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B2B Assignment 1 Green Rubber Case Study 1. 0 Introduction Green Rubber Global (GRG), a subsidiary of the Petra Group, own the global patent for the ‘DeLink’ technology, a compound that can be used to create a new product called ‘Green Rubber’. This revolutionary process transforms scrap (including vulcanized) rubber into a new recycled compound that possesses many of the desirable characteristics of virgin rubber, while doing so at a reduced cost to business and the environment. GRG was formed in 1996 by businessman Vinod Sekhar to promote Green Rubber (GR).
Initial attempts at commercialization failed, due largely to the Asian financial crisis, low oil and rubber prices, and society’s general indifference on environmental matters at the time (Case Study, 2011), however, an attempt to re-introduce the product on a commercial scale has recently been launched. A number of circumstances have changed since the initial entry attempt, and with the world’s ever-increasing rubber consumption pattern, we are not far from seeing global demand for rubber exceed supply (Case Study, 2011), making Green Rubber an incredibly relevant product for this current day and age.
This report contains an analysis of the company and its customer groups. Key strategic decisions need to be made in a number of areas, and the goal of this report is to inform decision makers and provide a basis for judgment formation. 2. 0 Company Analysis The ‘Dell’ model (Hutt, et. al, 2010) looks at four major components of a business concept; Customer Interface, Core Strategy, Strategic Resources, and Value Network. The GRG business has been analysed using this model, and the following points of note were evident. See diagram overleaf) * Strategic focus * Complete customer solutions * Revolutionise rubber product industry * Marketing objectives * Initiate widespread industrial trial of Green Rubber * Further the brand through strategic partnerships * Overcome hurdles of skepticism in the industry * Value Proposition * Cost-effective, sustainable, and customisable recycled rubber solutions, with exceptional service support * Customer requirements * Are wide and varied Some industries have already adopted GR, others have more stringent quality standards and are awaiting results of more detailed tests * Must be tailored to each industry and business needs * Segmentation * By industry * By technological complexity (high-tech, low-tech) * By usage type * By usage rate * By country For more segmenting information, see the following section, Customer Analysis. 3. 0 Customer Analysis The customers of Green Rubber are wide and varied.
Potential for GR products spans over all three business sectors (Commercial, Government and Institutional), but currently the major targeted industries as specified in the case study are; * Tire retread industry * Automotive industry (excl. tire manufacture) * Industrial sector * General rubber-products sector The current targeting strategy stems from the segmentation of complexity of functional purchasing criteria, or what could more simply described as ‘low-tech’ and ‘high-tech’ industries.
The low-tech industries have less stringent attribute specifications, and can adopt Green Rubber with a much smaller turnaround-time. They would generally tend to be more of a transactional customer. The functional expectation of a product in a low-tech industry is generally judged on simpler specifications, based on common principles such as; shock absorption (eg: dock bumper, shoe sole), traction/slip-resistance (eg: tyre retread, mats), or element impenetrability (eg: seals, roof-liners).
The high-tech industries, such as the automotive industry, are likely to require very specific combinations of performance in a great number of areas. This would require a highly collaborative relationship between organisations. The consequences for a high-tech industry of not having done thorough testing of a crucial component are potentially much more disastrous than a low-tech one. The failure of a small component could cause failure of an entire machine, which in turn could be costly and/or pose significant danger to people, spelling possible legal ramifications.
GRG must jump through a lot of hoops in order to satisfy the exhaustive purchasing-criteria-set of this industry, but if a general acceptance of Green Rubber is achieved in higher-tech industries such as the new-tire industry, the potential for revenue is enormous. This path is not without its challenges however, as the case study refers some auto/tire manufacturers who still believe the technology to be questionable, and many are cautious about adopting GR after its earlier failure in the market.
