Transcript Osram Sylvania

Osram
Sylvania
By Gediminas Sumyla
Company overview
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OSRAM is one of the two largest lighting manufacturers in the
world.
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OSRAM products are used in about 150 countries.
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With sales outside Germany accounting for 88 % of total
turnover and a sales presence on every continent, OSRAM is
a true global player.
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OSRAM SYLVANIA is the North American operation of
OSRAM GmbH, Germany.
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“We're proud of our longstanding reputation of providing
lighting solutions in homes, businesses and institutions,
automobiles and a broad range of specialty applications.” –
OSRAM management team
Mission and vision
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Company’s mission is to shape today's materials into the
lighting solutions of tomorrow.
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OSRAM believes that its ideas can make a difference in every
person's life and that its products reflect a commitment to
making the world more comfortable, more productive and
more imaginative.
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Company continues to strive on growth and profitability and
are guided by set of values:
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OSRAM SYLVANIA is its people
Company is customer focused
They respect and care for the environment
They are open to, and drive, positive change
OSRAM sets clear and ambitious goals to stay ahead of the
pack
 Company is profitable and strong
History
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SYLVANIA traces its roots back to 1901, when young
entrepreneur Frank Poor became a partner in a small company in
Middleton, Massachusetts, that renewed burned-out light bulbs.
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Poor soon moved the business to Danvers, bought out his
partner, and called his new company Bay State Lamp Company.
His brothers soon joined him in the enterprise.
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The Poor brothers started the Hygrade Incandescent Lamp
Company in 1909 to sell new carbon-filament light bulbs.
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In 1916, Hygrade opened a new plant and headquarters in Salem,
Massachusetts, which could turn out 16,000 lamps a day.
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After several transitions, the company was finally purchased in
1922 by entrepreneur Bernard Erskine and two associates, who
founded the Nilco Lamp Works.
History (cont’d)
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The 1940s and 1950s company witnessed enormous growth,
as new plants were opened. It increased its production of
materials and components, phosphors and metals, for
example, used in lighting and other products.
Sylvania also expanded into consumer electronics, television
tubes and radios.
In the 1970s and 1980s, OSRAM gradually moved out of
consumer electronics to focus on lighting and precision
materials.
In the 1980s, the SYLVANIA Octron® fluorescent lamp and the
OSRAM Dulux® compact fluorescent lamp represented major
innovations.
OSRAM SYLVANIA in its current form was created in January
1993.
In 1998 company established confidential e-team to begin
discussing how best to utilize the Web to forward the
company’s business objectives.
Facts of the case
• Lighting market consisted of $12-$15 billion.
• It is dominated by three major players: Philips
Lighting, General Electric Lighting and
OSRAM Sylvania.
• Bulbs are commodity product, so companies
were competing by introducing higher-end,
value-added products that increase the life of
the product, improve the quality, and lower
energy costs.
• Lighting consumes 15%-20% of world’s
energy, and general lighting is responsible for
about 60% of the energy in office and
commercial buildings.
Customers and channels
• Customers include consumers who
purchase lightbulbs for their homes,
contractors who purchase products for
renovated and commercial buildings,
and large accounts such as hotel
chains or retail stores.
• Company has several distribution
channels:
 For consumers it uses retail channels.
 For business-to-business company sells through
distributors and directly to large customers.
Web presence
• In 1998 company established e-team to
discuss how bet to utilize the Web.
• Team started analyzing the opportunities that
Web offered.
• The first focus was on business-to-business
sell side.
• Company had no interest selling to individual
users over the Internet.
• Web was used to offer personalization at the
channel level and build a customer-only web
site called mySYLVANIA.com.
• Web site offers secure on-to-one
communication between company and user.
Use of SAP
• OSRAM Sylvania built the site using SAP as
the backbone.
• Company already had implemented SAP R/3
as an enterprise resource planning system, so
it was easier to integrate and upgrade.
• The use of SAP allowed customers to place
orders, pay for them, and track them online.
• This solution also handled each customer’s
particular discount, payment terms, and other
contract conditions.
• Using SAP through business helped
customers and partners to do business
anytime anywhere.
External issues
• Major customer concern was
security.
Customers wanted some guarantee
of security while using company’s
website.
Different customers demanded
different security levels.
There was need to create
personalized security.
Internal issues
• It was hard to adopt the new online customer
interface.
• Needed sales force to believe in web
presence, because they were who would be
introducing the system to customers.
• “At the beginning there were a lot of
nonbelievers” – Mehrdad Laghaeian, CIO
• People didn’t think system would work.
• Employees were uncomfortable changing the
established ways of doing business.
New opportunities
• mySYLVANIA.com opened new
opportunities for serving small
customers.
• Web site set up new channel for
this group of customers.
• It also allowed to personalize down
to customer level and achieve true
one-to-one marketing.
Implementation strategy
• First of all OSRAM should create and
guarantee security for different customers with
different demands, so customers will feel
comfortable.
• Second, company should create different
authorization levels for particular users. (For
example: managers, employees,
administrators)
• Third, company should use all data that is
gathered on website to personalize, better
understand and market the customers.
Implementation plan
(cont’d)
• OSRAM should analyze tracked data and
make better decisions on:
 What customers are viewing the most and what
transactions are used the most, company should
make marketing more personalized, apply discounts
and special offers to attract customer to buy the
product.
 For the date last signed on data, company should
use remainders for customers.
 For most dollar amount purchased, OSRAM should
give better discounts, special offers and make them
loyal customers.
 For products looked and not purchased, analyze
why products were not selected. Use banner-ad
survey to ask why customer didn’t chose the
product, and focus on promoting that product.
Implementation strategy
(cont’d)
• Company should also sign contracts
and service agreements with loyal
customers to “lock” them in.
• By personalizing, giving more security
and better customer service, providing
better discounts and special offers,
interacting with end-users will add more
value.
Communication and
selling analysis
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Personalization, targeted promotions, contacting customers
via newsletters and customer support will build greater
communication between customer and company.
This also will build greater trust and better understanding
about the consumer.
Creating more value to the customer by personalizing,
security and customer service, discounts and special offers,
interaction with end-users will create trust-based selling and
bring higher sales.
With a creation of a new channel for end-users Sylvania will
have to go through all four functional substitution elements:
generate awareness, build perception of the product, convince
customers of product’s value and lead them to purchase.
To generate awareness about the product OSRAM Sylvania
should use the clickstream and transaction data that is
collected through the web site and use it to expand marketing
efforts and fine-tune company’s campaigns.
Key to success
• Key to success was Sylvania’s
understanding about expanding the
market to smaller segments, because
there were a lot of small customers
which would capture greater market
share.
• Company’s Web presence brought
down the costs of doing business with
small customers.
• Finally, Web presence expanded the
communication and request capacity.