Businessmodel of Ecolab

Customer Segments

Ecolab has a niche market business model, with a specialized customer segment. The company targets its offerings at firms in the foodservice, food processing, hospitality, healthcare, industrial, and oil and gas markets.

Value Proposition

Ecolab offers two primary value propositions: performance and brand/status.

The company has demonstrated strong performance through tangible results. Specific examples of positive outcomes for clients include the following:

• Ecolab helped an operator in South Texas by designing a treatment program that decreased oil carryover, resulting in a 3,550% return on investment with $55,000 in annual increased oil sales
• Ecolab helped a major refinery complex in the Middle East improve bio-fouling control, resulting in $4 million in annual savings and potential reduced maintenance costs of $0.5 million annually

• Ecolab helped a customer implement a paraffin inhibitor to extend production time, resulting in savings of $4,000 per month and total savings of $20,000 in five months The company has established a strong brand due to its success. It serves customers in over 1.3 million locations in over 171 countries (including 90 outside of the U.S.). It has 47,000 employees and generates $13.5 billion in annual sales. Lastly, it has won many honors, including the following:

• Recognition as one of the World’s Most Admired Companies by *Fortune *
• Ranking as #13 out of 500 on *Newsweek’s *Green Rankings list
• Recognition as one of the World’s Most Ethical Companies by Ethisphere ten years in a row
• Recognition as one of the 100 Best Corporate Citizens by Corporate Responsibility magazine
• Recognition as one of the Best Companies for Leaders by Chief Executive magazine ### Channels

Ecolab’s main channel is its direct sales team. It also sells its products through independent third-party distributors. The company promotes its offeringS through its website, social media pages, and participation in conferences.

Customer Relationships

Ecolab’s customer relationship is primarily of a personal assistance nature. It has its 25,000 field associates partner with clients in order to provide on-the-ground consultation and service at their facilities. That said, there is a self-service component.

The company’s website features a “Document Library” section with useful resources including articles, reports, case studies, and brochures. The site also has a “Resources” section with news, webinars, and expert-authored articles.

Key Activities

Ecolab’s business model entails designing, developing, and manufacturing its products for customers.

Key Partners

Ecolab’s key partners are the suppliers that provide it with the over 10,000 raw materials it needs to manufacture its products, as well as other components. These items include the following:

• Inorganic chemicals, including alkalis, acids, biocides, phosphonates, phosphorous materials, silicates, and salts
• Organic chemicals, including acids, alcohols, amines, fatty acids, surfactants, solvents, monomers, and polymers
• Plastic films and parts to manufacture medical devices that serve the surgical and infection prevention markets
• Packaging materials for its manufactured products
• Components for its specialized cleaning equipment and systems Ecolab also maintains several consolidated and non-consolidated joint ventures with various businesses in order to to achieve quicker operational scale, meet local ownership requirements,  expand its ability to provide customers a more fully integrated offering, and provide other benefits.

Key Resources

Ecolab’s main resources are its human resources, who include the engineers and scientists that design, develop, and/or manufacture its solutions; the water, healthcare, food safety, and public health experts who provide valuable insight; and the customer service personnel who provide support.

It also maintains important physical resources in the form of manufacturing plants and 19 global technology centers. Lastly, it places a high priority on intellectual property, with 6,300 patents.

Cost Structure

Ecolab has a value-driven structure, aiming to provide a premium proposition through significant personal service and frequent service enhancements. 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

Ecolab has one revenue stream: revenues it generates from sales of its products to customers.