Businessmodel of Domtar

Customer Segments

Domtar has a segmented market business model, with customer groups that have slightly different needs. The company targets its offerings at various types of businesses:  paper merchants, paper stationers, office equipment manufacturers, converters, commercial printers, and retail outlets.

Value Proposition

Domtar offers two primary value propositions: risk reduction and brand/status.

The company reduces risk by maintaining high quality and safety standards, as follows:

• 75% of the energy used in its pulp and paper mills is renewable, compared to the industry average of 67%
• 73% of the electricity used in its pulp and paper mills is self-generated, compared to the industry average of 56%
• 29% of the fiber used in its pulp and paper mills in 2015 was certified

• It has achieved a 15% reduction in greenhouse gas emissions from purchased energy since 2010 The company has established a strong brand due to its success. It is the largest integrated producer of uncoated freesheet paper in North America and is the second largest globally based on production capacity. It has more than 10,000 employees operating in over 50 countries worldwide, and generated sales of $5.3 billion in 2015. It is a leading manufacturer of communication papers, with prominent brands such as Xerox Paper and Specialty Media, Lynx, Cougar, Opaque Ultra, Opaque Offset, Husky, EarthChoice, and First Choice. Its personal care segment produces recognizable brands such as Attends, Indasec, and IncoPack, and it is one of the top producres of private-label diapers. Lastly, it has won a number of honors, including the following:

• The Innovation in Sustainability Award and the Leadership in Sustainability Award for Sustainable Forest Management from the American Forest & Paper Association (2015)
• The Environmental Strategy of the Year Award and the Innovative Printing and Writing Campaign of the Year Award from Pulp and Paper International (2014) ### Channels

Domtar’s main channel is its direct sales team. The company promotes its offering through its website, social media pages, and participation in trade shows and conferences.

Customer Relationships

Domtar’s customer relationship is primarily of a self-service nature. Customers utilize its products while having limited interaction with employees. That said, there is a personal assistance component in the form of phone and e-mail support.

Key Activities

Domtar’s business model entails designing, developing, manufacturing, and distributing its fiber-based products for customers.

Key Partners

Domtar’s key partners are the suppliers that provide it with the raw materials it needs to manufacture its products; the main materials it uses are wood fiber, chemicals, and energy. The company also works with some clients to help them develop their own house brands.

Key Resources

Domtar’s main resources are its physical resources, which include 13 pulp and paper mills and 10 converting sites in North America, and six personal care facilities in North America and Europe. The company places a high priority on its intellectual property, with its brand names and trademarks being important to its business.

Cost Structure

Domtar has a cost-driven structure, aiming to minimize expenses through significant automation. Its biggest cost driver is cost of sales, a variable expense. Other major drivers are in the areas of sales/marketing and administration, both fixed costs.

Revenue Streams

Domtar has one revenue stream: revenues it generates from the sales of its products to its customers. Sales often occur through the formation of long-term contracts.