Businessmodel of 3M

Customer Segments

3M has a diversified market business model, with customers that have very different needs. The company targets its offerings at consumers, businesses, and government agencies.

Value Proposition

3M offers three primary value propositions: accessibility, innovation, and brand/status.

The company creates accessibility by offering a wide range of options. It markets over 60,000 products that are used in homes, schools, businesses, hospitals, governments, and more. These items are divided into 12 areas of expertise: automotive, commercial solutions, communications, consumer, design and construction, electronics, energy, health care, manufacturing, mining, oil & gas, safety and transportation. In short, 3M sells something for everyone.

The company has embraced innovation throughout its history and continues to do so. It invests 5.8% of its revenues in research and development. This funding helps produce over 3,000 patents annually and a constant stream of new, cutting-edge products. In fact, one-third of its sales derive from products that were invented within the past five years. Examples of its innovations are as follows:

• The first waterproof sandpaper, which reduced airborne dust during auto manufacturing
• The first masking tape, which eventually led to Scotch Pressure-Sensitive Tapes
• The first disposable toilet scrubber with built-in bleach
• Post-it notes, which introduced an entire new category in the marketplace In 2016 3M opened a state-of-the-art, $150-million R&D laboratory on its Minnesota campus.

The company has established a powerful brand due to its success. It maintains operations in 70 countries and sales in 200. It has 46 technology platforms, and introduced a number of brands that have become household names, including Scotch tape, Post-it notes, Filtrete, and Command. Lastly, it has won many honors, including placing on the “Best Companies for Leaders” list by Chief Executive (2015), ranking 12th on *Forbes’ *“World’s Most Respected Companies” list (2015), placing on Interbrand’s “Best Global Brands” list (2014), and being named a “Great Place to Work” (2014).

Channels

3M’s main channels are its website and retailers, wholesalers, distributors, dealers, and jobbers. The company promotes its offering through its social media pages, advertising, and conferences.

Customer Relationships

3M’s customer relationship is primarily of a self-service nature.

Customers use its products while having limited interaction with employees. The company’s website provides answers to frequently asked questions. That said, there is a personal assistance component in the form of phone, e-mail, and live chat support.

Key Activities

3M’s business model entails designing, developing, and manufacturing its products for consumers. The company relies on third-party manufacturers for some of its products, but does not specify their identities.

Key Partners

3M’s main partners are the retailers, wholesalers, distributors, dealers, and jobbers that sell its products.

Partners also include suppliers for its parts and third-party manufacturers. Suppliers have access to Supplier Direct, a portal that provides helpful references, documents, forms, and links.

Key Resources

3M’s main resources are its research and development staff members, who include over 8,500 scientists and researchers worldwide.  Important physical resources include its labs in 36 countries and manufacturing facilities in 29 countries.

Lastly, the company places a high priority on intellectual property, with 46 technology platforms, 106,151 total patents, and 3,000 new patents each year.

Cost Structure

3M has a cost-driven structure, aiming to minimize expenses through low-price value propositions.

Its biggest cost driver is cost of sales, a variable expense that includes engineering, manufacturing, and freight costs. Other major drivers are in the areas of sales/administration and research and development, both fixed costs.

Revenue Streams

3M has one revenue stream: revenues generated from the sales of its products to customers.