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The Paint Coating CompanyThe Paint Coating Company

Customer Tiers and theCustomer Tiers and the

Balanced Scorecard ConceptsBalanced Scorecard Concepts

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The Paint Coating Company

Chemical Coatings

Tier 1- Preferred strategic

solution seekers

Tier 2- Large price seekers

Tier 3- Least attractive price

seekers Solvent

Distributors

Paint Manufacturers

ArchitecturalTier 4- Local manufacturers

Resins AutomotiveTier 5- Specific targeted

Additives Industrial maintenancecompanies

Colorants Building products

Appliances

Tier 1- Full alignment Metal office furniture

Tier 2- Large power

bargainers

Tier 3- Fragmented local

agents

Tier 4- Specialty distributors

End Users

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The Delta Model in the Paint Coating Company

Tier 5

Tier 3

Tier 1

Tier 4Tier 2

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The Paint Coating Company Customer Segmentation by TiersTier 1 - Preferred strategic solution seekers.

Tier 2 - Large price seekers. Tier 3 - Least attractive price seekers.

Tier 4 - Local manufacturers. Tier 5 - Specific targeted companies.

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The Paint Coating Company Customer Segmentation by Tiers

Tier 1 - Preferred strategic solution seekers. These are

strategic solution seekers that will be the recipient of

total customer solutions provided by a team approach.We will target these preferred companies by offering

solutions intended to increase productivity and

performance, reduce supply chain costs, provide

eBusiness solutions and develop jointly unique productsand a variety of other value added services. It is

mandatory that the customer value propositions will

result in quantified and well-documented cost

reductions, performance and productivity improvements

for our clients, improving our customers and our

shareholders profitability.

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The Paint Coating Company Customer Segmentation by Tiers

Tier 2 - Large price seekers. Composed of large price

seeker paint & coatings manufacturers, which may not

be as responsive to receive the total customers solutions

approach of Tier 1 customers. Our intent is to make

every effort to move these accounts towards a closer

collaboration, seeking a true partnership for value

added.

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The Paint Coating Company Customer Segmentation by Tiers

Tier 3 - Least attractive price seekers. These are the

least attractive price seekers that have non-existent

switching barriers to select a supply. These are

primarily transactional customers who will receive

minimal services.

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The Paint Coating Company Customer Segmentation by Tiers

Tier 4 - Local manufacturers. These are composed of a

large number of local paint & coatings manufacturers,

but because of their collective volume, provide attractive

opportunities to us but cannot be targeted in the mannerof Tier 1 and 2 customers. We will utilize eBusiness and

telesales technology to address and satisfy their needs.

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The Paint Coating Company Customer Segmentation by Tiers

Tier 5 - Specific targeted companies. Composed of

targeted companies that although small in size, deserve

special attention because they are either highly

innovative or address unique environmental concerns.

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The Balanced Scorecard Dimensions (Corporate)The Balanced Scorecard Dimensions (Corporate)

BalancedScorecardFramework

Financial Perspective(Shareholder look)

BusinessProcesses

(OperationalEffectiveness)

OrganizationalLearning

(Technology)

CustomerPerspective(CustomerTargeting)

CorporateLevel

Volume, revenue,earnings, gross marginby product and/or marketsegment (actual vs. plan)

Revenue and earningsby service and businessmodels

- Eastman ROI- Complementor ROI

Revenue and earningsby specialty vs.commodity

Growth of volume,revenue, earnings, grossmargin (relative to

what?) (Growthinitiatives)

Capacity utilizationby productcategories orproduction site

Unit cost byEastman ESQproduct categories

% First pass qualityby productcategories

Budget vs. plan(Cost centers)

Specialty/Commodity ratio ofsales

Rate of productintroduction by marketsegment

Percent of sales fromnew products bymarket segment

R&D as % of sales

- Resins

- Solvents

- Additives

- Formulations

Projected revenue vs.actual for tacticalportfolio reachingcommercialization

Projected revenue vs.actual for strategicportfolio reachingcommercialization

Product marketshare

Customermarket shareby tier

Profitability bycustomer by tier

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The Balanced Scorecard Dimensions (Tier 1)The Balanced Scorecard Dimensions (Tier 1)

BalancedScorecardFramework

FinancialPerspective(Shareholder

look)

BusinessProcesses

(OperationalEffectiveness)

Organizational Learning(Technology)

CustomerPerspective(CustomerTargeting)

Customer TierLevel - Tier 1

Volume

Revenue

Gross Profit

Earnings fromOperations

Return on VDSCapital

Return on VDSInvestment

Year over yearsales andearnings growth

Working capitallevels

- Receivables

Profitability of

customizedmanufacturingrevenue stream

Cost to serve thecustomer

Breadth ofcustomerengagement(use +5 to -5scale)

