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Marketing Plans of 3M Company -
May 17th, 2011
3M Company (NYSE: MMM), formerly known as the Minnesota Mining and Manufacturing Company, is an American multinational conglomerate corporation based in Maplewood, Minnesota, a suburb of St. Paul.
With over 79,000 employees, they produce over 55,000 products, including: adhesives, abrasives, laminates, passive fire protection, dental products, electronic materials, medical products, car care products (such as sun films, polish, wax, car shampoo, treatment for the exterior, interior and the under chassis rust protection), electronic circuits and optical films. 3M has operations in more than 60 countries – 29 international companies with manufacturing operations, and 35 with laboratories. 3M products are available for purchase through distributors and retailers in more than 200 countries, and many 3M products are available online directly from the company.
3M was founded in 1902 in Two Harbors, Minnesota. Five businessmen set out to mine corundum, a mineral ideal for making sandpaper and grinding wheels. The mineral turned out to be low-grade, therefore sales were poor and the company nearly failed, but its founders persevered. The company moved to Duluth, Minnesota and began producing sandpaper products with abrasive minerals purchased from another source. After years of struggles, the company finally began to show profits.
In 1925 3M invented masking tape which led to many other Scotch brand tape products. In the 1940’s, 3M began making defense materials for World War II. In the 1950’s innovations moved into electro-mechanical products. In 1951, 3M began producing products for almost every country in the world. In the 70’s and 80’s the company expanded into pharmaceuticals, radiology, energy control, and office products. In 1990, 3M had company sales of over $15 billion annually, 30% of which were from new products created over the past four years. More than half of their sales currently come from outside the United States. 3M has come this far through a desire to participate in many markets where the company can make a significant contribution. (History)
Today 3M is a $16 billion company which currently produces over 50,000 products. Headquartered in St. Paul, Minnesota, 3M has operations in more than 60 countries and serves customers in nearly 200 countries. The company has more than 40 business units that are organized into the following markets:
Consumer and Office
Display and Graphics
Electro and Communications
Safety, Security and Protection Services
3M Company values include:
· Providing investors an attractive return through sustained, quality growth
· Satisfying customers with superior quality, value and service
· Respecting the social and physical environment
· Being a company employees are proud to be part of
Ultrathon Insect Repellent is a product developed and patented by 3M Corporation through their Consumer and Office Division. It was originally developed for use in the U.S. Military, to give soldiers long-lasting protection in adverse situations. It has been tested in the bug infested jungles of Central America. Ultrathon is now being reintroduced to the general public. Ultrathon Insect Repellent is available in a 6 oz. (170g) aerosol spray can or a 2 oz. (59ml) lotion. The price per can is around $4.97.
Ultrathons point of difference is its controlled release technology which makes it slow to evaporate so it will continue to work long after other repellents have stopped working. This advanced 3M formula creates an effective barrier to protect against mosquitoes, ticks, flies and more. It is water resistant and has a pleasant scent. The convenient spray-through cap makes it easy to use. Ultrathon is great for hunting, camping, fishing, hiking, running, biking, golfing, and boating, as well as for many other outdoor sports, leisure activities and work. Consumer Reports rates Ultrathon as the best insect repellent available for people who spend time outdoors. (3M Ultrathon)
3M Ultrathon is a global product that has a potential of four diverse target markets. They are categorized below:
1. The United States Military
2. Outdoor enthusiasts
3. Outdoor workers
The scope of this marketing plan will address two of these target markets. The first target market to be addressed is outdoor enthusiasts who enjoy hunting, camping, fishing, golfing, hiking, boating and other outdoor sports. The second market is families who encompass parents and children in outdoor activities. These two markets were chosen because they have the greatest buying potential.
Ultrathon is a global product; however, for the purposes of this marketing plan, the state of Wisconsin will be used as a test market.
