3M aims to achieve over 50% growth in its first two years by targeting industrial clients and the government sector. It plans to hire additional sales specialists, penetrate further into strong regions, and expand its distribution channels. 3M also needs to improve brand awareness and consider more flexible contracts to increase sales. The strategy focuses on quality, price competitiveness, and developing efficient training and marketing programs.

1. Changellenge
3M
Stubborns
Anna Putrya  Dmitry Markus  Oleg Gusev  Tatiana Pavlova

2. Stubborns Changellenge
 MIPT (2011)  MIPT (2007)
 NES (2011)  UC Berkeley
(2009)
 NES (2011)
 MIPT (2011)  MIPT (2011)
 NES (2011)
MIPT – Moscow Institute of Physics and Technology
NES – New Economic School

3. Outline
• Objective
• Strategy
• Implementation
• Risks

4. Objective
 Reach more than 50% growth rate in the first
two years and 25% in the following years
 Marketing budget amounts to 2% of sales

5. High competition on the C&R market
may slow 3M growth unless it takes immediate actions
• High quality, price
Customers
• High brand awareness • Low price
Western C&R market Russian/ Chinese
companies $100mln, 10% growth companies
3M
Strengths Weaknesses
• 10% of the market • Low brand awareness
• Grows 3-4 times faster
• Innovative
• Wide range of products
• High quality

6. Key challenges for 3M in the short-run are in the marketing and
sales parts of value chain
Manufac-
Logistics Marketing Sales
turing
• Marketing: poor brand awareness
• Sales: limited human resources and distribution channels

7. Construction and Repair Department
Commercial
Private housing Industries Government
construction
10% 90%

8. Private housing segment
Commercial
Private housing Industries Government
construction
• This segment of customers is looking for affordability, while
3M is a premium product
• Each of the clients makes low-volume purchases
• Low brand awareness
This segment is not very perspective to target in the short run

9. Residential construction segment
Commercial
Private housing Industries Government
construction
Contractor
Project
Buyer
Institute
Result
• Buyer is interested in the quality of the final result
• Contractor is looking for low price materials, satisfying the criteria
Under obsolete quality standards 3M is unable to target commercial
construction segment in the short run

10. Industrial segment
Commercial
Private housing Industries Government
construction
Literature, publications
Aware Internet advertising, convenient internet site
Seminars, conferences with the overview of
Trust successful projects, emphasis on the quality
Flexibility – sales in credit, option of renegotiation,
direct contracts with large customers
Affordability – attractive prices
Wider range of products and services
Buy Services, maintenance, implementation, consulting,
large capacities

11. Segment of the government
Residential
Private housing Industries Government
construction
• Cross-selling: participation in the National Projects with other
departments of 3M involved in (ACCR, infrastructure etc.)
• Participate in the municipal construction, emphasizing high fire
safety of the products
• Lobby the introduction of strict quality standards in the long
run

12. Marketing Summary
• Target audience: large industrial clients and government
• Key changes: become more flexible in terms of contracts
• Emphasis: complex solutions, feedbacks from clients

13. Sales force and Distributors across Russia
25%
2%
15%
30%
20%
4% 4%
Strong regions are exactly those with sales specialists

14. Volga region shows a great potential for 3M electric business
expansion
Investments in capital asset* Residential construction**
Central Others Central
Others 23% 27% 26%
35%
Ural
Siberia
16% Volga
South 12%
South 20%
11% Volga
15%
15%
3M should hire a business developer in this region
* December,2009, ** set in operation, March, 2010

15. Further penetration into 3M strongest regions
• In 3M strongest regions the company has not exhausted its
potential yet, hiring additional sales specialists there could
substantially increase sales.
• Increased demand should be balanced via increased number of
distribution channels as well as via their efficiency
• New compensation and bonus schemes for distributors: emphasis
on high-marginal products

16. Expansion of distribution channels
Negotiate contracts with cable manufacturers to cross-sell 3M products
via their distribution channels
Client 1
Cable
Client 2
manufacturer 1
3M Client 3
Cable
Client 4
manufacturer 2
• Cable manufacturers have clients interested in the products of 3M
• 3M could adapt its technical solutions for each cable manufacturer
under long-term contract

17. Sales Summary
25%
2%
15%
30%
20%
4% 4%
• Penetrate further : increase the number of sales specialists and
distributors in strong regions
• Cover new areas: create sales force in Volga region

18. 3M should concentrate on developing efficient training and
marketing programs
2011
April May
Initial meeting
Set up PM team
Develop project plan
Develop training program
Develop marketing program

19. Time schedule for people hiring
2011
June July Aug Sep Oct Nov Dec
Hiring SS in Central, Volga
Training process
Hiring SS in Ural, Siberia, N-W
Training process
Marketing Campaign

20. Risks and their mitigations
Risk Impact Mitigation
Operational risks (delays on
Keep enough items in warehouses.
custom, logistics problems etc.)
Government regulation (tariffs,
Build facility in Russia
import limits)
Contracts in foreign (dollars) currency,
Exchange rate
currency futures
Credit risk Give credits to the reliable clients

21. Conclusion
• Target industrial clients and government
• Consider more flexible contracts, introduce sales on credit
• Hire additional sale specialist in strong 3M regions
• Increase distribution channels as well as their efficiency

22. Stubborns Changellenge
 MIPT (2011)  MIPT (2007)
 NES (2011)  UC Berkeley
(2009)
 NES (2011)
 MIPT (2011)  MIPT (2011)
 NES (2011)
MIPT – Moscow Institute of Physics and Technology
NES – New Economic School