline of its position in the
market. They came to know some important facts:
Flow of DuPont’s Fibers:

DuPont’s Fibers Carpet Mills Wholesalers Retailers

End Users The carpet mills are concentrated in only three countries the UK, France and Belgium.
80-20 rule is applied in European market; 80% of the business is carried but top 20%
manufacturers. To stimulate the market, they used the help of Style Books to the wholesalers and
retailers. They were not loyal customers to the fiber industry. They focused on the company that
provides material at the best price. Retail and Wholesale operations are very different in these
countries. In Germany wholesalers dominated in the UK and Belgium retailers dominated the
supply chain.

PROBLEM:

DuPont concentrated only on the carpet mills and they didn’t make any effort in knowing the end
users. They invested money in R&D for making innovations in fibers that is to be supplied to the
carpet mills. They are least bothered to know about the customers.

The main problems were:

1. Losing the position as the market leader.

2. People prefer alternate flooring to Carpeting and find it an ordeal to shop for carpets.
3. Customers were unhappy with the services provided by the retailers.
4. Fiber manufacturers were responsible for only supplying to the Carpet mills, thus the price and
quantity standards were dictated by Carpet mills.
5. There was no proper market segmentation or market focus

ALTERNATIVES:

DuPont need to concentrate on the techniques that value the customers without affecting the
supply chain. As carpet mills are the important customers to DuPont, they need to retain them.
“Creating loyal customers is at the heart of every business”-Don Peppers and Martha Rogers.
Identify the “Customer Benefit” and “Customer Cost” of the users and provide the product at
“Customer- perceived value” (CPV). Monitor the satisfaction of the customer by conducting
surveys.

Some other alternatives are:

1. Develop the Brand name and ensure the customers know about DuPont and its products
through various marketing strategies employed by the company. Some of the marketing
strategies could be Advertisement in different industrial magazines and training the retailers.
2. Open a new division which deals with all products and services related to flooring. Also, the
procedure of buying carpets could be turned into an emotional and enjoyable experience wherein
the customers look at carpets as more than something just to walk on.

3. The company should provide proper Training session to the retailers so that they have proper
knowledge about the products they are selling. And the customers should be provided with after
sales service such as fitting of the carpet and maintenance which will ensure that customers leave
satisfied. There could also be a hotline where the customers can directly contact experts in the
industry.

4. There should be a contract stating the price range within which they should sell and the
quantity standards which need to be maintained by the carpet mills ensuring that the customers
were not cheated in anyway. Also, providing Technical support as well quality assessments and
help them identify the latest trend and styles in the market.

5. The company should analyze the different markets and recognize their needs and prepare
goods as per the specifications, thus it will ensure complete customer satisfaction and better
profits for the company.

ANALYSIS OF ALTERNATIVES:

The biggest problem the company was facing was that the customers remained dissatisfied with
the services provided and that lead to the sales going down.

In Europe, there are 60 carpet mills that can level DuPont’s standards; however only 50% of
them are using their fibers. Rest of them wandering around for best price. The mills using
DuPont’s fibers should be retained and they need to analyze the CPV value and set the “price”
accordingly. The “place” is also very important for setting the price as European market is
fragmented unlike USA market which is having only four players. The customers give least
preference to carpets when they are buying house- hold equipment.

They are not enjoying or admiring to shop for carpeting as it is just a blanket to protect the floor.
Customers spend at least 10 weeks in buying the carpets.52% Customers buy carpets if the
existing one is worn out. Repurchase cycle for carpets is 12 years. Customers are not satisfied
with the product information. The retailers and wholesalers are not providing full information.
They are not providing information on price, color, fitting rooms and quality. If “product” and
“service” quality is maintained, customers would retain with them only. They didn’t “promote”
their products.

RECOMMENDATIONS:
The best possible solution to the problem of customer dissatisfaction and the problem which
needs immediate attention is that of the retailers being uninformed, unsympathetic and
motivated only
to close the deal rather than serve customers. The retailers should have detailed knowledge about
the products they are selling and should be able to answer any queries the customers have, which
will ensure that the sales go up and there is higher revenue for the company. For this purpose, the
retailers need to be given proper training.

Retain the customers by giving them offers that attracts them easily. Provide sample fibers to
50% carpet mills that are not using DuPont’s material and offer a price that satisfy their needs.
Provide a portal for the customers to choose their own color and design according to their
choices by collaborating with mills. Provide better customer care services by training the
retailers and wholesalers. Provide catalogues to the customers for better awareness of the
product, whether it is retailer, wholesaler or final end user.

PLAN OF ACTION:

Identify the customers who are loyal to the company, give them incentives and promote the
product brand. Select the location where sales of the company are not up to the mark and apply
the alternatives to them i.e. setting price and giving offers to the carpet mills. Later on,
collaborate with the mills in that location and train the wholesalers and retailers about the
product and give them the full information along with the catalogues. Provide better services to
the customers by setting a portal where they can choose their own designs and place order to the
carpet mills. Implement the above-mentioned steps for three months and find the sales growth.
Spread the plan if it worked in the selected location, by making minute changes to it according to
the location.