Wisconsin has a population of 5,363,675. The median age is 36, with 28.6% under age 19, 54.6% between the ages of 20 and 59 and 16.9% age 60 and over. Males make up 49.4% of the population and females make up the remaining 50.6%. Race consists of 88.9% white, 5.7% black, and 5.4% other ethnic backgrounds. The average household size is 2.5 people with an average family size of 3.05. The median household income is $43,791. Management and professional occupations make up 31.3% of the work force, sales and office occupations make up 25.2%, production and transportation 19.8% and service occupations are 14% of the total work force. (American Factfinder)
The demographic target market for Ultrathon Insect Repellent will be males between the ages of 20 and 59 (this covers 27% of the population).This age range will target the male market most likely to be outdoor enthusiasts.
This marketing plan will also target females between the ages of 25 and 40 who have families (the average family size is 3.05). This age range is being targeted for females because they are most likely to purchase items for the household as well as mothers who would be interested in purchasing protection against insects for their families.
Wisconsin is a Midwestern state consisting of 73 counties, 190 cities, 395 villages and 1,265 towns. Its largest city is Milwaukee, with a population of 596,974. Wisconsin covers a total land area of 34,760,751 acres. Wisconsin has 43 State Parks covering 60,570 acres and 12 State Forests covering 471,329 acres. This state also has 5 recreation areas and 25 state trails, covering 750 miles, that are open to the public. Wisconsin is home to 15,057 lakes, 2,000 miles of trout streams, 6,000 campsites and 6 million acres of hunting land. (Wisconsin Facts)
The geographic target market will consist of major cities, suburbs and small towns, where population is highest and sales potential is greatest. Rural areas will also be targeted near State Parks, State Forests and various lakes where the insect population is the highest and most outdoor activities are taking place. These rural areas have been selected because the potential need is greatest here.
The people who live in Wisconsin tend to have Midwestern values. They lean towards a healthy lifestyle, wish to preserve the past and protect the environment. They enjoy many outdoor activities. The outdoor enthusiasts enjoy hunting and fishing as their major recreational activities. Most also enjoy camping, golfing, hiking, boating and other outdoor sports. Families enjoy spending time together doing outdoor activities.
The psychographic target market will consist of outdoor enthusiasts and families who love to spend their time in the great outdoors. This target market will undoubtedly encounter the insect population and will benefit the most from Ultrathon Insect Repellent.
Benefits/Product Usage Characteristics
Ultrathon’s biggest benefit and point of difference, compared to its competitors, is its slow release formula and long lasting protection. It provides a continuous shield of protection against insects. 3M’s controlled Release Technology allows Ultrathon to evaporate more slowly than other leading insect repellents allowing it to work much longer. Ultrathon aerosol spray will last 8 hours in rugged outdoor use, while the Ultrathon lotion will last an amazing 12 hours.
Ultrathon contains only 25% DEET in its aerosol can and 33% DEET in its lotion. This advanced 3M formulation creates an effective barrier that repels mosquitoes that may carry the West Nile Virus. It also repels ticks that may carry Lyme Disease as well as biting flies, chiggers, gnats, and deerflies.
Ultrathon Insect Repellent resists rain, perspiration and water, which helps it to stay on longer. It has a pleasant outdoor scent that is not offensive, and can be sprayed upside down, which makes for easy all over coverage.
Ultrathon offers its user the ability to enjoy a greater duration of activity while exposing them to a lower concentration of DEET. It reduces the need for frequent reapplication of the repellent with its long lasting protection. This product is less oily and has a mellow scent. Ultrathon is able to offer reduced concerns about potential DEET toxicity do to its lower concentration levels. (3M Ultrathon)
Description of Competition
The largest competitors of 3M’s Ultrathon Insect Repellent are:
· Off! (by S.C. Johnson & Son Inc.)
· Cutter (by United Industries Corp.)
· Repel (by United Industries Corp.)
