Travis Nembhardt

Marketing Strategy

Prof. Shapiro

Innovation at 3M Corporation

Statement of the Problem

Weak Product Development Leadership

By outsourcing their market research, the product developers show they have no willingness to
understand the needs of their market and no sense of direction for their company’s employees.
This lack of leadership has brought confusion and panic to the direction of their current
operating strategy.

Lack of Defined Mission

3M Corporation does not have a mission it stands by or even believes in. 3M Corporation has
stated that they believe in “Incremental growth”; however, this strategy only incorporates
production speed and revenue in recent years. Those factors have nothing to do with the
mission, which includes the quality of product and customer relationship the company will
stand by.

Lack of Marketing Leadership Experience

A product oriented firm that places a high emphasis on product research and development
must also place a high priority on market research and consumer relationship development. 3M
Corporation does a poor job of that. By outsourcing their market research, cutting expenses
spent on market research and having no personnel that does market research, indicates they
have no product marketing strategy. Thus, marketshare has decreased this year.

Lack of Product Innovation

3M Corporation has only made one innovative product in the last ten years. This could be due
to the lack of priority on market leadership, defined mission, consumer relationship or market
research. Historically, 3M Corporation’s marketshare has relied on product innovation.

Poor target market focus

3M Corporation does not have a target market it has observed significant growth in product
demand. 3M Corporation currently cannot afford to risk testing new markets.

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 Section 2: SWOT Analysis

Strengths Weaknesses Opportunities Threats

High Sales in U.S Poor Marketing International product Communication

Strategy Marketshare Barrier
internationally
High Ceiling of Weak Managerial Strong international International Price
Growth Communication economy Considerations
Unique Product Weak More Technological International
Offering Development Innovation Differences in
Leadership Marketplace
Strong Emphasis on Undefined Need for medical Culturally Insensitive
R&D Company Mission equipment Employees
internationally
High Interest U.S Weak Focus on Environmental Friendly Trade Tariffs
Marketplace Target Market Government internationally

Great Reputation Lack of Marketing Environmental friendly International

Experience start-up companies transportation cost
Great Product Weak direction in Medically centered Falling product
Development Staff leadership government marketshare

Strong International Mediocre Net Tax exemption for Tax regulation

Growth Potential Profit Margin medical devices in U.S impact
Strong Research and Lack of Internal Low competition Unknown Customer
Development team Coordination internationally needs
Low Competition Poor dedication to Economic growth in Smaller Customer
marketing U.S Centered
Competitor
Customizable No experienced Lower cost of materials Shortage of popular
Products marketing in U.S materials in U.S
consultants
Large Product Firm Lack of product Increase of medical Economic Crisis
innovation device usage overseas Internationally

See Exhibit A

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 Section 3: Alternative and Evaluation

A1
3M Corporation is a large and inefficient company that must change by improving leadership.
Leaders of 3M will focus on improving cost strategy, marketing strategy and innovation strategy.
Cost strategy will improve by employee efficiency. Developers will no longer be rewarded for
seniority but solely for impact on product innovation. Meritocracy for all employees will be
implemented. Unproductive and unexperienced employees, primarily developers, will be
released upon evaluation. Marketing Strategy will improve due to increased spending on market
research groups and in-house marketing specialist and consultants. Marketing leadership will
showcase research that will assist defining the current mission of the product development
staff. Innovation strategy will be bolstered with product developers spending 5-10% of their
time with marketing leadership to discuss the current state of target markets with a full body of
research. In these discussion, product developers and market strategists will select a broad
category of products that fit the target market.

P1: More Marketing Leadership | C1: More Salary Expenses

P2: Faster Innovation Process | C2: Doubt in process succeeding
P3: Target Marketing Improved| C3: Less Time for innovation
P4: Employee Meritocracy | C4: Experienced Employees may get laid-off
P5: Defined Mission | C5: Less control over innovation

A2
3M Corporation will change the business focus to the lead user approach. The lead-user teams
will be counted on for new innovation and closely monitored by leadership. Leadership will then
define a mission to the rest of 3M employees based from research collected from the lead user
team. The least efficient and experienced product developers will be evaluated and terminated
accordingly. The developers will be replaced with a few more employees on the human resource
staff. In addition, the product developers will no longer have 15% of time focused on ideas. This
15% in time will be used to educate and discuss new market research with the product
developers, including from the lead users team. During these discussions, the target niche of
the day will be evaluated. The remaining product developers will see a 5% pay increase due to
additional job requirements.

