JOSEPH R. KENDALL

CorporateMarketing Research

at 3MThe Corporate Marketing Research Department at 3M is unusual in the duairoie it performs in the company. Since 1964, the department has been botha marketing research resource for the operafing unifs of 3M ond the ieadingenfry point in the company for MBAs seeking markefing management (nofmarketing research] careers.

Understanding marketing research at 3M requires somedescription of the company. 3M is a $13 billion corporation,with almost 50% of its sales coming from overseas opera-tions. Organizationally, it has four operating sectors.

1. Industrial and Electronic2. Information and Imaging Technologies3. Life Sciences4. Commercial and Consumer

The four sectors contain 14 groups, made up of about 60operating divisions and departments. The operating units haveglobal strategic responsibilities for their product lines andtactical responsibilities in the United States. The generationof tactics for outside the U.S. is the responsibility of the 533M subsidiaries, located in just about every country that hasa free enterprise economy.

The company is almost entirely home grown, basing itsbusiness on 16 broad technologies that have evolved from itsown laboratories over the past 86 years. The technologies rangefrom precision coating, abrasives, and adhesives throughelectronics, magnetic memory, and imaging to fluorochem-istry and health science, to name just a few. This array ofcapabilities has led to more than 50,000 products. It has alsoled to confusion among the people who report on businessactivity. Over the years, various publications that categorizecompanies {Fortune, Forbes, Business Week, etc.) have listed 3Munder such disparate classifications as chemicals; measuring,scientific, photographic equipment; widely diversified prod-ucts; conglomerate; and others.

The operating units are autonomous in most of their ac-tivities and especially in marketing. They have their ownsalesforce, marketing and communications departments, andin some cases marketing research. They are not required touse the Corporate Marketing Research Department for anyof their research needs. They can go outside the company

Joseph R. Kendall is Direcfor, MorketingResearch and Information Systems, 3MCompany.

CORPORATE MARKETING RESEARCH AT 3M

for research services just as easily as they can use the internalservice.

researchers at 3M, thediaOenges are toughand the opportunities* almost limitless

Research Needs at 3MA company as diverse as 3M has many marketing research

needs, which can be categorized roughly into three types.

1. Operating unit research, done on a project basis, which the oper-ating unit pays for on a recharge contract covering time and ex-penses for the work done. It is most often done with a contract foreach project, though some divisions buy a percentage of a research-er's time for a period of time to cover numerous projects (e.g., 50%of a person's time for a year).

2. Research covering the entire marketing community, which may berequested by the Marketing Council (the marketing directors of theoperating units), national sales managers' conference, or a corporateexecutive, or may be the brainchild of one of the members of theresearch department. If the Vice President, Corporate Marketing Ser-vices (to whom Corporate Marketing Research reports) approves theproject, the cost of the work is spread over all of the operating units.An example is research into the general effectiveness of sales incen-tives.

3. Corporate projects, which benefit all business disciplines (marketing,manufacturing, laboratory, finance), such as corporate image re-search. These projects must be approved by the Executive Vice Pres-ident, to whom the Vice President, CMS, reports, and are chargedto a corporate fund.

Development of Marketing ResearchersThe challenges are tough and the opportunities available

to marketing researchers at 3M are almost limitless. The big-gest challenge is that each reseacher has an annual goal of aset percentage of time that must be sold on approved proj-ects. The opportunities presented by a large number of busi-nesses, with thousands of products, that need research in-formation are obvious.

The Corporate Marketing Research Department consists ofabout 29 people, organizedfas in Figure 1. The marketing re-search project work is carried out by the analysts, senior an-alysts, supervisors, and the two research managers. (The re-search manager for Corporate Planning Services works solelyfor the Corporate Planning and Strategy Committee.) Proj-ects are obtained through requests from marketing personnelin the operating units or from sales calls made by analystsand senior analysts. A sales call may be the result of fol-io wup from a previous project, introduction of a new re-search service, information on new or expanded activity inthe operating unit, or the introduction of a new analyst. Allproject requests take the form of a proposal that outlines themarketing situation, the information need, how the infor-mation will be obtained, timing, and costs. The signed pro-posal, with an operating unit designated to be charged forthe costs, is the authorization to proceed with the project.

The analysts are recruited from university MBA programsand from among 3M employees in other disciplines (i.e., en-gineering, laboratory, etc.) who have obtained an MBA whileworking at 3M and want to make a career change. The an-alysts' career goals are in marketing management but theyare interested in, and have an aptitude for, spending three

MARKETING RESEARCH, JUNE 1991

Figure 1ORGANIZATJON OF CORPORATE MARKETING RESEARCH

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years in marketing research. Just about all of the analysts havepost-baccalaureate business experience with 3M or othercompanies.