% of revenuefromdifferentiatedcustomersolutions

- Revenue fromdifferentiatedproducts

- Revenue fromcustomer integratedsolutions andservices

% revenue fromdecommoditizedproducts

Revenues emerging from R&Dtechnology partnerships

- Customers- Complementors

Revenue emerging fromcustomized technology solutionsby customer

Return on invested hours oftechnical support being provided

to customer for productdevelopment and for processimprovement

Rate of product introduction bymarket segment

Percent of sales from newproducts by market segment foreach customer

Total R&D as a % of Total Tier 1Sales

Projected revenue vs. actual fortactical portfolio reachingcommercialization by customer

Product marketshare by

customer Solution

revenue/earnings by customer

Cost to servethe tier

Value added

VDS integrationlevel

- Customer ROI

- Eastman ROI

Joint revenue/earnings fromcomplementorrelationship

- Customer ROI

- Eastman ROI

- ComplementorROI

Projected revenue vs. actual forstrategic portfolio reaching

commercialization by customer

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The Balanced Scorecard Dimensions (Tier 3)The Balanced Scorecard Dimensions (Tier 3)

BalancedScorecardFramework

FinancialPerspective(Shareholder

look)

BusinessProcesses

(OperationalEffectiveness)

OrganizationalLearning

(Technology)

CustomerPerspective(CustomerTargeting)

Customer TierLevel - Tier 3

Volume

Revenue

Gross Project

Earnings fromOperations

Return on low costVDS Capital

Return on low costVDS Investment

Year over year salesand earnings growth

Working capitallevels

- Receivables

Cash flowcontribution bycustomer

Time to complete thetransaction from startto finish

Measure customersatisfaction with thetransaction

% revenue, volumeand earnings by

channel- Inside sales

- Distributor

- Self serve

- Direct

- Digital

% revenue fromdecommoditizedproducts (CAB,MAK, CPO, newproducts)

Fees emerging fromR&D technologywizards

- Customers

Cost of developingstandardized lowcost productsolutions by product

R&D cost associatedwith providing non-customizeddifferentiatedproducts

Rate of productintroduction bymarket segment

Total R&D as a % oftotal Tier 3 sales

Product marketshare by customer

Service feesgenerated

Cost to serve thecustomer bychannel

- Inside sales

- Distributor- Self serve

- Direct

- Digital

Unit delivered costto customer

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The Balanced Scorecard Dimensions (Tier 4)The Balanced Scorecard Dimensions (Tier 4)

BalancedScorecardFramework

FinancialPerspective

(Shareholderlook)

BusinessProcesses

(OperationalEffectiveness)

Organizational Learning(Technology)

CustomerPerspective(CustomerTargeting)

Customer TierLevel - Tier 4

(Data by CustomerGroup)

Volume

Revenue

Gross Profit

Earnings fromOperations

Return on VDSCapital

Return on VDSInvestment

Previous yearsmonth sales andearnings growth

- Quarterly- Annually

Working capitallevels

- Receivables

(Tier 1 metricsmay apply to

some subgroupsand tier 3metrics mayapply to othersubgroups)

(Metrics will bedeveloped bycustomer group)

(Data by Customer Group)

Feeds emerging from R&Dtechnology wizards

- Customers

Cost of developingstandardized low cost productsolutions by product

R&D cost associated withproviding non-customizeddifferentiated products

Rate of product introductionby market segment

Total R&D as a % of total Tier4 sales

Projected revenue vs. actualfor tactical portfolio reachingcommercialization bycustomer

Projected revenue vs. actualfor strategic portfolio reachingcommercialization bycustomer

Market share bycustomer group by

product

Service feesgenerated bycustomer group(ROI justified)

Cost to serve bycustomer group

Value added VDSintegration level bycustomer group

- Customer ROI

- Eastman ROI

Joint revenue/earnings fromcomplementor

relationship bycustomer group

- Customer ROI

- Eastman ROI

- Complementor ROI

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TheThe Balanced Scorecard Dimensions (Tier 5)Balanced Scorecard Dimensions (Tier 5)

BalancedScorecard

Framework

FinancialPerspective(Shareholder

look)

BusinessProcesses

(Operational

Effectiveness)

OrganizationalLearning (Technology)

CustomerPerspective(Customer

Targeting)

Customer TierLevel - Tier 5

Total leveragedvalue across allcustomer tiers from

Breadth oftechnology andbusiness

% of revenue fromdifferentiated technologyor business model

Customers relativemarket share in theniche

tier 5

- Volume

- Revenue

- Gross Profit

- Earnings fromOperations

Cost to manage therelationship

innovationengagement(use +5 to - 5

scale)

solutions

- Revenue from differentiatedtechnologies

- Revenue from customerintegrated solutions andservices

% revenues fromdecommoditized products

Revenues emerging fromR&D technologypartnerships

Size of EMN marketpotentially impactedby tier customer

Size of additionalrevenue for the tiercustomer innovatedby EMN (preparethese companies foracquisition by tier 1)

- Customers- Complementors