S.C. Johnson, the maker of Off! Insect Repellent, is located in Racine, Wisconsin. They are the largest competitor of Ultrathon. One of SC Johnson’s strengths is that it is one of the world’s leading manufacturers of household cleaning products, storage products, personal care products and insect control products. It is a family-owned and managed business and has been in operation for 116 years. The company name and its product brand Off! are both very well-known in the market and are trusted by consumers. They are a company dedicated to innovative, high-quality products. There are many Off! Insect Repellent products to choose from. They range from Deep Woods Off! with 100% DEET for sportsmen, to 30%, 25%, 15%, 10%, 7%, and 5% DEET products in pump, spray or lotion. One product has sunscreen, one is unscented and one has a tropical fresh scent. A new addition to their line is Off! Botanicals Insect Repellent Lotion which contains no DEET, but uses a new ingredient found in lemon eucalyptus oil. The prices range from $2.83 for a 6 oz .pump bottle of Skintastic to $5.72 for an 11 oz. spray can of Fresh Scent (15% DEET). Their prices are less than Ultrathon which sell for $4.97 for a 6 oz. can. The various choices offered by Off! are an advantage to consumers, and their many products take up a majority of the shelf space which makes them easy to see. Disadvantages however, might be confusion by the customer as to which item they should purchase. Also, the company would have added marketing expenses for additional items for the same line. Since SC Johnson is a smaller company they would have less money to allocate to advertising. (SC Johnson)
United Industries Corp. the makers of Cutter and Repel Insect Repellents is the second largest competitor to 3M’s Ultrathon. United Industries just recently acquired WPC Brand which is the manufacturer of Repel. The company feels this acquisition strengthens their position as the No. 2 insect repellent manufacturer in the industry. They feel they can now offer an optimal mix of solutions to consumers and retailers looking for insect repellents. United Industries is a privately held manufacturer of insect control and lawn and garden products. The company is the 39th largest privately held company in St Louis with $288 million in revenue last year. (United Industries)
Advantages of Cutter insect repellents are that they have proven to be the most effective insect repellent protection available for the past 50 years. Cutter was invented by outdoor enthusiasts for outdoor enthusiasts and their families and has consistently been rated the most effective brand available. Their product line ranges from Outdoorsman which offers between 5 and 8 hours of continuous protection and sells for $3.76 for a 6 oz. aerosol can to an unscented aerosol spray, a pump spray and Cutter Towelettes. They also sell area repellents. Cutter is also priced lower than 3M’s Ultrathon. (Home)
To fully analyze the insect repellent industry the following trends need to be addressed:
Recent changes in insect repellent products and alternatives to insect repellents
DEET is still the gold standard in highly effective insect repellents. Recent trends however, have been to decrease the amount of DEET while still making the product effective and long lasting. Some products are combining insect repellent with sunscreen for added benefits. Others are improving the scent or making it unscented so it will be less offensive. Some products offer natural repellents like lemon eucalyptus oil and tomatoes. Another product on the market, as an alternative to insect repellent, is a piece of jewelry called Bugs B Wear. Each piece of jewelry contains a hidden compartment with a natural plant derived oil to repel insects. (Jewelry)
Changes in the environment due to diseases such as West Nile virus
and Lyme Disease
Protection against disease transmitting mosquitoes and ticks is becoming more and more important. West Nile virus swept the U.S. last year and has killed 274 people since 1999. A good insect repellent can be a lifesaver. Repellents provide the extra protection individuals need when exposed to disease carrying insects while allowing them to enjoy the outdoors. Lymes disease is also a serious and growing health concern. Using insect repellents containing DEET have been proven to repel ticks. (Jeanie)
Changing levels of outdoor activity due to age and economics
Outdoor recreation activities in Wisconsin are constantly evolving. Many factors affect the demand for outdoor activities. Demographics play a key role in determining the level of outdoor activities in a given area. The most significant would be the aging “baby boomers.” As people age their patterns regarding outdoor activities change. It is unknown if they will maintain the same level of activity that they currently are enjoying.
Economics also plays a part in changing levels of outdoor activity. Employment means less free time but more disposable income for activities. Provided the economy of Wisconsin remains the same the current pattern of outdoor activities in relation to the economy will most likely continue. (Participation Trends)
The objectives for this marketing plan are as follows:
1) Increase brand recognition from 18 percent to 25 percent of target market.
2) Increase market share from 17.5 percent to 21.5 percent.
3) Maintain a 21 percent profit margin on the Ultrathon product line.
