MAKROLON : THE

HIGH-TECH MATERIAL
Case Analysis

Group 7:
Arpit Garg (6)
Ishaan Gill (18)
Purnima Arora (30)
Sachit Mohan Kohli (38)
Sharad Chandra Sharma (41)
 WHAT IS MAKROLON?
• A thermoplastic with truly diverse applications used
in medical devices, automotive headlamps, sporting
equipment, electronics, eyewear, architectural glazing
LED lighting, and numerous other products.
• Versatile in extreme - high transparency, impact
strength, and dimensional stability in even high
temperatures
• A polycarbonate invented by Bayer in 1953, now part
of Covestro AG – spin off Bayer’s MaterialSciences
division, focusing on specialty chemicals for heat
insulation foams and transparent polycarbonate
plastics.
 ABOUT BAYER
Healthcare, Nutrition & High-tech materials

5 sub divisions

Bayer Group Organization

Drug Of The Century

 Global
isation Bayer
of 90s opens
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Bayer Bayer ceutical
Founde joins Bayer acquir researc
d 1863 – IG survives es h triad
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dyestuff launched in economi Canad Japan Acquires
s in 1899 1915 c miracle a by 1995 Roche

1st Bayer Bayer Bayer Bayer 2001 –

Industri integrate come hit acquir Acquir
al d into s badly es es
Researc WW1 to unde due Sterlin Aventis
h Lab produce r to the g in & gives
war contr oil 1994 to legal
materials ol of crisis enter indepe
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Force Bayer
s Materia
after lScienc
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• Invention by Bayer in 1953

• 45 billion CDs since 1982

• Everyday use of more than 500 tons

• Capacity of more than 740,000 tons in 4 subsidiaries

• 2007: Brand Awareness of 31% (best in Europe)

• Best in US: Lexan from GE Plastics

• Ingredient Branding Strategy introduced in Year 2000

• Earlier, marketed only as B2B application chemical

 MARKET SCENARIO OF
POLYCARBONATES AS OF 2006
BAYER & SABIC 75% market share
Increase in demand from computers & 10-12% annually
home appliances
Expected growth rate of PC market 8% annually
Increase in demand in ‘hollow sunlight 12-15% annually
panels’ manufacturing sector
Demand of hollow sunlight panels in Strong
Railway, highway, airport & urban
construction sectors
Consumption by PC-based blend alloy Strong
composite material suppliers to
automotive industry
Bayer increasing market share based on high investments of $1.1
billion till 2012 & focusing on China in the future
COMPETITORS
GLOBAL PARTNERS
 Everybody comes into contact with Makrolon at least once a day

Makrolon Locomotive Motif OEMs Using Makrolon For Their End Product
 INGREDIENT BRANDING
• Creating brand for an ingredient or component of
product, to project high quality or performance of the
ingredient – examples Intel, 3M, DolbyDigital
• Used to call customer attention and create a pull-
effect
Making the Invisible Visible

A car powered by Ingredient Branding

Logo Labelling Web sites
on select
products Multi Level Marketing Strategy in Europe
Public Relation
Integrated logo
in Exhibitions /
Fairs / Shows Point of Sale
Ingredient-
Print Supplier
Advertising & Multi Level Marketing
End user
Promotion Selling Sourcing
surveys
campaigns Original
First Level Building select
Events Marketing Equipment Mfg
sourcing partnerships
Selling
Price reduction
Sponsoring for core product
Second Distribution
manufacturer
Level Marketing Souring
Magazines Support partner
Selling
campaigns
End user
Third
Level Marketing Train Motifs for
Journals emotional
association
Flyers /
Brochures
 Cooperation Advertising
Both partners advertise together & do not pay any advertising grants to advertise with each other. Each partner has to
finance his own part. This results in a “win- win” situation for both sides, with added value for both without sharing costs.

• The Ingredient Branding

partnership between Bayer
Makrolon and its customers is
balanced because of its
interdependence
• The principle is based on
synergies, i.e. each partner
integrates the other and refers to
the partnership in their
advertising, brochures,
catalogues, websites and even
plastic locomotives
• This does not result in advertising
Partnership embodies
cost allowances or similar benefits
complementary attributes to
and concessions for either side
the end user
Application In Ski Equipment For Makrolon
 Sales-promoting from the
Ingredient supplier to the Sales-promotion to the
final customer Ingredient- B2B Customer
Producer

Supply-push
Demand Supply
Incentives to
Pull demand creation
at the B2B customer
InBranding Push & Pull Final Product
Demand pull Producer OEM Push
Incentives for the
demand creation of a Supply-push
Demand Supply
certain ingredient in Incentives for
the final product demand creation
at the final customer
Final User

