Category winner:
Michelin Fleet Solutions: From Selling Tires
to Selling Kilometers

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This case won the Marketing category at The Case Centre Awards and Competitions 2015.
 
The case

Who – the protagonist

Jonas Pills – appointed after five years as a Regional Sales Manager to manage the deployment of Michelin Fleet Solutions in Germany.
Pierre Dupuis – Michelin Fleet Solutions Director in Europe.
Jean Baudriard – European Director of the Truck and Buses (TB) Division. 

What

tyreMichelin is a worldwide leader in the tyre industry, based in Clermont-Ferrand in the Auvergne région of France. Michelin launched Michelin Fleet Solutions to offer transportation companies comprehensive tyre management solutions for their fleets of vehicles over a three to five year period. The deal would offer customers a number of peace-of-mind benefits including better cost control, fewer breakdowns and less administration.

Why

This move away from Michelin’s core business of manufacturing and selling tyres towards the new world of service was a radical one, but it seemed to offer promising growth opportunities and a way to differentiate itself from competitors. It was also seen as a way to build long-lasting relationships with customers and promote brand loyalty.

When

LorryMichelin launched Michelin Fleet Solutions (MFS) in 2000. However, by 2003, the picture had become much darker; despite substantial investment, geographic expansion was still poor and MFS remained unprofitable. The situation had deteriorated so much that a well-known consulting firm had been employed to help fix the problems. The company now had to decide the future of MFS: was it a passing fad that should be abandoned?

Where

Michelin Fleet Solutions was targeted at large European transportation companies such as Schenker, TNT, and Geodis.

Key quote

‘Even if these solution offers were working properly, don’t you think this is far beyond our core business? Michelin is a tyre manufacturer. Full stop!’ – Jean Baudriard, Director of TB Europe (Truck and Buses Division)

What next?

What recommendations should go to the board? After three years, results were still below expectations. Was Michelin’s strategic move to enter the solutions business the right decision? Should the company pursue this difficult path? Perhaps its solution offer should be repackaged, or maybe it would be best to simply return to its traditional business model of manufacturing and selling tyres.

 
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Michelin Fleet Solutions: From Selling Tires to Selling Kilometers
Ref 510-103-1
Teaching note
Ref 510-103-8

Related item:
Abridged version of the case
Ref IMD-5-0793

The authors

Wolfgang Ulaga, Frederic Dalsace, Chloe Renault

Wolfgang Ulaga, Frédéric Dalsace and Chloé Renault

Wolfgang explains why the case is user-friendly and how the lessons learnt can be applied to businesses of all sizes across a wide range of industries.

Timely issue

I think the case addresses an extremely timely issue. The question of how to differentiate from the competition and strategically grow beyond the traditional core is on the mind of many executives. B2B companies want to sell profitable customer solutions, rather than focusing on selling products and services only. This is also quite a hot topic among scholars and has led to a growing number of publications. The case lends itself to a very fruitful discussion of the opportunities and challenges involved in designing and rolling out a new business model in a B2B environment.

Familiar industry

MichelinOne does not need to be a tire expert to jump into the case discussion, and the lessons learned apply to businesses of all sizes in a wide variety of industries. Our close cooperation with Michelin allowed us to witness how this innovative go-to-market initiative developed over time and to document how the journey translated into financial outcomes for both Michelin and its customers.

Supplementary teaching material

Based on Michelin’s strong support throughout the case writing process, we were able to develop a rich set of accompanying pedagogical material, such as video interviews with key protagonists, a PowerPoint slide deck, and a detailed teaching note.

Rich debate

It’s vital to secure the strong and continuous support of a key sponsor inside the company throughout the case writing process. To be successful, a case must lead to one or more clear decision points and allow for a rich debate of contrary viewpoints. A strong teaching note and multimedia material to accompany the case are also critical to ensure widespread adoption.

Creating value

Michelin leaned that having a superior technical product does not suffice. By developing and implementing an innovative business model, it not only succeeded in creating more value for customers, it also secured customer loyalty and gained a better return on its tire expertise. The company also learned that the move towards solution business represented a major challenge in terms of change management and required the involvement of top management and a critical review of the company’s business model.

About the authors

Wolfgang Ulaga is Professor of B2B Marketing and Strategy at IMD.
e wolfgang.ulaga@imd.org

Frédéric Dalsace is Associate Professor, Marketing, at HEC Paris.
e dalsace@hec.fr

Chloé Renault is a PhD Student at HEC Paris.
e chloe.renault@gmail.com

 

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