GRG are keen on pursuing this sector and are awaiting results of more tests in order to proceed with proof. Other potential industries for GRG to consider; * Sports-surface construction industry * Geotechnical/Asphalt applications * Adhesives and sealants * Construction * Additional general rubber-products sector (Adhesives, sealants, etc. ) The ‘Industrial Market Segmentation’ model developed by Wind & Cardozo (Hutt, et. al, 2010), looks at both Macro & Micro segmentation bases. Two target segments have been identified according to this model. MACRO LEVEL| | MICRO LEVEL| | | | | 1)| Customer Type| | Purchasing Criteria| | Manufacturers and recyclers of ‘low-tech’ rubber products| | Organisations whose functional purchasing criteria are relatively straightforward, and easily satisfied by independent test results| | | | | 2)| Customer Type| | Purchasing Criteria| | Organisations with a major green-marketing focus| | Marketable eco-story, an acceptable standard of functional performance, good public reputation of supplier| Generally a low-to-mid level of customisation is required in these segments.
Most of these relationships will be largely transactional, with some of the more technically-complex tending towards being collaborative in nature. The case study states that GRG are prepared to work closely with organisations and tailor individual solutions wherever the situation demands, but seemingly the current customer groups are not those with the most highly-specific, technically-complex needs. 4. 0 Recommendations It seems as if there is still a great deal more work to do in terms of commercial acceptance of GR. A strong suggestion of this report is that more work should be done on public relations and image.
Even though GR will be approaching prospective industrial clients directly, in what is largely a ‘push’ strategy, it would be beneficial to create more general awareness and consumer education (introduce some more ‘pull’ to the marketing balance). This includes things like a website redevelopment, social media and public relations strategy development, and generally a wider, more integrated online presence. It is suggested that GRG might look at geographic segmentation in the future, exploring which prospective clients may be conveniently located nearby GRG facilities.
This would reduce ‘cost to serve’ and hopefully facilitate development of a few key industrial location-based clusters (hubs) within which use of GR is prevalent. These geographic strongholds would be a great building block from which to successfully implement GR into the mainstream world manufacturing industry. The recycling/manufacturing plant in New Mexico is one such location around which (provided there are sufficient business opportunities) GRG could build up a strong localised following.
GRG may also wish to segment further by type of solution desired to build a more targeted strategy of pursuit. GRG currently offer two potential solutions; a) buying processed rubber from the company, or b) to invest in the tools required to do it themselves. Company Type and Company Size variables should allow GRG to reasonably forecast which types of companies are likely to have the inclination and resources (space, manpower, finance) to set up their own Green Rubber processing facility, and which may just be interested in buying the finished product.
This may drive marketing tactics moving forward. GRG should do analyses of potential new industries and assess the attractiveness of new markets, such as those mentioned in section 3. Upon attaining positive results of new detailed tests, it is highly recommended that GRG aggressively pursue contracts in high-tech industries (such as the new-tire manufacture industry), as they are likely to be very financially rewarding and stable industries. 5. 0 Conclusion
Needs of rubber manufacturing/recycling companies vary greatly, but they all require a certain basic level of provable functional performance. GRG is already operating successfully in a number of low-tech industries, where the product performance standards are simpler to determine/address, and relationships are largely transactional, because there is less need for close collaboration. Positive results of further product testing will see GRG move into higher-tech industries, working closely with organisations to provide more customised solutions.
This will see the company shift its focus to more collaborative relationships and intensive product development. More of an emphasis on careful management of customer relationships (CRM) may also occur. GRG must grow the brand in the public arena as well as in the business sector. The internet will obviously play a huge role in achieving this goal. Consumers need to be educated about the option of Green Rubber, and on why there a need for change.
Because organisations have their ear to the ground more than ever before, more of a ‘pull’-type strategy might work well for the business. If rumblings start to occur about changing consumer preferences, then that will soon filter up the chain. References * Asia Case Research Centre, University of Hong Kong, 2010, Green Rubber: The Revolution of Rubber Recycling Business, RMIT B2B Marketing Resource * Hutt, M, Speh, T, Zimmerman, A, Blythe, J, 2010, Business Marketing Management – an Asia Pacific Focus, 1st ed, Cengage Learning, South Melbourne