Discussion Questions for a case - marketing
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m360-pdf-eng_b2c_in_b2b.pdf
CASE: M-360
DATE: 12/15/15
David Hoyt and Professor Baba Shiv prepared this case as the basis for class discussion rather than to illustrate
either effective or ineffective handling of an administrative situation. The authors thank Sander Arts and Atmel
Corporation for their assistance in preparing this case study.
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ATMEL: IGNITING THE B2C IN B2B
In 2012, Sander Arts joined Atmel Corporation as its new marketing vice president. Atmel was
an engineering-driven manufacturer of semiconductors, without a strong marketing function.
Arts was not an engineer, and was challenged to make marketing relevant at Atmel, and to
increase revenues and income, making marketing relevant to the company.
The challenges facing Arts are described in the 15-minute video: Atmel in 2011: An
Engineering-Driven Business (M-360V1).
The video is divided into the following sections:
1. Perspective of stakeholders in late 2011, before Sander arrives. 2. 2012: Sander has just joined Atmel. The characters present their initial reactions to
rumors of his plans.
3. Today: Sander reflects back on the situation as he saw it when he arrived.
SUMMARY OF VIDEO CHARACTERS
The video presents interview with a number of stakeholders, whose perspectives are described
below:
Engineer: Engineering drives the company—the key issues are increasing performance and decreasing price. The role of marketing is to launch products (website, tradeshow, specs,
etc.)
Marketing: Sees job as facilitating launch of new products, as directed by business units. Their role is to execute on traditional activities. Is not involved in corporate strategy, and
does not see a role for marketing in strategy.
Sales: Works closely with key accounts, and believes he knows what those accounts require. Does not see the need for marketing.
For the exclusive use of S. Zhao, 2016.
This document is authorized for use only by Shanshan Zhao in Business to Business Marketing taught by Dhiren Patel, California State University - Northridge from August 2016 to December 2016.
Atmel: Igniting the B2C in B2B: M-360
p. 2
Customer: Buys product that meets performance requirements at the lowest cost. Researches specs online, and has little, if any, interaction with suppliers. Finds it difficult to get
information from suppliers, and often resorts to online user communities for help.
Financial Analyst: Notes that company has rebounded from recession, but worries that this is a commodity business, and it’s difficult for any competitor to build a sustainable advantage.
Sander Arts, new VP Marketing: Sander a real person (the others are actors representing the perspectives of various stakeholders). In 2012, he is joining Atmel to develop a marketing
program. He wants to prove to the organization that marketing is relevant, and that it can
bring a return on investment.
ADDITIONAL INFORMATION
The following information supplements the video of Atmel’s marketing situation, and the
challenges facing Sander Arts when he became VP Marketing in 2012.
Products
Atmel’s product: microcontroller chips
Atmel product used in GoPro3
In Atmel’s SEC Form 10-K for the year ended December 31, 2011, the company described its
products as follows: 1
Microcontrollers
This segment includes a variety of proprietary and standard microcontrollers
enabling developers to design complete system solutions for a wide variety of
advanced applications. We utilize four major flash-based architectures targeted at
high volume embedded markets. This segment includes 8-bit and 32-bit AVR
based products, our Atmel QTouch® and maXTouch solutions, as well as ARM
based 32-bit microcontrollers and 8051 architecture products. Our maXTouch
controllers offer customers fully integrated touch solutions, with embedded
software libraries and capabilities that allow us to enhance the functionality and
1 Atmel SEC Form 10-K for the year ended 2011, pages 3-4.
For the exclusive use of S. Zhao, 2016.
This document is authorized for use only by Shanshan Zhao in Business to Business Marketing taught by Dhiren Patel, California State University - Northridge from August 2016 to December 2016.
Atmel: Igniting the B2C in B2B: M-360
p. 3
features offered with these products. The Microcontroller segment comprised
62% of our net revenues for the year ended December 31, 2011, compared to 54%
of our net revenues for the year ended December 31, 2010.
Nonvolatile Memories
This segment consists predominantly of serial interface electrically erasable
programmable read-only memory ("SEEPROM") and serial interface Flash
memory products. This segment also includes parallel interface Flash memories
as well as mature parallel interface electrically erasable programmable read-only
memory ("EEPROM") and erasable programmable read-only memory
("EPROM") devices. The Nonvolatile Memories segment comprised 14% of our
net revenues for the year ended December 31, 2011, compared to 17% of our net
revenues for the year ended December 31, 2010.
Radio Frequency ("RF") and Automotive
This segment includes products designed for the automotive industry, including
automobile electronics, networking and access systems, and engine, lighting and
entertainment components. This segment produces and sells wireless and wired
devices for industrial, consumer and automotive applications and it also provides
foundry services, which produce radio frequency products for the mobile
telecommunications market. The RF and Automotive segment comprised 11% of
our net revenues for the year ended December 31, 2011, compared to 12% of our
net revenues for the year ended December 31, 2010.
