Case Study MICHELIN: Strategic and Marketing Segmentation in B to B

1. Presentation of the Michelin Group

1.1. Michelin in a few figures

· Consolidated revenue in 2003: 15.4 billion euros

· 19.2% of the tire market shares
· 130,000 employees from all cultures, including 4,000 researchers distributed in the
technology centers
· Commercial presence in 170 countries

1.2. The group's mission

The essential mission of the group is to contribute to the progress of the mobility of goods and
people, by facilitating freedom, security, efficiency and also the pleasure of being
move. To do this, Michelin relies on its capacity for innovation and the quality of its
products and its services, as well as on the strength of its brands.

Figure 1: Portefeuille de marques

The variety of brands represented above reflects the multiple acquisitions and partnerships.
Michelin which pursues a sustained internal growth policy in order to penetrate
new markets. To say as a comment on the photo
The levers of Michelin's strategy are as follows:

Market anticipation
Development in high-potential geographic areas
The reduction of fixed costs
Flexibility
Reactivity

1.3. Michelin Activities

Graph 1: Distribution of activities

1.4. Michelin located close to its customers

The group has chosen to establish itself locally to respond to the specificities of
markets.
This can be illustrated by these key figures:

74 production sites worldwide in 19 countries

o Algeria
o Germany
oBrazil
oCanada
oChina
 o Colombia
oSpain
oUnited States
o France
oHungary
oItaly
oJapan
oMexico
oNigeria
oPoland
oRomania
oUnited Kingdom
oRussia
oThailand

A technology center on three continents (Europe, Asia, and America)

North

6 rubber tree plantations in Brazil and Nigeria

Graph 2: Distribution in the world

1.5. Michelin and competition

 Graph 3: Michelin and the competition

2. 'The axes of the strategy'

Philippe Jacquin explained to us how Michelin, since 1996, the date of

the birth of the Michelin Civil Engineering Product Line has become the major dynamic player
oriented towards tires for mining equipment.
Right from the start, Michelin makes a strong impression by offering a large size in
wanting to show its desire to start strong and be present in the market as a leader
and not as a follower. This desire will be clear through its strategic growth cycle.
effective Say as a comment before addressing the current issue

While strengthening its offer and its presence in the 57'' market (largest size)
in use in 1996), Michelin offers its clients and manufacturers new
load capacities for an increase in tire capabilities (offer 63")
The market is shifting and Michelin becomes the undisputed leader in Very Large Mining Tires.
(about 80% EPM on 63'' in 2002). Across all large mining tires (57 and 63)
Michelin gains 19% of EPM between 1996 and 2001.

The success of this approach is based on: FCS

a significant industrial deployment (creation of a new unit of

production : US7)
new technical solutions (series 80, 'low pressure' concept, XDR,
TGP,…
the development of a strong dedicated and global sales force
the strengthening of its service to mining clients (continuing the 100 years
of innovation that make the history of Michelin

Michelin's approach was based on four actions, which will be described one by one below:
2.1. Act 1: the upstream strategy

2.1.1. Market Analysis

The clients are mining clients who represent large professional clients.
Given that the domestic ore market is highly competitive, they are willing to
take technical risks to reduce their costs per ton transported
demanding flawless performance in return.

2.1.2. Understand – Anticipate

[Link]. Future strengths of the market

The mining market is a market

A strong Added Value

Strong growth
of image (impact beyond the perimeter of the large tires)
Profitable (strong margins)

There are mainly three major players in this market: Bridgestone, Michelin, and Good Year.
Bridgestone is very aggressive in terms of competition but is not very efficient.
in the market for large mining tires. Capturing this new market presents a dual
interest. Michelin can not only move the global market towards mining tires,
thus ensuring a near monopoly (90% of EPM), but can also prevent Bridgestone
to benefit from the reinvestment of these margins which allowed it to be more aggressive in
level of competition. To say as a comment

[Link].Michelin's strengths
Michelin was a mining player, there was expertise, it had skills,
means and a credit of trust.

2.1.3. Choose

The choice that has been made is to invest in a new factory that cost 275 million.
dollars knowing that the total investments of Michelin amount to 1.5 billion
dollars per year.
2.1.4. To commit
It is about convincing one's partners by taking the initiative of a market shift.
Indeed, making larger tires implies that manufacturers need to build larger machines.
Say as a comment
To achieve this goal, it is necessary

to have confidence in one's technique

to provide proof of its means and ambitions
to bear the responsibility for major investment decisions for the
manufacturers

2.2. Act 2: From preparation to the construction of the factory

2.2.1. The preparation

It is about

Show its ability to grow in order to become a serious partner and

essential before the introduction of a new capability

Strengthen its presence on the ground by introducing a person in all markets

even the least interesting.

