Distribution Strategy of a Global Firm in an Emerging Market: The Case of 3M India

Abstract

3M had an entire portfolio of Personal Protective Equipment (PPE) targeted at the large industrial customers. These were high priced, premium quality products which 3M India enjoyed a dominant market share in this segment. The demand for such products was facilitated by the fact that big clients were more aware of the Occupational Health and Environmental Safety (OHES) implications at the workplace. 3M traditionally capitalised on its business strategy of differentiation. This helped it charge a premium on its products to its customers. Having catered to large industrial customers since its entry into the Indian market, 3M had developed its marketing channel to improve its revenues from this target segment. With economic liberalisation, the smaller B2B customers who belonged to the small and medium-sized enterprises (SME) category also became aware of OHES. This segment was very price conscious and did not have preference for any brand. PPE was another overhead for them and they would opt for any product that addressed the safety concerns and at the same time keep costs down. In order to build a presence among them, it was necessary to build an intensive distribution network with a strong sales force. Ubiquity of the brand was essential to gain market share. Another important consideration was competitive pricing compared to prices to the existing players. Both the factors together were expected to help 3M consolidate its position as a supplier of PPE for this segment. 3M had never been a player on the price front. The price war that 3M had to constantly indulge in while targeting the SME segment was not its forte. The decision on whether to go for a comprehensive rollout was itself questionable. Introducing low price products in the Indian market would lead to cannabilisation of the high end PPE. A pertinent question was how much of this inevitable cannibalisation would be acceptable without impacting the revenues.