Overshooting is a key sign of a market ready for disruption. The Innovation Matrix is a tool for you to evaluate where you currently are, but more importantly, it is there to help you figure out how to get to where you want to go. You are commenting using your Facebook account. Separate business models work best when they share resources. Dow Corning customers could bulk order some of the parent company’s most established products without the premium prices that reflected added services. Let my know if you ever have any further questions about our story. Industries include from healthcare to automobiles and household products to electronics.
Xiameter’s search for new, more profitable markets will not come at the expense of Dow Corning’s value-added silicone business. The innovation and R;D must definitely proceed, to produce high quality products. My starting point was an article outlining the structure of Xiameter: Xaimeter initial product range was products from the from Dow Corning The current pricing model was based on a high-priced innovative product and service package. Join other leaders, and receive our hand-picked publications. Dow Corning has more than 7, offerings, but the Xiameter portal sells just items.
Dow Corning achieved double digit growth in its initial years. Do you want to save your changes? You are commenting using your WordPress.
Clayton Christensens illustration of disruption Dow Corning recognized that it was overshooting its market. The business model change was necessitated by the growing commoditization of the business — demanding a lower cost structure.
The marketing environment comprises the microenvironment as well as the macro environment. Second, Xiameter is more than willing to co-exist with a high-touch, high service business model that Dow Corning provides.
Research and knowledge from IMD business school
There definitely appears to have been concern internally about the potential of Xiameter to cannabilise the core Dow Corning customers. Here is how Phillips discussed this: Pricing is the major factor affecting buyer choice and also the most flexible marketing mix element, because it can be change quickly. Dow Corning has been pioneers in the development of silicones for commercial uses for the last 80 years, founded as a joint venture between Dow Chemical Company and Corning Glass.
This include customize application testing, training custom blending packaging and recycling and formulation.
This is where it helps to be big. Indian elevator market growth is very promising in the timeframe, which is when this case study takes place. Kay Plantes and Jeffrey Phillips have also written excellents posts on this case after speaking with Stacy.
Read Xiameter industrial marketing case study uploaded seperately assuming – Essay – words
Her response was that they were all running multiple instances of SAP. Predetermined manufacturing lead times and standard terms for credit help Xiameter reduce costs further.
One is that Xiameter achieves its lowest total cost position by taking advantage of resources within Dow Corning, and this can have negative impacts on incentives within the parent firm.
This change in what some customers valued—and the consequent decline in profit margins within those market segments—led Dow Corning to conclude that the basis of competition had shifted in parts of the industry. Through application of the above theory about product levels to products sold by Xiameter, the above figure has been created to demonstrate what Xaimeter consumers are actually buying into, in terms of product levels.
Dow Corning recognized that it was overshooting its market. Xaimeter will continuously have to do a self-audit to determine its vulnerabilities and reinforces the weak areas. Asad, the real issue here is we do not know what would have happened to revenue and profits absent the new business model. To meet their needs—and to keep them from migrating to other, less-expensive providers—Dow Corning would have to devise a radically lower cost structure that would allow it to profit solely from selling products.
Business Model Design: Disruption Case Study
In this case, and I suspect in many cases, business model innovation expands the pie and attracts new customers. Customers who need help coming up with new product formulations can continue to buy this expertise through the Dow Corning channel.
The amazing part of Xiameter, however, is that Dow Corning distrupted itself. Dow Corning’s segment share is estimated to be more than 36 percent, which puts the company well ahead of its nearest rival, GE Silicones, which holds an estimated 24 percent share of the market, according to Chemical Week magazine. The environment around Dow Corning was changing.
I am a little surprised about how feelings, impressions and bias dominate even in an article from a researcher against facts and figures. This meant that as specific products matured, the priorities of clientele within them shifted from wanting help with innovation to wanting to keep costs low. Many firms do not recognise that a business model exists at a point in time — and, like all complex systems, every time you act in the market you perturbate the system and a new configuration of the business model emerges.
To date, however, Xiameter has been a clear winner: More intelligence needs to go into the web-enabled offering, by offering blanket just-in-time contracts, which can enable customer to get deliveries whenever they require it, without the hassle of renegotiations on price and quantities, this can be achieved by interrogating of the historic buying behavior of the customer.
From the case study Xiameter turnover has increased dramatically, but there is no indication of the profitability of the business. To sharpen my skills I decided to deconstruct the Xiameter business model and compare its parent, Dow Corning —just for fun. These aspects are shown in BLUE notes.