Prepare the builders by developing work in co-engineering (co-design)

and co-steering (joint guidance on technical, economic aspects, of
flux...) in order to propose and build reference solutions for tomorrow, to
work in a good understanding of the tire-vehicle interaction and to consider
jointly all aspects of the market.

2.2.2. Organization of the factory

The choice was the establishment of a new factory in North America, the primary market.
global for large mining tires. Here is an overview of the reasons that led to this choice and
their consequences.

Skilled workforce organized as 'manufacturing professional'

 Proximity of customers and suppliers of semi-finished products to just-in-time operation

Need to adapt to the market structural flexibility (online factory), flexibility

dimensional
Maximize the use of "innovative process bricks" at the factory is built and
optimized around a new process, machines, new designs

It was then necessary to develop suitable technical solutions.

2.3 Act 3: From Start-up to Scaling Up

It was necessary to define a startup strategy. The choice was to start with the
local personnel which allowed for the empowerment of teams and feedback.
Sequencing the industrial start-up was the second step. In this process, what matters is the
The highlighted issue is the organization of 'sourcing', namely, the scaling up.
Say as a comment
It was about respecting:

othe usual flow constraints (customer demand, supplier capacity,

adequacy productivity, stock management

othe constraints induced by the rise of the factory (schedule

deployment of industrial equipment, needs of the plan
of the factory approval, need for maintenance or intervention on
machine

oconstraints related to the introduction of a new supplier factory (management)

from a plural sourcing, do not encourage the client to impose a sourcing,
enhance the existence of 'made in US' sourcing

2.4. Act 4: Remain Leader

The attitudes to follow are as follows:

Do not settle for targeted strikes like the small challengers.

Knowing how to serve global demands by working in intercontinental networks

To be a reliable and sustainable partner by keeping commitments and maintaining a strong

reaction capacity, thus becoming the partner of builders.
 Seek continuous progress whether from a technical, industrial or
commercial.

3. The elements of debate

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One of the questions considered was that of the factory calibration. Indeed, what limit
Can there be tire sizes?

The factory is calibrated to make an even bigger tire (defined by constraints of

supply chain and especially transport conditions, that is to say 4.30 m in diameter
unlike 4m today)
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Philippe Jacquin was able to show us the two aspects that must be balanced during
the implementation of an innovation. On one hand, it must be fast enough to stay ahead-
guardsman but, on the other hand, it must be matured because failure is inconceivable, given all
the human, financial, and material capital invested.

Michelin owns two main trades who are :

- The trades tires
- The trades average
At to be of ces two trades, we have theDAS:

For the occupations tires :

The activity « Tourism &ndash; Van »
The activity « Weight Heavy »
The activity « Genius Civil »
The activity « Material Agricultural »
The activity « Aviation »
The activity « Two Wheels »
And for the trades average :
The activity « Editions of journey »
The activity « Products Derivatives »
The activity « Services Multimedia »

We decided to structure Michelinde's organization this way because it seemed the most
coherent. Indeed, Michelin is the number one in tires, which is why the first profession encompasses all
the pneumatic activities. The other profession represents much less market share but remains very
important for Michelin. The activities that compose it represent only 2.5% of the turnover and
yet, they contribute to the image and reputation of Michelin, which allows the company to be part of the
daily consumer.

More excerpts from Michelin's strategic analysis and segmentation in strategic business areas.

(THE)
The Michelin strategy on the 'two wheels' business: - A wide range of quality products. - A reputation.
important and a valued brand image. - Innovation with notably the competition tire without
inner tube Michelin's strategy on DAS 'Michelin Guide' and 'Paper Maps': - A notoriety
important and suitable for the market. - Regular updates of the offered products allowing a highlight of
the qualitative value of Michelin. [...]

This added value from Michelin allows it to highlight quality and innovative products. By
with this strategy, Michelin makes its innovations and quality a strong competitive advantage. Strategy
Internationalisation and acquisition Michelin is present in the European (west) markets, but also in
the American continent (north). This allows it to finance its growth and develop in markets
emerging (Asia, South America, and Eastern Europe) The 'Van Tourism' segment is booming
in the market. [...]