Brief introduction about the case

In 2008, Dow Corning was one of the largest providers of silicone products in
the world, and the market leader in China. With its dual branding strategy,
they had managed to escape commoditization and provide multiple channel
access for their diverse customer groups.

Due to extensive brand management, their low-end brand Xiameter was

established, which was able to compete with low-cost providers and thus
avoid price wars.

Growth in the silicone market has slowed down, however, and Dow Corning
is now trying to decide whether to extend its market segmentation to other
areas, particularly in China. The question is whether this kind of move would
put the dual branding strategy at risk and result in diluting brand equity

About Dow Corning

Established in 1943 as joint venture between The Dow Chemical Co. and Corning
Inc.

Provides performance-enhancing materials and solutions to serve the diverse

needs of more than 20000 customers worldwide with more than 7000 products
and services It is global leader in silicone and silicon based technology and
innovation and provides wide range of products to diversifying industries from
shampoos t cables to electronics.

Historically, Dow Corning has been positioned as a company capable of providing

the highest levels of support and value added services to its customers. It was
perceived to be a high priced supplier

Competition in the global market, rising costs of raw materials and downward
pressures on pricing converged to create a complex business environment for the
industry

Birth of Xiameter model

Dow corning came up with the new business made to serve the price seekers
by introducing an entirely new brand named XIAMETER

In 2002 Dow corning launched the Xiameter brand and became the first in
chemical industry to launch a d, web-enabled business model

Xiameter operated almost exclusively via the web, offers limited services and
requires high volume purchases. These features allow Xiameter to offer
market driven prices for silicone materials

This model primarily resulted in Dow Cornings revenue to go up from 2.6

billion in 2003 to 5 billion in 2007

Cannibalization?

The biggest risk Dow Corning could have faced was the possibility that the
Xiameter model would cannibalize Dow Cornings existing business.

Current customers might move to the new offerings because of its online
convenience and competitive pricing.

Dow corning successfully communicated the differences between the two

brands to customers and most customers valued the services offered by Dow
corning.

Cannibalization has been minimal.

DOW CORNING

XIAMETER

Flexible ship dates.

Materials delivered in all
sizes and quantities .
Extensive services and solutions.
Technology and R&D.
Personal customer
service.

No technical service
Large volume orders
Commonly used silicones
Market driven prices

Two brands share the same

Global manufacturing sites.

High quality products.
Reliable global supply.
SAP infrastructure.

Footprint in china

Dow Corning expanded into the China market in 1973, and since then has
established offices in Shanghai, Beijing, Shenzhen and Hong Kong, providing
comprehensive products and services to its clients all over the country

Through 2007, the company has invested over $470 million in China to build
and improve its infrastructure to serve customers locally

In 2006, Dow Corning received official approval from the Chinese government
to build a siloxanes manufacturing facility in China

Dow Cornings innovative and quality products have led its way to Chinas
major public construction projects

DOW Corning in India

Entered in 2000

Operates with 2 brand names DOW Corning, Xiameter (provides unbundled

services)

Established its plant in Pune in 2006

Recognized as one of the top 25 companies to work for in India by the Great Place to
Work Institute (2010)

India's fastest growing speciality chemical firm (2010)

CAGR of India's speciality chemical industry is >13% (According to Mckinsey report

2012)

DOW Corning financials

Q1 2016

Q1 2015

%
change

Sales (in billions)

$1.32

$1.36

-3%

Net Income (in millions)

$112

$185

-40%

Adjusted net income* (in

millions)

$116

$101

14%

*Adjusted net income is a non-GAAP financial measure which excludes certain unusual
items.

Source : Dow Corning First quarter 2016 financial performance http://www.dowcorning.com/content/news/q1-2016-financial-report.aspx

DOW Corning China

(in millions $)

2015

2014

Net Sales

1,869

1,893

Long-lived assets *

1,036

1,115

*Long lived assets primarily include investments, plant and equipment, goodwill and
other intangible assets.

Total investment of over $2 billions (almost $1.8 billion investment in zhangjiagang plant)
6 offices and 2 major production bases in shanghai and zhangjiagang

Source : Annual report 2015 https://www.corning.com/media/worldwide/global/documents/2015_Corning_Annual_report.pdf

Recommendations
&
Solutions

How should Dow Corning make good use of its

two brands to grasp the china market to sustain
its long- term growth?

 Establish efficient market channels for customers

Business model clarity
Distinct set of values
Differentiate itself from other B2B sites

Growth Share Matrix

Dow Corning
Cash Cow Maturity Stage
Xiameter
Star- Online sales have risen to 30 per cent in 2006

If the target companies in china cover a broad range of

industries-how should Dow corning map out its brand strategies

and communication activities?

Objective: Establish a brand preference

and brand loyalty

Market Penetration

Ansoff Matrix

Understanding Psychological concerns of

Industrial buyer
Post Purchase Relationship
Internal Marketing
Ingredient Branding
Pull Principle
Push Principle

Pricing Strategy

Earlier
Customer Value Based
Pricing

Future
Competition based Pricing

With the expanding market for personal care in china, will this
increase in sales of consumer products provide Dow Corning
another growth opportunity?

Yes, the expanding market for personal care in china will definitely
provide Dow Corning another growth opportunity

High usage in personal care products

Hair Care
Eye Makeup
Packaging and product design

With increasing internet users and fast growing online

market, what could Dow Corning do to stand out among
those major B2B online service providers?

Build up a strong brand and do some publicity to motivate the market

to buy on internet
Know the market and customer characteristics . Focus on specific
segment
Setting the market standard for e commerce in silicone products
Continue to develop their website and online transaction platform

How can Dow Corning prevent channel conflict if its

products are available both in its own Xiameter
site as well as in other major Chinese B2B ecommerce sites?

 Channel conflict is frequent when there is more than one channel to

sell a single product
Examples of channel conflict- Pricing issues, communication
Channel conflict leads to issues like Unhealthy competitiveness,
Changes in consumer behaviour, partners undercutting each other,
etc.

Channel Conflict
Management

Steps that can be taken by Dow Corning to manage channel conflict

Delineation of Xiameter as a sub-brand of the overall Dow Corning brand
must be evident. Channel partners provide tailored offerings to better meet
customer needs. Xiameters stripped down, no frills approach must evidently
serve a different market segment than other channel partners to reduce
conflict.
Proper Demarcation- Xiameter can be made exclusive to Xiameter site.
Equal Prices- The price difference must not exist between home site and
other B2B e-commerce sites
Availability of products must not be a differentiating factor between Home
site and other E-commerce sites

Thank You