4) Increase revenue by 44 percent, from $ 35 million to $ 50.5 million total revenue
· $ 200 million potential market ( source: Black)
· $ 200 million * 1.18 = $ 236 million ( 18 % estimated market growth)
· $ 200 million * 4 % = $ 8 million from increase market share
· $ 36 million * 21 % = $ 7.5 million from market growth
· $ 8 million + $ 7.5 million = $ 15.5 million revenue growth
· $ 35 million current + $ 15.5 million growth = $ 50.5 million
(These numbers are estimates based on the market data available)
Ultrathon has been on the market for a couple of years, but does not have the brand recognition like their competitors Off! and Cutter. To succeed in these marketing objectives, 3M must first increase the recognition of the brand Ultrathon. The marketing strategies will concentrate on brand awareness of consumers.
With an increase in brand recognition and an aggressive marketing campaign, it will be possible to gain 4 percentage points of market share from 3M’s competitors.
As 3M increases its revenue and market share, they will continue to maintain the profitability of the product.
3M plans to increase revenue through increased market share of the current market of $200 million and through the estimated growth of the industry of 18 percent.
III. Market Strategies
According to their annual report, 3M allocated $372 million of their $16,332 million of sales, or 2.8%, to their total advertising expenses in the year 2002. With forecasted sales of $50 million for Ultrathon, an advertising budget of 2.8% of sales will result in an advertising budget of $1.4 million for Ultrathon. Since this is a product re-introduction with the objective to gain brand awareness and market share, a higher percentage of advertising to sales ratio will be spent on advertising for Ultrathon Insect Repellent.
The advertising campaign will be focused on the two target markets identified in the target market section, which are male outdoor enthusiasts and families (of which females do the purchasing for the household.)
The purpose of the advertising campaign is to increase brand awareness of the Ultrathon Insect Repellent.
Advertising Strategies for Outdoor Enthusiasts
Outdoor enthusiasts like to read magazines, surf the internet, and watch TV shows that relate to their activities. Since our test market is Wisconsin, we will advertise in Wisconsin outdoor magazines, on sporting websites, and TV shows for outdoorsmen. To begin with, ads will run in the following:
· Wisconsin Outdoor Journal
· Wisconsin Sportsman Magazine
· Backwoods Wisconsin Web Site
· Wisconsin Outdoor TV Show (i.e. Minnesota Bound with Ron Schara)
These are pioneering advertisements that will show people hunting, fishing, camping and hiking in insect infested areas without being affected by the insects. They will inform potential buyers about Ultrathon and its many unique benefits.
Advertising Strategies for Families
Females with families like to read magazines and watch TV shows that relate to home life and raising a family. The magazines and TV shows that will be advertised in and that will focus on this target market are:
· Family Circle
· Better Homes and Gardens
· Good Housekeeping
· Wisconsin Outdoor Show For Women (i.e. Rebecca’s Garden)
These will also be pioneering advertisements that will show families and children engaging in outdoor activities being protected by Ultrathon. The advertisements will use fear appeals and will stress the importance of protecting your family from such dangers as Lyme Disease and West Nile virus.
Personal Selling will be an extremely accurate method to be used on the outdoor enthusiast. Booths will be rented at the following three events this year:
· Sportsmen Show
· Boat Show
· Game Fair
The booths will have a box filled with mosquitoes and a person will be demonstrating the direct effect of one arm having Ultrathon on it and the other arm bare.
Samples and coupons will be given out at the shows. The use of the samples will create brand awareness and the coupons will increase market share when they are redeemed for the purchase of Ultrathon. This will also increase revenue. The cost will come out of the advertising budget as not to impact the profit level of the product.
Personal selling will also be geared towards the family target market through a select number of grocery stores where samples and coupons will be handed out.
3M will use sales promotion to increase brand awareness, market share and revenue. The use of Point of Sales Displays will be used with a discount coupon for the purchase of Ultrathon. Although, the use of Point of Sales Displays produces a short-term effect in revenue and market share, the brand awareness will have a long-term effect. The use of this sales promotion along with the rest of the marketing strategy will produce a long term increase in both revenue and market share.
The Point of Sales Displays for the male outdoor enthusiasts will be at Gander Mountain and Galyans by their checkout lines.
