Business Strategies & Marketing Programs at 3M The Minnesota Mining & Manufacturing Company, Company, better known known as 3M, began manufacturing sandpaper nearly a century ago. Today it is the leader in dozens of technical areas from uorochemistry uorochemistry to ber optics. The rm makes makes more more than !",""" !",""" di#erent products, products, which generated generated $%.3 billion in global sales in %""'. The company produced $3. billion in operating income despite the onset of a global recession in the second half of the year. (s you might e)pect of a rm with so many products p roducts,, 3M is organized into a large number of strategic business units *+-s. The company contains 3 such +-s or product di/isions organized into si) market sectors. The 0ndustrial & Transportation Transportation +ector +ector makes makes a /ariety of tapes, abrasi/es, adhesi/es, lters and specialty chemicals for industrial applications ranging from aerospace to automobile manufacturing. The 1ealth Care Care +ector markets markets a /ariety of medical, surgical, surgical, pharmaceutical pharmaceutical and dental products & ser/ices. The Consumer & 2ce +ector o#ers o#ers products for homes & oces, oces, such as 4ost5it brand repositionable notes and +cotch brand tapes. The 6lectro & Communications Communications +ector supplies connecting, connecting, splicing & protecti/e products for electronica & communication markets. The 7isplay & 8raphics 8raphics sector is a world leader leader in the sales of lms lms & reecti/e materials for electronic displays, touch screens, commercial graphics & trac control. The +afety, +ecurity & 4rotection 4rotection +er/ices +ector +ector markets markets a wide /ariety of products ranging from respirators for worker safety to cleaning supplies and re protection products. •
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The corporation9s growth growth strategy has has focused primarily on on internal new product de/elopment, emphasizing both impro/ed products for e)isting customers and new products for new markets. 2ne formal ob:ecti/e assigned to e/ery business unit is to obtain at least 3"; of annual sales from products products introduced introduced within the past four years. years. The company supports its growth strategy with a <&7 budget of $=.> billion, billi on, more than !; of its total re/enues. The company also pursues pursues growth growth through through the aggressi/e de/elopment de/elopment of foreign markets, markets, and an additional organizational sector is responsible for coordinating the rm9s marketing e#orts across countries. 0n %""', 3M attained $=!.= billion in sales 5 !>; of its total re/enue ? outside the -nited +tates. 7i#erences in customer needs and life5cycle stages across industries, howe/er, lead 3M9s /arious business units to pursue their growth ob:ecti/es in di#erent ways. The 0ndustrial Tape 7i/ision with the 0ndustrial & Transportation +ector, for e)ample, operates in an industry where both the product technologies and the customer segments are are relati/ely mature and stable. 8rowth in this group results from e)tending the scope
of adhesi/e technology *for instance, attaching weather stripping to auto doors, product impro/ements and line e)tensions targeted at e)isting customers, and e)pansion into global markets. 0n contrast, the rm9s 7rug 7eli/ery +ystems 7i/ision within the 1ealth Care +ector de/elops new medical applications for emerging technologies de/eloped in 3M9s many <&7 labs. 0t sells a /ariety of technologies for the deli/ery of medications that are inhaled or absorbed through the skin. Most of the unit9s growth comes from de/eloping new products, often through alliances with other pharmaceutical rms, aimed at new markets. The competiti/e strategies of 3M9s /arious business units also di#er. @or instance, the industrial tape unit is primarily concerned with maintaining its commanding market share in e)isting markets while preser/ing or e/en impro/ing its protability. 0ts competiti/e strategy is to di#erentiate itself from competitors on the basis of product Auality and e)cellent customer ser/ice. ut the drug deli/ery systems unit9s strategy is to a/oid head5to5head competiti/e battles by being the technological leader and introducing a stream of uniAue new products. To be successful, though, the unit must de/ote substantial resources to <&7 and to the stimulation of primary demand. Thus, its main ob:ecti/e is /olume growth, and it must sometimes sacrice short5run protability to fund the product de/elopment and marketing e#orts needed to accomplish that goal. These di#erences in competiti/e strategy, in turn, inuence the strategic marketing programs within the /arious business units. @or instance, the rm spends /ery little on ad/ertising or sales promotion for its mature industrial tape products. 1owe/er, it does maintain a large, well5trained salesforce that pro/ides /aluable problem5sol/ing assistance and other ser/ices to customers. 0n contrast, the pioneering nature of the drug deli/ery unit9s technologies calls for more e)tensi/e promotion to attract potential alliance partners, de/elop awareness among prescribing physicians, and stimulate primary demand. ConseAuently, the unit de/otes a relati/ely large portion of its re/enues to ad/ertising in technical :ournals aimed at the pharmaceutical industry, physicians, and other medical professionals. (lthough di#erent business and marketing strategies make sense for business units facing di#erent market conditions, they pose a dilemma for top management. Can a /ariety of competiti/e strategies and marketing programs be consistent with, and e#ecti/e under, a single corporate strategy or company policyB 8eorge uckley had to address this issue when he took o/er as 3M9s C62 in %"". 1is predecessor had instituted a si) sigmaD program throughout the rm. +i) sigma is a Auality control approach that uses rigorous statistical analysis to remo/e /ariability from a process ? such as order fulllment or product deli/ery ? thereby reducing defects, impro/ing Auality, and lowering costs.
+i) sigma9s ob:ecti/es and methods make good sense for mature businesses such as 3M9s industrial tape unit where the product line is well established and impro/ing Auality and lowering costs are important means of maintaining protability. ut what about a business whose competiti/e strategy focuses on inno/ation and new product de/elopment, such as the drug deli/ery systems unitB (s one management guru points out, The more you hardware a company for total Auality management *e.g., si) sigma, the more it is going to hurt break5through inno/ation. The mind5 set that is needed, the capabilities that are needed, the metrics that are neededE.. for discontinuous inno/ation are totally di#erent.D ConseAuently, C62 uckley has made ad:ustments in the rm9s corporate policies to accommodate some of the strategic di#erences across the rm9s business units. @or instance, while he has continued to pursue si) sigma goals in 3M9s mature businesses, he has loosened the reins a bit by de5emphasizing the si) sigma approach in the rm9s research labs and some of its pioneering business units. Orville C. Walker and John W. Mullins : Marketing Strategy