P1: Lead User-Teams Innovate| C1: High Cost to Implement

P2: Researched Mission | C2: More work for leadership
P3: Training Developers | C3: Implementation Cost + Time
P4: HR Staff to Support New Strategies | C4: Loss of product developers
P5: Evaluating More target audiences | C5: Less Time to Innovate

See Exhibit B

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 Section 4: Implementation

The first alternative is recommended. We believe strong leadership is needed to foster

innovation. After evaluating the decisions, we believe 3M Corporation is in a state of panic and
should not overreact to the lack of profit. The 3M did 15 Billion in sales, profited 7 Billion but
only netted 2 Billion. This scenario illuminates a large and non efficient company. 3M
corporation, at the least, will save millions by creating a more efficient cost and market research
strategy to assist product development. The clear drop in marketshare and increase cost of
goods in 1996 speaks to this lack of effectiveness of those two branches. A more efficient
business strategy will lead to happier employees, more market-share, more product innovation
and more profit. 3M Corporation will have a comfortable transition into our first alternative.

Exhibit A
S1: Overall sales has been trending up each year.
S2: 3M is a known company with large room for growth
S3: 3M has a reputation for unique products compared to the rest of the market.
S4: Their team has shown their innate ability to develop new successful products
S5: The market-share in the U.S was strong for that company
S6: 3M is the first company to have a unique products and great employee treatment.
S7: Their product development engineers are a shining star for this company.
S8: International markets have shown their affinity towards doing work with 3M.
S9: 3M makes excellent products and has a world class R&D team
S10: They are historically known for developing amazing products like the post-it note.
S11: 3M makes a large variety of products that fills the needs of many market segments
S12: 3M has 15 billion in sales in 1996, very large company.
W1: No advanced marketing strategies were used by 3M’s management
W2: There was a low amount of communication to train and assist the company’s engineers.
W3: There was not enough active leadership in place to communicate or know the company's
mission.
W4: Company mission statement has been bottlenecked by the lack of market research and
communication of management
W5: They had trouble finding growth in a target market, in order to see the trend to innovate
W6: Market Research was outsourced and under funded. Very few marketing personnel.
W7: The leadership had no direction. The rode the coat tail of 3M’s reputation.
W8: 15 Billion in sales and 2 Billion of net profit. Not great.
W9: Lack of internal coordination is shown by the ineffectively of their personal strategies on
their target market.
W10: There is manger dedicated to marketing to train engineers properly on market data
W11: Marketing consultants are need because no experienced marketers work for 3M

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 W12: No Product innovation, which means falling marketshare.
O1: International marketplaces like 3M products. They buy product.
O2: The International marketplace may have a low amount of competitors
O3: More technological innovation could improve 3Ms lead user research
O4: A higher need for medical equipment is great for 3M
O5: Environmental friendly governments will have a higher need for 3M’s products.
Environmental Friendly government would also give 3M an easiest way to incrementally
develop their products
O6: Medically centered start-up companies can be partnered with build more innovation
O7: A medically centered government can provide or aide 3M in sales buy providing business
exposure
O8: tax exemption for medical devices would be huge in lowering tax and increasing slim net
profits
O9: Low Competition is a easy way to gain product marketshare
O10: Economic growth in the U.S will usually lead to more overall sales and marketshare.
O11: Lower cost for material will greatly help 3M’s bottom-line
O12:Increase of medical device need for overseas usage will increase sales
T1: The context of communication is different in each country for 3M
T2: Different cultures place different values on products
T3: International Marketplace may contain places that do not believe in medical products
T4: Cultural insensitive employees may unknowingly create negative brand image in new
countries.
T5: International business must pay to have their products shipped internationally and may
incur tariff charges
T6: International transport cost are a big expense for product based companies
T7: Less people using 3M products can mean lower demand for their product
T8: Tax regulations could affect 3M’s bottom line in a big way because they have a low profit
margin.
T9: If 3M cannot meet customers needs, they will continue to lose marketshare
T10: A smaller customer centered competitor can win over marketshare
T11: Shortage of materials in the U.S will decrease the amount of customer fulfillment and can
be bad for 3M.
T12: A economic crisis would lower total sales for 3M

Exhibit B
A1
P1: 3M improved marketing will surely improve innovation
C1: More Salary will be need to higher experienced marketers
P2: Faster innovation processes will lead to more innovation
C2: The business is at risk, so the same strategy is a very risky approach
P3: Target marketing strategy will help market and product development research
C3: Implementation time always cost companies time for innovation
P4: Employee’s fighting for what they deserve will boost innovation

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 C4: Experienced employees may get laid-off
P5: A proven company will bring a defined mission
C5: Old Employees will have to adapt to having less control over innovation process

A2:
P1: Lead user teams are a great way to increase innovation
C1: This will be an expensive process to implement
P2: Due to the lack of experience and results of the engineers, they need to be trained
appropriately
C2: This will be more work for HR and general leadership
P3: Due to the lack of experience and results of the staff, they need to be trained appropriately
C3: This internal focus of business will take time away from 3Ms 15% innovation focus
P4: A human resource element will foster more communication of expectations
C4: Implementation time always cost companies money.
P5: More target audiences will increase consumer relationship and market share
C5: This will of course cause less time to innovate or develop products

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