Application Specific Integrated Circuit ("ASIC")
This segment includes custom application specific integrated circuits designed to
meet specialized single-customer requirements for their high performance devices
in a broad variety of specific applications. This segment includes products that
provide hardware security for embedded digital systems. This segment also
includes products with military and aerospace applications. We also develop
application specific standard products ("ASSP") for high reliability space
applications, power management and secure crypto memory products. The ASIC
segment comprised 13% of our net revenues for the year ended December 31,
2011, compared to 17% of our net revenues for the year ended December 31,
2010.
For more information about products and customers in 2011, see: Atmel 2011 SEC From 10-K
(http://ir.atmel.com/sec.cfm?DocType=Annual&Year=2012&FormatFilter=).
For the exclusive use of S. Zhao, 2016.
This document is authorized for use only by Shanshan Zhao in Business to Business Marketing taught by Dhiren Patel, California State University - Northridge from August 2016 to December 2016.
Atmel: Igniting the B2C in B2B: M-360
p. 4
Development of the AVR Microcontroller
To view the video “The Story of AVR,” (7:27), about the development of the AVR
microcontroller, see: (https://www.youtube.com/watch?v=HrydNwAxbcY).
Marketing Organization in 2011
Staffing
All marketing personnel were based at the company headquarters in San Jose. They were
organized in silos, working on individual tasks, as assigned by the company’s business units.
Staffing included:
PR person
Website maintenance team
Creative team
Technical documentation group
One writer
Distribution
In 2011, direct sales to OEMs were 43 percent of net revenues. Sales to distributors were 57
percent of net revenues. 2
To see Atmel’s distributors, see
http://www.atmel.com/about/contact/distributors/default.aspx?contactType=Distributor . Note
that this includes distributors at the present time, not in 2011, but is representative of distributors
in 2011.
Advertising
The following advertisement was representative of Atmel’s advertising in 2011: 3
2 Atmel SEC Form 10-K for 2011, page 11.
3 Reprinted with permission of Atmel Corporation.
For the exclusive use of S. Zhao, 2016.
This document is authorized for use only by Shanshan Zhao in Business to Business Marketing taught by Dhiren Patel, California State University - Northridge from August 2016 to December 2016.
Atmel: Igniting the B2C in B2B: M-360
p. 5
Selected Financial Information
Consolidated Statement of Operations and Balance Sheet Items
All data in millions of dollars, except per share amounts.
2011 2010 2009 2008 2007
Net Revenues 1,803 1,644 1,217 1,567 1,639
Cost of Revenues 895 916 804 976 1,059
Research and Development 256 238 124 260 272
Selling, G&A 280 264 221 273 242
Other Expenses (10) 116 102 72 14
Total Operating Expenses 1,421 1,537 1,342 1,581 1,588
Operating Income (loss) Before
Taxes
381 116 (136) (20) 56
Net Income (Loss) 315 423 (109) (27) 48
Net Income (Loss) per share $ 0.69 $ 0.92 $ (0.24) $ (0.06) 0.10
Cash and Equivalents 329 501 438 409 374
Fixed Assets 257 260 203 383 580
Long-Term Debt 5 4 9 14 20
Stockholders’ Equity 1,082 1,053 764 802 823
Revenues by Operating Segment
2011 Revenue
($ million)
% of Net
Revenues
% Change
from 2010
Microcontroller 1,114 62% 25%
Nonvolatile Memory 256 14% (8)%
RF and Automotive 202 11% 7%
ASIC 232 13% (19)%
Net Revenues 1,803 100% 10%
Operating Income by Segment
2011 Operating
Income
($ million)
% of
Operating
Income
% Change
from 2010
Microcontroller 235 63% 48%
Nonvolatile Memory 56 15% 40%
RF and Automotive 17 5% 18%
ASIC 64 17% 492%
Net Revenues 372 100% 65%
Revenues by Geographic Area
2011 Revenue
($ million)
% of Net
Revenues
% Change
from 2010
Asia 1,063 59% 17%
Europe 463 26% 5%
United States 250 14% (4)%
Other 28 1% (21)%
Net Revenues 1,803 100% 10%
For the exclusive use of S. Zhao, 2016.
This document is authorized for use only by Shanshan Zhao in Business to Business Marketing taught by Dhiren Patel, California State University - Northridge from August 2016 to December 2016.
Atmel: Igniting the B2C in B2B: M-360
p. 6
Sources: Atmel SEC Form 10-K for year ending December 31, 2011:
Consolidated Statement of Operations and Balance Sheet Items, pp. 35, 66. (Expense data for 2008 and 2007 from Atmel SEC Form 10-K for year ended December 2008, p. 64.)
Revenues from operating segment, page 39.
Revenues by geographic area, page 41.
Operating income by segment, page 46.
For the exclusive use of S. Zhao, 2016.
This document is authorized for use only by Shanshan Zhao in Business to Business Marketing taught by Dhiren Patel, California State University - Northridge from August 2016 to December 2016.