The Point of Sales Displays for the family market will be at Wal-mart and Target stores.
Publicity / Public Relations
The publicity of insect repellents is rising due to the increased threat of insect carrying
diseases such as Lyme Disease and West Nile virus. News stations and newspapers are carrying stories about the threat regularly and stressing the use of insect repellents.
Ultrathon is getting great publicity for being the best insect repellents on the market today for preventing the spread of these diseases. Consumer Report featured an insect repellent comparison in which Ultrathon was rated number one in insect repellents.
Ultrathon is also getting free publicity from its retail outlets, (i.e. Wal-Mart) citing its growth potential.
3M will donate Ultrathon to several public groups that participate in outdoor activities to promote their product and increase brand awareness.
Direct communications will be used to measure brand awareness, as well as increase brand awareness and market share. A survey will be sent out as a focus mailing to 3M’s two target markets. The survey will measure; brand awareness of insect repellents, likes and dislikes between Ultrathon and its competitors, and the outdoor activities of the survey taker. The survey will include a coupon, for one free small can of Ultrathon.
This marketing plan for 3M Ultrathon will meet our objectives to increase brand awareness and market share, maintain profit margin and increase revenues.
The planning workshops
The processwasstarted with an inaugural two day planning workshop in the spring of 1992andwas followed by five additional two day workshops spread over the following three months.The resulting plan was completed in June 1992. The later success of the implementation effortwas in part due to the following benefits which the planning activity generated.(1)A robust plan was produced – an essential prerequisite to any implementation activity.(2)Important team building had been started amongst the management team.(3)A strong sense of ownership had been created in the management team.(4)The enthusiasm and commitment to make it work had been generated.(5)Finally and, arguably, most important, there was a confidence and belief amongst all teammembers that the business was going to achieve its ambitious new goals.
The implementation process
Whilst it could be argued that the process methodology adopted by ASD of using a team-based approach to the development of their plan was not unique, the same cannot be said of the subsequent implementation model. The key elements of the implementation activity wereas follows.(1)Write the plan.(2)Create a presentation of the plan suitable for review with senior management.(3)Review the plan with senior management and gain their approval/support.(4)Create an A5 sized card containing the essence of the plan which is both simple andmemorable.(5)Use the sales conference(scheduled for the autumn of 1992)as the platform forlaunching the new plan to the entire ASD organization.(6)Back-up the presentation made at the conference by distributing the A5 plan summarycards to everyone present and recommend that these be kept at the front of their daytimer diaries(almost everyone in ASD at that time had the A5 version of these diaries,hence the decision to produce the plan summary in that size and with the day-timerhole configuration).(7)Introduce the concept of segment action teams(SATs).(8)Select initial cross-functional teams of people, drawn from all levels within thosefunctions, for participating in those teams.(9)Appoint one member of the management team to chair each of the newly formed SATs.(10)Devote responsibility for the development of segment-specific tactics and programmes tothe SATs.(11)Execute those tactics/programmes through the functional groups best equipped toundertake those tasks.(12)Manage the introduction and execution of all the activities proposed by the SATsthrough the steering group comprised of the management team.The implementation activities which were particularly key to the success of the processwere the plan summary cards and SATs. By producing the card in diary size and pre-punching with the correct hole configuration it was made as easy as possible for everyone tokeep the messages somewhere where they would be seen on a daily basis. At firstconsideration it may appear superficial, but the introduction of these cards and management’sinsistence that everyone carried them at all times played an important role in gaining acommon understanding of the ASD goals and direction and led to a clearer focus across thewhole group. Over several years it contributed towards the behaviour change, particularlyacross the salesforce, of calling only on those accounts within the five priority segments.Embodying the SATs as an integral part of the structure, as shown in Fig. 3, was anothermajor factor which contributed to the implementation success. Underpinning all of thesesuccess factors was management’s determination to keep the messages and supporting processesas simple as possible and involvement in the process as widespread as possible. Sacrificingsome sophistication in favour of simplicity and involvement proved to be crucial decisionswinning the hearts and minds of the majority.