Dow Corning's Xiameter Brand: Product Commoditization and Business Model Innovation
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Case Code: BSTR446 Case Length: 13 Pages Period: 2000-2013 Pub Date: 2014 Teaching Note: Not Available |
Price: Rs.400 Organization: Dow Corning Corp Industry: Silicone, Specialty Chemicals Countries: US,Global Themes: Business Strategy, Brand Management, B2B Marketing |
Abstract Case Intro 1 Case Intro 2 Excerpts
Introduction
In November 2013, Dow Corning Corporation (Dow), a global leader in silicone technologies, launched new fluoro-liquid silicone products called the ‘RBL-9200 Series LSR (Liquid Silicone Rubber)', under its commodity products brand, Xiameter. This was another initiative on the part of the company to introduce new products under the Xiameter brand. Launched in 2002, the Xiameter brand until then had been used to sell only mature silicone products that had attained the status of commodities, with no added services.
The offering of new products was expected to enhance the product line of the Xiameter brand. In 2005, the company had begun providing a separate service agreement to Xiameter customers, who needed additional services. Speaking about these developments, Gabriel Knee, Project Manager of Dow Corning, said, “As time has gone by, the firm has added more technical capability within the Xiameter brand to support customers..
With that there has been a few new products developed for Xiameter, and this line is one of those new products." Over a period of ten years, the sales under the Xiameter brand had risen to account for almost 40% of Dow's total sales.
During the late 1990s, Dow experienced a fall in silicone sales. The company constituted a team of its managers to understand the reasons for the decline. Dow realized that with the onset of the maturity stage in the product life cycle of some of its products, these had become commodity products. Over time, the competitive landscape and consumer expectations from the seller in relation to this product category had changed.
Dow realized that it was in no position to serve the price conscious customer due to its service oriented business model that drove up business costs. Therefore, the company decided to brand its commodity silicone products, numbering around 400, under a new brand, Xiameter, and sell them at market prices. Dow developed an online B2B sales channel called Xiameter.com to sell the commodity products with none of the customization, services, or support which were earlier a regular part of its product offering. The company decided to sell its other silicone products with
services and support under the 'Dow Corning' brand...
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