What Bayer and its partners are both aiming to achieve is:
• To differentiate themselves from the competition and competing products by means of the Branding
strategy
• Highlight the advantages of Makrolon and transfer this positive image to the end product with the help of
brand name, creating a competitive advantage by communicating the value / benefit to end user
• Give the ingredient a USP & encourages the end customer to give preference to products with the
Makrolon logo or even keep a lookout for this particular product when looking to make a purchase
• The potential customer then may ask for a product manufactured with Makrolon
Q1. WHAT WAS THE ORIGINAL MOTIVATION BEHIND
BAYER’S DECISION TO LAUNCH THE MAKROLON
INGREDIENT BRANDING CONCEPT?
Creating a global identity for the Bayer Cross Logo
 EXPLANATION
• Bayer pursued the Ingredient Branding strategy in 2000, by marketing
Makrolon
• Resulted in putting both product and the component in an excellent
competitive position by creating and communicating added value.
• Quality assurance and Uniqueness of the patented product created
synergies with Partners for a “win-win” relationship
• Each partner financed his own part – not paying any advertising
grants
• Low cost-high impact in increasing the brand value along with
partners and keep pace with their growth and expansion globally
• Build competitive advantage by testing products produced with the
use of Makrolon – ensuring the Partner doesn’t default in quality while
using its branding
• Pioneering it in Chemical Sector, based on the success stories of other
companies like GE
Q2. WHAT FACTORS WERE RESPONSIBLE FOR THE
SUCCESS AND FAILURE OF EFFORT?
• Polycarbonate resonated with the end product (e.g.: UVEX)

• Creating a USP & communicating value addition to the end user

• Multi Level Marketing across locations

• Maintenance of High Quality Standards

• Forming a win-win strategy with partners

• Incorporation of Bayer Logo into Makrolon

• Thorough selection process of products and companies

• Low introductory and ongoing advertising costs

Q3. WHAT WAS THE BRAND PROMISE AND HOW WAS
IT MATERIALIZED?
• Brand Promise: The Manufacturer of the end product and the
company that makes the most elementary component of the
product stand for flawless quality and that the customer can trust
this product
• Materialization of Promise: The end user was to be more willing
to pay more for the products labelled with Makrolon ingredient as
well as demand the ingredient in core products
 Q4. HOW DID THEY MANAGE THE INGREDIENT
BRANDING CONCEPT AND WHAT OTHER OPTIONS
DOES THE MANAGEMENT HAVE?
 Question 4a
How did they manage the ingredient branding concept?
• Selected partners to use and process the product on the basis of ‘flawless
quality’ & credibility, to build customer trust / faith

• Tested all products that are destined to carry the Makrolon label & used brand
usage agreements to ensure the required level of quality

• Took samples during production to offer end consumers assurance of

consistently high quality & scrutinized the company and its image as a whole

• Avoided associating with partners engaging in price wars

• Created a pull effect by communicating the value-ad through multi level

marketing with partners

• Incorporated the Bayer cross into the Makrolon logo to keep ad costs low &
transfer of positive image / reputation
 Question 4b
What other options does the management have?

1. Continue with InBranding Efforts if it converts into profits:

• Exploit its competitive position by exploring partnership opportunities with
other OEMs and replicate the success

2. Invest further in value added offerings:

• On similar lines of Aspirin, Bayer can manufacture its own polycarbonate
product and make it popular through Makrolon

3. Go back to B2B:
• In case of no substantial breakthrough, Bayer can go back to the old day
strategy of keeping Makrolon focused on B2B as an application chemical
instead of risking the brand completely
 ISHAAN’S INPUTS
• The strategy opted by Bayer to get in touch with consumers and retailers, they had
started with the concept of ingredient branding campaigns to inform about their
• product “Makrolon”.
• To further manage the ingredient branding strategy they had communicated through
various channels of reach which are as follows:
• Communication through magazines, journals & popular magazines
• Collaboration with various partners who had educated the end consumer through
means of advertising campaigns, flyers, websites and exhibitions.
• Integration of Advertising with public relations in order to reach out to the consumer.
• Usage of point of sale marketing activities
• Conducting end user surveys to identify consumer needs.
• The case specifies about the strategic partnership between Bayer and U-vex sports.
• The management had used this partnership as their means of ingredient branding
strategy.
• Markolon used their high end specialized raw materials for production of products for
motor sports, cycling and skiing. These products were sold by U-vex sports to specialist
shops. As well as distribution activities are conducted to all major markets.
• Through the medium of channels of reach by U-vex sports, applications of Markolon
can be explained to various consumers.