Reference no: EM132148176

Emerson Process Management: Accelerating on the Internet

If you were selling automation products for manufacturing plants, the 1970s were a wonderful time—sales were booming. By 2000, however, the market had changed. Sales had slowed and purchasers were beginning to think of automation products as commodities. So many buyers were using fewer suppliers.

That was the situation that the Fisher-Rosemount division of Emerson Electric faced. How could it attract the interest and attention of industrial purchasers for services that helped buyers optimize their plants and processes? Such decisions are made infrequently and can involve big money, ranging from $25,000 to $25,000,000. How could Fisher-Rosemount demonstrate in an engaging and dynamic way the benefits of reworking processes in customers' existing plants? How could the company show what its services could accomplish?

Fisher-Rosemount tackled this situation by first repositioning its services. By looking at the relevant purchase processes from the customer's point of view, it realized that customers were not looking for individual products that they had to assemble themselves, if they had the needed in-house expertise. Instead, they were looking for complete solutions. Competitors—especially software vendors—had already realized this. Seeking to capitalize on their own expertise, the competitors had assembled product portfolios that included everything from PC-based process control solutions to supply chain management solutions. However, although Fisher-Rosemount's repositioning strategy was similar to that of other industry suppliers, the company had the advantage of being part of a much larger organization.

Emerson Electric was founded in 1890 in St. Louis, Missouri, to manufacture reliable electric motors. By 1892, it was selling the first electric fans in the United States, still one of its major lines. Over the years, however, Emerson Electric has benefited from stable management and consistent growth in its product and service lines. Today, it has over 60 divisions selling a variety of products from fans to process solutions, from to refrigeration and air-conditioning technologies to tools for do-it-yourselfers and professionals, from plastics joining and cleaning compounds to world-class engineering and consulting services. In 2000, Emerson reported sales of $15.5 billion—a 9 percent increase from the previous year. The company also reported increased earnings for the forty-third year and increased dividends for the forty-fourth year in a row. To achieve such an enviable record, Emerson stresses increased growth—particularly in global markets—and innovation.

One way Emerson stays ahead of the competition is through heavy use of the Internet. It has over 115 e-business projects under way. In 2000, it transacted 10 percent of its sales (that's $1.55 billion) online and 70 percent of its 60-plus divisions had Web projects up and running.

The Internet provides a good channel for selling technical products. A survey of industrial users of the Internet indicated that much of the industry (85 percent) has access to the Internet, and that engineers are among early adopters and frequent users of the Net. They use the Internet primarily to gather information, but given the lack of relevant information found there, they spend only up to three hours a week on the Net. Therefore, it appears that supplier companies can best increase the value of the Internet in selling their services by providing more detailed information about products and services.

The folks at Fisher-Rosemount must have seen this report, because they chose to develop an information-packed site called ThePlantWeb (www.plantweb.com). The home page of this Web site provides visitors with information on ThePlantWeb. Right away, visitors learn how they can understand today's technologies better, access information more quickly, reduce costs, and increase revenues. They can do this by taking advantage of PlantWeb University, which provides short business courses on how to improve plant profitability, and engineering courses in which they can explore leading automation technologies. The page also provides short "testimonial-descriptions" of companies that have recently used ThePlantWeb to improve their operations. Visitors who want more information than that provided by the short testimonials can call up longer case studies for information. ThePlantWeb News provides recent examples of new users of ThePlantWeb services and gives a chronological listing for the last five years of successful applications of its services.

What is most interesting, engaging, and unusual about this Web site is a feature called TestDrivePlantWeb. In the test drive, visitors can see how much PlantWeb architecture can reduce capital expenditures compared to traditional DCS (Distributed Control Systems) architecture. What does that mean? Assume that you are a manager of a pulp and paper plant. Visit the Web site, go to the TestDrivePlantWeb page, and click on one of the industries listed on the left side of the page. Click on Pulp & Paper, then continue with the test drive, and you'll get a diagram showing all the processes in the pulp and paper industry, from waste treatment through papermaking, recovery, bleaching, and pulping. By using the various buttons, such as Customize Areas and Design Cost Assumptions, you can input data for your plant. All the while, the site provides an estimate of how much you can save using process management from Fisher-Rosemount. In addition to a summary of savings, you'll received information detailing how you would achieve those savings. Can't you just imagine engineers inputting various data to see how much they could save? In fact, the site has proven very effective in attracting new customers. No doubt that's why TestDrivePlantWeb has won several awards.

What is PlantWeb? According to the Web site, it's a revolutionary field-based architecture that changes the economics of process automation. TestDrivePlantWeb allows you to build your own virtual plant to evaluate the economics of process automation. It employs an easy-to-use, drag-and-drop interface that allows users to customize models by adding or deleting process areas, units, or devices or by adjusting variables such as labor rates and average wire run. The effects are shown immediately in the summary. Specific benefits of retrofitting your old plant with automation from Fisher-Rosemount include reduced process variability, increased plant availability, reduced capital and engineering costs, reduced operations and maintenance costs, and streamlined regulatory compliance.

In 2001, as part of its corporate repositioning strategy, Emerson Electric renamed the Fisher-Rosemount division, calling it the Emerson Process Management division. The goal was to enhance the overall corporate brand and to provide insight into the division's services. The repositioning also involved the integration of Fisher-Rosemount with other services in Emerson Electric, such as Emerson Performance Solutions, in order to provide complete solutions to purchasers.

Emerson Process Management does not rely only on the Internet to sell its services. To promote ThePlantWeb, it hired 50 sales reps (dubbed "PlantWeb Champs") and trained them on Internet technology. To support their efforts, it used print advertising and direct marketing to reach prospects that it calls "technical evangelists." The print ads used brilliant colors and images that contrasted old and new technology—for example, a weather vane and a weather satellite. These ads stood out amid the wordy competitor ads surrounding them. Emerson also used the TestDrivePlantWeb site to collect names of prospects and their affiliations. It then sent direct mail to higher-level executives in each organization. The idea was to intrigue the "technical evangelist's" supervisor, who was more likely to be involved in the purchase decision. Perhaps they would meet in the hallway, and the technical evangelist, who was excited from taking a "test drive" on ThePlantWeb, would exchange information with the supervisor who had questions about costs.

Such simple hallway conversations can be the beginning of a process that takes months to complete. During that time, Emerson sends prospects promotional materials and invitations to seminars to keep their interest from flagging. If all of those marketing efforts are not enough, PlantWeb has a guarantee that the purchaser will reduce total installed cost using PlantWeb automation solutions as compared to traditional DCS architectures.

Does this work? You decide. In the first 18 months that TestDrivePlantWeb was up, Emerson identified 65,000 unique visitors to the site, and that translated into 850 installations of ThePlantWeb product.

Questions for Discussion

1. What type of purchase decision is involved in buying solutions to a company's process systems from Emerson Process Management (Fisher-Rosemount)?

2. Who might participate in the buying process? How can ThePlantWeb and the associated marketing campaign impact each of the buying-decision participants?

3. How can ThePlantWeb and the associated marketing campaign affect each stage in the business buying process?

4. What purpose do the testimonials, case studies, and PlantWeb Guarantee serve?

5. Is promotion and selling on the Internet a wise decision for Emerson Process Management? Why or why not? What are the advantages of using the Internet compared with using only personal selling and advertising? The disadvantages?

6. In your opinion, is Emerson wise to reposition itself by branding all of its divisions with the Emerson name? Why would this be beneficial in selling to business markets? How might it be a disadvantage?