DuPont Case Analysis
DuPont Case Analysis
DuPont was established in the year 1802 by French Chemist, E.I DuPont de Nemours in USA. DuPont became successful by the end of third year and it started exporting back to its continent, Europe. In the span of these 200 years, it had shaped into a global company with variety of enterprises like Chemical, Energy, Science Based and High Technology. It maximized its manufacturing or processing operations in 40 countries and its products were sold in 150 places by the end of 1990. The company’s one third revenue comes from the European market from 1960. There are 50 companies, which employed more than 19,000 people in 14 countries of Europe. The scientists of DuPont developed the synthetic fibres industry by introducing nylon. They were the leading manufacturer of manmade fibres in the world. The most important product of DuPont is “Carpet Fibre”. This division was setup in Geneva, Switzerland which holds the R&D, marketing and production areas. Products were produced in the UK and the sales offices are in Germany, the UK, France, Belgium, Spain, Scandinavia, and Holland.
DuPont’s product nylon carpet fibre is not different from other fibres available in the market; however they were the top players in fibre industry. The parameters like color and texture are the factors that differ in the carpets. The fibre industry has nothing to do with these things. The carpet industry is concerned with these directly and they in turn led to the wholesalers, retailers and in turn to the customers. From the consumers point of view the carpet should be colorful, its texture is important and it should be easily maintained. DuPont has done extensive research on the customers third interest i.e. maintenance and founded the “Stain Master” that would allow to remove the stains permanently.
With this invention, DuPont’s market share increased by 5%. This was first introduced in USA, later on with minor changes it has been launched in Europe. It gave mixed results for the company. DuPont’s decision is that the mills should have certain quality to use the process of stain master. In Germany, many mills felt that they don’t have these standards set by them; hence they didn’t show interest in the product. The UK market and France market reacted positively. Many companied executed the same formulae by giving low quality material at lower prices. This led to the stake of DuPont’s position in the market by 1980.
DuPont conducted research in the European Industry after the decline of its position in the market. They came to know some important facts:
Flow of DuPont’s Fibres:
DuPont’s Fibres Carpet Mills Wholesalers Retailers
End Users The carpet mills are concentrated in only three countries the UK, France and Belgium. 80-20 rule is applied in European market; 80% of the business is carried but top 20% manufacturers. To stimulate the market, they used the help of Style Books to the wholesalers and retailers. They were not loyal customers to the fibre industry. They focused on the company that provides material at the best price. Retail and Wholesale operations are very different in these countries. In Germany wholesalers dominated in the UK and Belgium retailers dominated the supply chain.
DuPont concentrated only on the carpet mills and they didn’t make any effort in knowing the end users. They invested money in R&D for making innovations in fibres that is to be supplied to the carpet mills. They are least bothered to know about the customers.
DuPont need to concentrate on the techniques that value the customers without affecting the supply chain. As carpet mills are the important customers to DuPont, they need to retain them. “Creating loyal customers is at the heart of every business”-Don Peppers and Martha Rogers. Identify the “Customer Benefit” and “Customer Cost” of the users and provide the product at “Customer-perceived value” (CPV). Monitor the satisfaction of the customer by conducting surveys.
ANALYSIS OF ALTERNATIVES:
In Europe, there are 60 carpet mills that can level DuPont’s standards; however only 50% of them are using their fibres. Rest of them wandering around for best price. The mills using DuPont’s fibres should be retained and they need to analyze the CPV value and set the “price” accordingly. The “place” is also very important for setting the price as European market is fragmented unlike USA market which is having only four players. The customers give least preference to carpets when they are buying house- hold equipments.
They are not enjoying or admiring to shop for carpeting as it is just a blanket to protect the floor. Customers spend at least 10 weeks in buying the carpets.52% Customers buy carpets if the existing one is worn out. Repurchase cycle for carpets is 12 years. Customers are not satisfied with the product information. The retailers and wholesalers are not providing full information. They are not providing information on price, color, fitting rooms and quality. If “product” and “service” quality is maintained, customers would retain with them only. They didn’t “promote” their products.
Retain the customers by giving them offers that attracts them easily. Provide sample fibres to 50% carpet mills that are not using DuPont’s material and offer a price that satisfy their needs. Provide a portal for the customers to choose their own color and design according to their choices by collaborating with mills. Provide better customer care services by training the retailers and wholesalers. Provide catalogues to the customers for better awareness of the product, whether it is retailer, wholesaler or final end user.
PLAN OF ACTION:
Identify the customers who are loyal to the company, give them incentives and promote the product brand. Select the location where sales of the company are not up to the mark and apply the alternatives to them i.e. setting price and giving offers to the carpet mills. Later on collaborate with the mills in that location and train the wholesalers and retailers about the product and give them the full information along with the catalogues. Provide better services to the customers by setting a portal where they can choose their own designs and place order to the carpet mills. Implement the above mentioned steps for three months and find the sales growth. Spread the plan if it worked in the selected location, by making minute changes to it according to the location.
Since DuPont is an expert and leading manufacturer in the manmade fibres, it can go for “VERTICAL INTEGRATION”. Instead of supplying fibres to carpet mills, it can set up a mill and manufacture carpets. It can directly deal with the customers. The above mentioned plan can be executed without the intervention of the mills. The Customer Satisfaction can be monitored and it can get to know the loopholes in the process and thus leading to correction of the mistakes and increasing the sales growth of the company.