Strategy Analysis - Problem recognition
Dow Corning is the leader in the silicone product industry with 40% worldwide market share (in 2006). Until the beginning of 2000s, customers had been willing to pay a premium for the R&D and services, as long as manufacturers were able to provide tailored solutions to their needs. Thus, Dow Corning positioned itself as an innovative company and aggressively market the quality of its technical support to differentiate its offer from competitors. But increasing competition, rising costs, and more importantly commoditization of products put some pressure on prices. The company's profits were stable in 1997-1998 ($2500-2600 millions) and net income was flat ($-600 million in 1998 and $100 million in 1999). Therefore, Dow Corning needed to find new ways to address its changing environment.
To evaluate the customer needs, the company came up with a new segmentation study which revealed a segment of customers who didn't want to pay for the added......
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