As a company built on developing customer innovation, Dow Corning had a substantial amount of customer information from numerous sources: purchased studies of its customer base, regular customer satisfaction studies conducted by an outside research firm, and regular customer feedback through its Customer Relationship Management (CRM) process. All of this contributed to a full and deep understanding of its customers needs and value expectations. Yet it was when Dow Corning started to look at its information from both segmentation and a customer value perspective that the information started to tell the company new things. For example, three broad customer value segments were identified: (1) customers who innovate into new markets, (2) customers who were in fast-growing markets, and (3) customers looking to reduce costs and improve productivity in large, highly competitive markets.

Innovation-focused customers are defined as those committed to being first to the market with new technologies and state-of-the-art products, and who seek advanced innovation and the creation of unique technical or market positions. Dow Cornings customer value commitment for this group of customers is both innovative solutions based on cutting-edge technologies and services and expertise in assisting customers to get their products to market faster with better value differentiators for the customers customers. (need)For example, Dow Corning helped Reliance Industries reformulate its fiber-optic cable conduit inner lining to improve the linings slipperiness. The superior slipperiness allowed fiber optics to go into conduit faster and at longer lengths. This enabled Reliance Industries customers to install fiber-optic cables significantly faster and for 30 to 50 percent lower cost. In another instance, Dow Corning helped a consumer products company get the new household cleaner to market faster by taking on the manufacturing of the cleaner in its own facilities.

Customers in fast-growing markets are defined as those looking for easy, drop-in solutions that give them speed, efficiency, convenience, and reliability to meet growth demands. Their value drivers are lower-cost offerings with proven performance and demonstrated use(their need) For them, Dow Cornings customer value commitment offers proven performance in technology, manufacturing, and supply chain management. Dow Corning helped a customers global sealants and adhesives business by working with its larger customers to convert to bulk delivery systems. The change from 55-gallon drums to a new 8,000-gallon storage facility reduced handling and labor costs, dropped waste 7 percent, and freed up 10,000 square feet of space in the customers operation.

Customers in large, highly competitive markets, typically with products in the mature stage of the product life cycle, form the third segment. These customers expect improved process efficiency and effectiveness in manufacturing to help them achieve maximum profit by reducing costs(need). They are looking for such things as ideas from suppliers, outsourcing capabilities, inventory control and supply chain services, and disposal assistance. Dow Cornings cost-effective solutions that drive overall costs down is the customer value commitment for this customer value segment. One tool Dow Corning developed for these customers was soft-ware that could more precisely pinpoint lubrication for critical plant equipment. The Integrated Oil Analysis software-enabled plant operations to perform a complete oil and lubrication analysis on vital equipment to optimize maintenance programs rather than follow routine scheduled maintenance.

1. Critique Dow Cornings segmentation planning process and the resulting three broad customer value segment groupings.
2. Which target market(s) should Dow Corning pursue and why?