MIDLAND, Mich.—When Dow Corning Corp. launched its Xiameter-brand, web-enabled business model in 2002, virtually none of the silicone material supplier's sales were conducted online.
Nine years later, the Midland-based company, which posted a record $6 billion in revenues in 2010, said about 30 percent of its sales come from online transactions, mostly through the www.xiameter.com website.
Dow Corning started the Xiameter brand because it was missing out on what it called the “price seeker” market, according to Stacy Coughlin, Xiameter marketing communications manager. Under the firm's two-brand strategy, she said the Dow Corning name was attached to high-value products that offer customized services.
The Xiameter brand included most of the standard silicone products at market-based prices. Among the offerings are many of the firm's silicone rubbers—both high-consistency compounds and liquid silicone rubber—sealants, silanes, emulsions and fluids.
Dow Corning sold about 400 products under the Xiameter line in 2002, but that number is now about 2,500, Coughlin said, after a major expansion of the offerings in 2009.
And while many of its elastomer-related products fall under Xiameter, Dow Corning will continue to upgrade its technology in that area, said Jeroen Bloemhard, who at the beginning of August officially took over as business vice president and global executive director for Xiameter.
“It doesn't mean that as a company we don't want to continue to innovate and develop new products in those same families as long as we can bring a certain level of differentiation,” he said.
Under which brand Dow Corning sells a particular line has a lot to do with where it is in the product lifecycle, Bloemhard said. When a silicone product is developed and introduced into the market, the company generally looks to offer something to separate it from its competitors' products.
After that, typically comes growth and a certain level of maturity, at which time the competition introduces similar materials, he said. Once a product starts down the path of maturity, customers generally tell Dow Corning that it has competitive alternatives, a situation that generally drives down prices.
“Those are typically trigger points for us to say we need to think about from a company perspective how can we continue to serve these customers in the best way considering these changes in market dynamics,” he said. “Our answer in those cases is to transfer those products over to the Xiameter model.”
The Xiameter web-based model brings with it a great deal of self-service. He said the intent always has been to make it a 24/7 type of operation, where customers can access the site at their convenience, see pricing, order products, determine shipping dates and track order status.
“It doesn't mean that there are no people behind this model,” Bloemhard said. “We still have a group of people that are there to interface with customers if they so desire. There are going to be customers who just prefer to talk to somebody at some stage of the whole cycle. It's not a human-less model.”
The majority of feedback on Xiameter has been extremely positive, the executives said. When the expanded Xiameter offerings were launched in 2009, Dow Corning didn't lose any customers, Coughlin said.
“For us that probably says it all,” she said. 'That's not to say it was a simple process. We had to spend a lot of time with these customers, getting them to understand how to place orders, getting their profiles set up, and helping them learn the business rules we have in placing orders.”
The Xiameter website is available in five languages: Chinese, English, Korean, Japanese and Portuguese. Products are offered in more than 90 countries, so those language choices generally have been adequate for the model to reach nearly all potential customers, Bloem¼hard said.
Sales of the Xiameter brand are split roughly evenly among the Americas, Europe and Asia, according to Coughlin.
There will be more product transfers into the Xiameter model, but it's difficult to say when. On a periodic basis, Bloemhard said the product line managers discuss the product lifestyle and determine if the timing is right to shift another group of offerings to Xiameter.
“The purpose of the model within Dow Corning is to continue to drive more of our products through the model and service the markets that way,” he said.
The company also will look at technology to help it expand the Xiameter model. It currently is looking to develop mobile applications, he said. “More and more information needs to be accessible on mobile devices. This is a key area where we think we have improvements to make and see how we can continue to attract a different demographic to the model.”
Social media is another way Dow Corning already is engaged in trying to expand the business. Bloemhard said social media should help not only in terms of geographic development, but also in helping educate potential customers to the use of silicone and how it relates to the types of applications they have.
In his 20-year career at Dow Corning, he said his background in marketing and management, along with positions around the globe, will help him push Xiameter forward. “As we are trying to evolve this model in various parts of the world, I think my geographic diversity is helping me to oversee that and provide the right level of direction where that is needed,” Bloemhard said.
Thus far, he said no competitors have directly copied the Xiameter model, but that's not to say it couldn't be done. “This is why we are continuously thinking about how we can sustain this model, and how can we advance it so that it becomes a sustainable competitive advantage for our company.”