3M Canada Case Analysis

3M Canada Case Analysis

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3M Canada Case Analysis

Question 4

Companies use different methods to ensure that they have a competitive advantage in the market. They formulate strategies that will work towards their advantage. Developing the right strategies enables companies to identify the right products suited to a specific market (Libecap & Thursby, 2008). 3M has already identified the product that will increase its sales revenue. Although they do not have loyal clients for the MRO products, they have noticed that the product moves and their competitors in the market have realized impressive sales growth within a short time. They are able to position the product in a way that they will attract customers. The company identifies the right marketing mix to enable them reach the intended customers. This includes focusing on different product features, identifying the correct channels for distribution, and knowing how to price and promote the product (Libecap & Thursby, 2008). The organization identified ten successful distributors to market its products and drive sales growth. Increasing their distribution will lead to enhancing their exposure in the necessary segments.

Companies cannot solely rely on a single strategy because of the constant changes experienced in the business environment. They find it necessary to change and improve their strategies so that they can be in line with the environment. This is because the main objective of the company’s strategy is to respond to the customers needs (Viardot, 2004). 3M changed its market strategy from cost reduction and increasing growth sales to promotion and market development. It identified four factors that would enable it to implement these strategies. This included growing their main business, pursuing any new marketing opportunities and acquisitions, and concentrating on growing their investment in the new markets. It is important for companies to update their strategies constantly because markets tend to change fast (Shankar et al., 2012). The company used to concentrate on increasing its profit margins with its specialized focus on premium products. Concentrating on the top margin enabled the company to concentrate on the products that would lead to more sales and consequently more revenue. This would mean concentrating on the low-end products instead of the premium products. This change was part of the company’s new strategy.

Companies use different combinations of people, technologies, processes, in a bid to have a better and clearer understanding of their customers. They do this so that they are in a better position to serve their customers better and satisfy them. They focus on retaining the customers they have as well as identifying ways of gaining other customers (Peel & Gancarz, 2002). Nowadays, customers have greater access to information and this has increased their level of awareness concerning products and services. Therefore, companies have to find ways to ensure that they exceed the customers’ expectations. Organizations aim to increase their competitive advantage by meeting the customers’ needs (Kumar & Reinartz, 2012). Companies implementing customer relationship management (CRM) learn more about the different customers they have and they find ways of interacting with them.

The sales personnel in 3M interacted with the store managers on an individual basis, and this enabled them to identify their needs. However, it was also a hindrance as it meant that different sales personnel dealt with the same customer. Having an account manager handling different business operatives would reduce time wastage. The customers were comforted by the knowledge that they did not have to deal with many different people to handle their questions and solve their problems. The company found ways of knowing their customers needs and requirements by contacting the people who used their products directly. It focused on customer retention and loyalty and it encouraged the sales personnel to build relationships with the clients. In the new strategy, the company aimed at customizing and differentiating the products, localizing the goods to suit the domestic markets, expanding on their private labeling, as well as maintaining its customers.

Question 5

The original equipment manufacturers (OEM) and the maintenance repair and overhaulers (MRO) are different market segments, and they differ in price. The OEM deal with high value products. They are expensive and they are directed at the premium markets. The MRO products were of low value and they were used in servicing. The OEM market was already mature and there was no opportunity to find new customers. The MRO market was unexploited and it continued experiencing growth. The products in OEM were part of the finished goods and the MRO were consumables. The OEM customers were loyal to the organization. They company concentrated on product specialization and this appealed to many people in OEM. The competition of the original equipment manufacturers was not challenging enough because there was already an established market for the products. There was intense competition for the products concerned with maintenance, repair, and overhaul. Many companies had already entered the market and there were many alternative products. Thus, whereas growth was slow in the OEM market, it was rapid in the MRO market. The MRO market was big and the rate of demand exceeded the available supply. There was an opportunity to develop different products and add others to maximize the competitive advantage.

The unstable nature of OEM and the concentration on the manufacturing aspects of its products enabled the business to differentiate and customize products in an effort to retain the customers. The company worked in close interaction with the customers and was in a position to identify and determine their needs. The company is not able to identify the needs of the MRO customers with relative ease because the distributors largely control the market. The manufacturers did not have the chance to specialize on different products to suit their customers’ needs, since they did not know what their customers required. Brand loyalty is necessary for OEM customers because of the relationships they build with the suppliers. This is different in the case of MRO customers, because there is a wide availability of the products they need and they have the freedom to choose the products they prefer. The high availability of the MRO products decreases their costs while the cost for the OEM products remains high because of the specialized markets.

The OEM mostly used the niche and special distribution categories. The customers benefited from technical skills, expertise and specialization offered through these channels. These categories did not have the distribution expansion capacity of the national category, as they were only concentrated in specific regions. The ability to consolidate different ventures enabled the expansion of this category. The OEM customers were used to dealing with individual sales representatives. The wide distribution of the national category means that MRO customers do not have the privilege of receiving specialized services, since the sales representatives have to deal with many protocols, procedures, and networks of people and business organizations. The sales personnel serving the MRO customers use generic sales skills, which do not guarantee additional sales and revenue. This has largely reduced the quality of services that the sales personnel offer, because they have to deal with issues that are beyond their expertise and knowledge. The decision by large-scale players to acquire different products and processes related to the premium market segment led to the commoditization of those products. Anyone could manufacture the products that were once the innovation and prestige of 3M because they were no longer patented.

References

Kumar, V., & Reinartz, W. (2012). Customer relationship management: Concept, strategy, and tools. New York, NY: Springer

Libecap, D. G., & Thursby, M. (2008). Technological innovation: Generating economic results. Oxford, UK: Emerald Group Publishing

Peel, J., & Gancarz, M. (2002). CRM: Redefining customer relationship management. Woburn, MA: Digital Press

Shankar, V., Carpenter, S. G., Farley, J., & Hamilton, A. B. (2012). Handbook of marketing strategy. Northampton, MA: Edward Elgar Publishing

Viardot, E. (2004). Successful marketing strategy for high-tech firms, volume 5. Norwood, MA: Artech House