In the first year about 60% of an analyst's time is spent onresearch projects for operating units. The remainder of thetime is spent in development seminars and classes coveringsampling, study design, questionnaire design, focus groups,and other relevant subjects. The classes taken depend on priorexperience and aptitude. All analysts take sales training fromone of 3M's divisional sales trainers. (They are expected tosell their time to cover their costs, so we feel we should givethem sales training. Also, we believe that sales training isvery beneficial in developing the personal interviewing tech-niques required in many projects.)

One year as an analyst, with good performance, qualifiesa person for a position as a senior analyst. This is a pro-motion and the senior positions require selling close to 100%of one's time. The senior analyst is the workhorse of the projectsystem, devoting time entirely to getting projects sold, com-pleted, and reported.

The researchers' projects, for the most part, are dividedalong sector and group lines. Therefore, an individual's workwill have an emphasis in a particular area such as industrial,health care, or imaging. However, if a project in one sectorcalls for an area of expertise that resides with someone as-signed to another sector, that person can cross over for theproject. Flexibility is an important element in the personaldevelopment of the analysts.

The senior analyst becomes a supervisor in about one yearand is given one or two of the beginning analysts to developinto a competent researcher and future 3M marketer. The su-pervisor still does operating unit work, handling some of themore complex projects, selling time in the 60 to 80% range.

Supervisors will have developed a special rapport withseveral operating units over the years and will invariably beoffered a marketing position in one of the line units at aboutthe time three years have been con:\pleted. Alternatively, the

Hi analysts take saleitraining from one of

divisional salestrainers-;; ••:'*

CORPORATE MARKETING RESEARCH AT 3M

managers of Corporate Marketing Research will be asked fora recommendation to fill an operating unit marketing posi-tion and the available supervisors will be recommended forinterviews.

This system of developing new marketers has been work-ing at 3M since 1964. Overall, about 113 MBAs have beenhired in Corporate Marketing Research in that time. Theirdisposition follows.

PercentageStill with 3M

Moved into operating unitStill in CMR

Left 3MMoved to operating unit and then moved out of 3MLeft 3M from CMR

644816362610

The average number of MBAs hired into Corporate Market-ing Research has been slightly more than four per year dur-ing the 26 years. The present positions of those who remainwith 3M range from executive and director through manylevels in the marketing organizations.

Variety of Research

Many types of research are conducted for the operatingunits, among them:

—new product evaluations (concepts, prototype testing, product test-ing),

—customer satisfaction (one-time and continuous tracking),—forecasting models,—market potential/market analysis,—product differentiation,—distributor motivation,—promotion evaluation,—pricing,—sales territory alignment,—distributor research, and—market share.

Much of the research is routine, with basic study designs,interviewing techniques, analysis, and reporting. However,some studies have a little twist that makes them unique orprovides an interesting result. Here are a few examples.

Customer Satisfaction ResearchA major customer satisfaction study for the Traffic Control

Materials Division consisted of 562 telephone interviews with:—safety barricade manufacturers/users,—pavement marking contractors,—independent sign shops,—local governnients, and—state governments.

The objective of the study was to determine the degree ofsatisfaction customers received from 3M products and the re-lated services and to compare the level of satisfaction withthat of 3M's competitors. The product and service attributesto be evaluated were obtained by interviewing 3M technical,marketing, sales, and executive personnel. One hundred andten attributes were found, which were reduced to 43 through

MARKETING RESEARCH, JUNE 1991

factor analysis based on interviews with customers. The 43factors were divided into seven categories:

—sales and order service,—product,—product performance,—delivery,—information,—technicat service,—^sales representatives, and—generaL

Overall, the results of the study showed 3M to be viewedfavorably and pointed out areas for improvement againstvarious competitors. However, one major finding was notexpected and was not a part of the original objectives of thestudy. Analysis revealed that the five customer groups hadvery different views of what was important in product attri-butes and service. Among the five top attributes for each ofthe five customer groups (25 in total), there were only sixduplicates. The customers, though buying the same productlines, viewed themselves, their businesses, and their sup-pliers very differently.

As a result of the study, the operating unit, which hadbeen approaching all five customer groups alike, developedfive different approaches. The customers were treated as fivedifferent markets. Subsequent sales data and customer sat-isfaction research has shown that shifting to five separatemarket strategies has been correct.