1. The company needs to have a clear understanding with the retailers about the change that is
going to take place. Thus, a meeting should be called wherein they sit together and have an open
discussion.

2. Then the problems which are faced by the customers when interacting with the retailers should
be communicated to them.

3. The retailers which are interested in bringing about changes should be kept part of the
distribution chain and the others should be immediately fired.

4. Then the retailers should be given proper training sessions which are carried out by the DuPont
experts, so that they have proper knowledge about the products they are selling.

5. The carpet mills should be provided with Technological assistance as well as quality standards
should be communicated so that the mills are aware about the standards that need to be met. The
company can ensure quality standards by carrying out quality assessment of the produce.
Contingency Plans. If the training of the retailers does not bring about the desired results then the
company should carry out proper surveys to understand the needs and desires of the customers in
different markets, to ensure that they are being provided with, what will satisfy them the best.
Thus, proper survey teams should be organized which will carry out surveys to find out what are
the prices the customers are willing to pay, the service they expect and the quality they demand.
When the goods are produced as per the specifications of the customers, the customer
dissatisfaction will reduce and sales will slowly increase and word of mouth will become a major
promotion technique.

CONTINGENCY PLAN:

Since DuPont is an expert and leading manufacturer in the manmade fibers, it can go for
“VERTICAL INTEGRATION”. Instead of supplying fibers to carpet mills, it can set up a mill
and manufacture carpets. It can directly deal with the customers. The above-mentioned plan can
be executed without the intervention of the mills. The Customer Satisfaction can be monitored
and it can get to know the loopholes in the process and thus leading to correction of the mistakes
and increasing the sales growth of the company.

QUESTIONS

Q1) Analyze DuPont’s marketing approach before change.

A1) DuPont carpet fiber was an industrial bulk supplier. As far as they were concerned, there
was one customer only: the carpet mill which used the carpet fiber that DuPont supplied. Until
early 80’s DuPont mostly followed the push strategy, i.e., producing their products in large
volumes and selling its high-quality fiber at competitive prices to as wide a market as possible,
so they emphasized more on sale. The firm didn’t give much thought to the end users apart from
brand advertising.

They thought that their market was restricted to only mills and the retailers and the end users
were not a part of their market. So, incurring additional expenses to provide value added services
for a section that was not a part of their market seemed like a bad strategy. According to them
only one thing mattered, i.e., price. As a part of their R&D they also came out with a new
product called Stain master which they believed was an upcoming requirement for the market.

Q2) What does the marketing research reveal?

A2) Market research revealed that most customers based their carpet buying decisions on three
key factors: design, color and ease of cleaning and maintenance. The research revealed that
customers required information and advice on what to buy for specific applications as well as
they wanted some good after sales experience when things went wrong. In Europe buying carpet
was not the first priority for the customers when planning a home as carpeting was perceived
as a
functional rather than an emotional experience. Customers were being more attracted to alternate
floor coverings like tiles and wood.

Unsatisfactory Experience: A survey on a group of customers revealed that they felt insecure
about buying carpeting because the product information was confusing and they were unsure of
where to start. For them the stores were depressing and the services were bad. They often found
the salespeople unsympathetic and uninformed and not motivated to serve the customers. The
retail stores didn’t have proper carpet samples and displays which would help customers in
visualizing how their room would look with the carpeting in place. Additional information was
sought by the customers relating to color, quality price, fitting etc. Reliability in delivery and
fitting was a problem and the after-sales service was nonexistent.

Q3) (A) Map the customer activity cycle.

A3) (A) Pre-Purchase:

It Includes decisions such as whether to buy a carpet or go for other flooring methods. What is
my budget, what is my quality requirements, durability?

During Purchase: Various factors include decision on color and Style, Customer friendliness. Cost
of purchase, cost of fitting and maintenance.

Post Purchase: Installation, Maintenance and warranty. After sales services, such as Customer
service etc.

Q3) (B) Where can services add value to end users, carpet mills, retailers?

A3) (B) For carpet mills- Technological and quality assessment, education as well as sales
support.

For whole sellers and retailers- Quality assessment, education, sales support and motivation to sell
more.

For end users- Motivation to buy, Quality assessment of the product and advice on what to buy.

Q4) Comment on Carr’s approach to the problem?

A4) Mr. Jim Carr took a whole new way of looking at things. He saw the decline of the volume
and saw ahead of the curve that it must perform with a whole different approach to retain its
market leader status in Europe and thus woo customers. He shifted his focus from their
immediate customers (i.e. Carpet Mills) to the end users of the product, their satisfaction and
retention. He is a pragmatic, protagonist who believes in spearheading the change. He focused on
his communication on the fact that the industry must understand its end users better.
Q5) What are the critical success factors needed to make Carr’s ideas work? What should he do
next?
A5) He first has to convince his board of directors in the meet for the plan of action. Also, he
would require full support from the carpet mills, wholesalers as well as retailers regarding
accepting the quality standards set by DuPont as well as openness to training. Proper Market
surveys which would identify the market requirements and customer feedback regarding the
service. Research has shown that spending on Magazine, TV, Brochure wouldn’t be fruitful
rather spending on displays in carpet shops and furniture shops is going to influence the
customer. Carr should come out with an innovative way to display his products.