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Press release from Business Wire

Dow Corning: Managing a Product's Life Cycle Helps Businesses Capture More Value

Monday, December 12, 2011

Dow Corning: Managing a Product's Life Cycle Helps Businesses Capture More Value10:00 EST Monday, December 12, 2011 MIDLAND, Mich. (Business Wire) -- When the first commercial cell phone call was placed on October 13, 1983, to the grandson of Alexander Graham Bell in Germany from the president of Ameritech Mobile Communications in Chicago, IL, who would have predicted that a generation later, not only would there be more than five billion cell phones in use around the world, but many of the devices would enable users take pictures, pull up maps, and watch movies and TV? “In a fast-paced global marketplace, there is no time to rest on laurels because today's innovation will become tomorrow's commodity,” said Jeroen Bloemhard, business vice president and executive director of Dow Corning's XIAMETER® brand. “This is a business reality that leaves manufacturers looking for ways to capture more value throughout a product's life cycle in order to recoup R&D and marketing costs to the fullest extent possible.” When a product is new, its novelty enables a producer to capture a premium in the marketplace. However, it doesn't take long for competitors to step in and disrupt the market with equal or better quality at lower prices. The product can soon become a commodity or what many industries also refer to as a standard product. To stay ahead of the competition, innovative companies invest in research and development to regularly refresh their portfolios with newer, specialty products while they continue to find ways to capture as much value as they can for their standard products. For example, when the iPhone 4S was introduced in October at $199 (for 16GB), Apple announced that they would offer the iPhone 3GS for free and the iPhone 4 for $99, both with service contracts. The chemical industry is faced with the same business reality. For example, Dow Corning Corporation, a global leader in silicones and silicon-based technology and innovation, offers more than 7,000 products to its customers around the world, serving virtually every industry from automotive and personal care to renewable energy. Many of those products are at the start of their life cycle being unique, differentiated, innovative, and specialized to meet the needs of customers. However, some of them have been around since the company was founded in 1943, and while still critical and valuable for specific applications, they are mature, and competitive alternatives are readily available. “Customers who purchase differentiated products pay a premium to take advantage of those unique technologies in silicon-based chemistry, and generally need access to comprehensive technical and customer support,” said Bloemhard. “On the other hand, customers buying standard silicones are interested in securing products most efficiently and cost effectively.” In Dow Corning's case, the solution was to adopt a two-brand strategy. The Dow Corning® brand focuses on full service and solutions offerings for customers who want innovation, customization and solutions beyond products. Its no-frills XIAMETER® business model and brand introduced in 2002 and expanded in 2009 offers standard silicone products through a web-enabled order platform. Customers purchasing via www.xiameter.com follow strict business rules that include minimum- and multiple-order quantities, lead times, and standardized services, which enables increased efficiency and results in the brand's ability to offer competitive, market-based prices. Today, it is the world's largest web-enabled portal for high-quality, standard silicon-based materials. “Having two brands with very different value propositions makes it possible for companies like ours to fully capture the value of products throughout their life cycle,” Bloemhard said. “By standardizing and automating processes, we can redirect resources to discovering, commercializing and selling higher-value specialty products and solutions through the Dow Corning® brand.” The key to successfully executing a dual-brand strategy is to organizeone company to deliver two very distinct business models with very distinct value propositions. For Dow Corning, it works. It's about understanding market dynamics and competitive landscapes, and matching those with customers' buying needs. By focusing on product life cycles, they've been able to provide customers with more of what they want and need. Want to follow the Dow Corning and XIAMETER brands online? Check us out on Facebook and Twitter. About XIAMETER The XIAMETER® brand of Dow Corning Corporation offers market-based prices for standard silicone products. Introduced in 2002, the brand offers thousands of products including silicone fluids, sealants, silanes, emulsions and rubber. The XIAMETER brand is a no-frills model offering cost effective products through streamlined services and a web-enabled order platform. The XIAMETER® business model offers customers enhanced self-service functionality, extended volume quantity options, transparent pricing, and more credit term choices. In addition, a broader range of standard silicone products is offered as well as the ability to purchase through local distribution. Learn more at www.xiameter.com. About Dow Corning Dow Corning (www.dowcorning.com) provides performance-enhancing solutions to serve the diverse needs of more than 25,000 customers worldwide. A global leader in silicones, silicon-based technology and innovation, Dow Corning offers more than 7,000 products and services via the company's Dow Corning® and XIAMETER® brands. Dow Corning is equally owned by The Dow Chemical Company and Corning, Incorporated. More than half of Dow Corning's annual sales are outside the United States. Dow CorningJoe Plahutnik, 989-496-6443joe.plahutnik@xiameter.com