Price Value AnalysisThe Automotive Design Systems Division of 3M developed

a new automotive nameplate product called DimensionalGraphics for the automobile equipment manufacturing mar-ket. At the time, the market was primarily buying plasticnameplates as commodities. Competition was on the basis ofprice. Dimensional Graphics was a new concept in the mar-ket, with several new features. The question was: What isthe added value of the features?

Through tradeoff (conjoint) analysis, based on 41 personaldepth interviews with automotive OEM purchasing decisionmakers and specifiers, a Corporate Marketing Research su-pervisor constructed a price elasticity of demand curve. Theresearch identified the criteria used by key decision makersand influencers in selecting a nameplate. Price was found tobe very important. However, its relative importance variedby product feature, and market share expectations could becalculated for various price/product feature combinations. Themodel has proven to be a successful guide in this part of theauto OEM business.

Research With (and for) DistributorsMany of 3M's industrial products move through distribu-

tors. Periodically, an industrial division asks for a survey ofits distributors to determine, anonymously, how they feelabout doing business with each of their suppliers, not just3M. The survey covers relationships with distributor man-agers and reps, product quality, ordering, delivery, ease ofhandling, training of distributor personnel, advertising andpromotion, and many other areas. The resulting report is

An tinexpecled studyfinding showed thatfive customer groupsshould be treated as

e different niarkets

CORPORATE MARKETING RESEARCH AT 3M

> 3M will be ablemake global

comparisons of 3Mcustorner service withcustomer expectations

aad

shared with the distributors to show how 3M stands withthem as a group and where and how we expect to improve.

Surprisingly, many of the distributors have been so ap-preciative of the information that they wanted 3M's Corpo-rate Marketing Research to conduct similar research with theircustomers to determine their standing in relation to otherdistributors. Such studies have been done in many cases, withthe approval and sometimes financial support of the 3M di-vision with whom the distributor works.

Measuring Customer Service Against Expectations andCompetition

The largest single marketing research project ever con-ducted at 3M will be carried out in 1991. It will involve everyoperating unit and will measure customer satisfaction with3M's products and customer service throughout NorthAmerica.

Each operating unit (assisted by an assigned researcher fromCMR) will provide CMR with a listing of its customers anddistributors for each business in which it operates. The num-ber in the listing, drawn to reflect large, medium, and smallcustomers, will be four times what is needed for a represen-tative interviewing sample. CMR will randomly select com-panies to be interviewed from the list given. Also, with eachcustomer name provided, the operating unit will include thenames of two or three individuals at that company who canknowledgeably answer questions about designated productand service areas, 3M, and its competitors.

The questionnaire will consist of about 70 general ques-tions, common to all interviews, and 10 to 15 product-specificquestions for each business. The common questions will bedivided into:

—supplier selection criteria,—supplier contact factors,—physical distribution factors, and—commercial and special factors.

The interviews will be face-to-face, conducted by an experi-enced outside agency, and will total 8000 to 10,000. A pilotstudy will be conducted with four operating units, one fromeach organizational sector, and 3M Canada (completed in late1990).

The data collected will be put into a single database thatcan be rolled up (where appropriate) to division, group, sec-tor, and company. Also, each operating unit will be able toaccess its data to conduct whatever analysis it deems appro-priate.

A study similar to the North American Customer Satisfac-tion Study was conducted by 3M in Europe in 1988-89 andin Mexico in 1990. The study will be done in selected coun-tries in the Far East in 1992, after which we will be able tomake global comparisons of 3M customer service with cus-tomer expectations and competition.

The results of the survey will be used to make Improve-ments in customer service based on 3M's ability to meet cus-tomer expectations. The study will be repeated in the future

MARKETING RESEARCH, JUNE 1991

(1993 or 1994) to measure the effects of changes made andto find opportunities for future improvement.

Research for Corporate Planning and Strategy

The Corporate Planning and Strategy Committee reviewsthe strategic plans of 3M's Strategic Business Centers andguides the long-range direction of the corporation. This ef-fort requires, among other things, the reporting of consis-tent, comparable data by the Strategic Business Centers. TheCorporate Marketing Research Manager assigned to the Cor-porate Planning and Strategy Committee, along with the cor-porate planning staff, has designed a system for definingmarkets and reporting share that is very revealing. It enablesthe planning committee to see market size, growth rate, andshare for 3M and its competitors in three essential dimen-sions—customer groups, applications, and technologies.

Looking at share in only one dimension can result in fail-ure to see emerging customer groups, product applications,and technologies that can eventually erode one's business.A technique utilizing "skyline" charts in the three areas men-tioned enables 3M's managers to see its situation at a glance.Figure 2, a chart based on a fictitious memory media indus-try, is an example.

Three customer groups are outlined—original equipmentmanufacturers, commercial, and consumer. If 3M's businesswere dependent on the consumer segment and we were notwatching the OEM segment, which has a higher growth rateand possibly higher profits, a potential competitor might growup there that could eventually threaten our consumer busi-ness.

Similarly, our consumer business could be based on a video-tape application utilizing a magnetic technology. If our mar-ket share research were measuring only this application andtechnology and not watching the others, we could be in trou-ble and not know it. A manufacturer in a data application,utilizing optical technology, could be developing potentialproducts for the consumer video business. Therefore, our re-search people must be able to watch not only our customers,applications, and technologies, but also ones that are relatedand have the potential to take share from us in the long term.

Developing analytical tools similar to those in the preced-ing example is an important part of the role of CorporateMarketing Research at 3M.

Evolution Program

Many new product projects may sit in 3M's laboratorieswithout sufficient funds for proper evaluation of their mar-ketplace viability. (The product idea may not be high enoughon the operating unit's priority list to merit marketing re-search funds.) The Evolution Program was developed by aCMR supervisor to overcome this problem and to provide avehicle to demonstrate to operating units the value of earlymarketing research in new product development.

The corporation gives Corporate Marketing Research$150,000 a year for marketing research grants to deserving

CORPORATE MARKETING RESEARCH AT 3M

Figure 2MEMORY MEDIA INDUSTRY

OEM

Customer Groups

CommercialConsumer

Applications

Video

Optical

Technoiogies

Magnetic

Global Market Size (MM$)

Competitor 1

Competitor 2

projects. An Evolution application is made by a technical/marketing tean:\ working on a product that has demonstratedtechnical feasibility. The application is reviewed by a selec-tion committee representing the technical, marketing, and le-gal functions. Each application is reviewed also by a mar-keting research professional, w ho recommends the mostappropriate research for the information needs and estimatesthe cost. Grants are made to the best qualified applicants onthe basis of the information needs, ability to use the awardeffectively, and potential benefit to the company.

The grant can be used only to pay for the time of the cor-porate marketing researcher who w ill carry out the project.The value of the Evolution grants ranges from $10,000 to$35,000.

10 MARKETING RESEARCH, JUNE 1991

Corporate Marketing LibraryThe Corporate Marketing Library serves as a reference re-

source to the researchers and is also available to all 3M em-ployees. It contains marketing and economic statistics fromall of the usual sources, marketing periodicals and newspa-pers, and information from various subscription services inthe marketing research business. The information analysts inthe library are experienced personnel with access to pub-lished information databases and contacts at appropriate li-braries around the country and at major information ser-vices.

The library pays its way, however, through one major ser-vice. Because of the decentralized nature of 3M, several in-dividual operating units could unknowingly purchase the samestudy at full price from an outside research firm. However,all proposals that come into 3M for multiclient studies, oravailable research data for sale, or subscriptions to data ser-vices are sent to the Corporate Marketing Library. The librarysupervisor and analysts know from experience which oper-ating units may have an interest in a particular subject andthey make known what is available to all appropriate 3M per-sonnel. (They also publish the availability of the data, study,etc. in a monthly newsletter.) As a result, items of interestto individual operating units are purchased once by 3M in-stead of three or four or five times by the various 3M units.The cost to each operating unit therefore is only a fraction ofwhat it would be if the unit made the purchase on its own.

SummaryCorporate Marketing Research at 3M is charged with (1)

providing an internal resource from which operating unitscan obtain high quality marketing research and (2) devel-oping graduate MBAs into potential marketing managerswithin 3M's operating units. A formal process of personneldevelopment has been underway for more than 25 years.

The department's work is paid for by the projects it con-ducts for the operating units. If department costs are not cov-ered as forecasted in any year, headcount reductions can beanticipated. If forecasted costs are covered and project workrequests exceed capabilities, expansion can occur.

The department's work is primarily in industrial, commer-cial, and health care areas, though some consumer researchis done. A wide variety of research techniques are employed,and the innovation and development of unique analyses isencouraged. In size, projects range from small group inter-views to total company efforts involving all operating unitsand all classes of customers.

Corporate Marketing Research has developed a program toencourage early research in product development (Evolution)that also helps the researchers to sell time and develop skillsin some relatively undefined markets.

The Corporate Marketing Library is a resource for both theresearchers and 3M marketing personnel in general. It alsoaffords substantial savings for the company by consolidatingthe purchase of research reports and data for the operatingunits.!

Reprint No, MR32101

The CorporateMarketing Library

pays its way throughcentralized purchasing

resource materiaM

CORPORATE MARKETING RESEARCH AT 3M 11