Marketing Audit Siemens I&s Group

Marketing Audit

Siemens I&S Group: USFilter

MKT 551 Marketing Management

Donna Guevara

Karen Yunker

December 7, 2005

TABLE OF CONTENTS

Executive Summary 3

Environmental Aspects 6

Economics 6

Markets 7

Technology 8

Marketing 9

Objectives 9

Strategies 10

Tactics 11

4 P's 11

Product 11

Price 12

Place 13

Promotion 15

Organization 15

Executive Summary

Siemens Industrial Services and Solutions (I&S) specializes in developing systems solutions for customers, who include some of the world's largest corporations and municipalities. I&S contributed Group profit of US$162 million in fiscal 2005, up 46% from US$111 million a year earlier. Profit growth was due primarily to a full-year contribution from the Group's water systems business, acquired in the fourth quarter of fiscal 2004, backed by Group-wide earnings improvements. Sales climbed 26% for the year, to US$6.306 billion, including the water systems business and revenues from the portion of the VA Tech acquisition allocated to I&S. The acquisitions also contributed strongly to the year's 31% growth in orders, which reached US$6.652 billion. Effective with the beginning of fiscal 2006, I&S includes Siemens' Postal Automation and Airport Logistics divisions, which were formerly part of L&A.

The fourth quarter at I&S followed the pattern of the full year. Group profit rose to US$60.84 million from US$40.94 million a year earlier on broad-based earnings improvement, which more than offset amortization effects related to VA Tech. Acquisitions drove 42% growth in fourth-quarter sales and 39% growth in fourth-quarter orders.

Siemens recently purchased USFilter Corp. for US$993 million, a company that is based in Palm Desert, California and in Houston, Texas. US Filter is one of the leaders in providing "municipal and industrial water treatment products and services". This particular sector is managed by Siemens' Industrial Solutions and Services (I&S) group.

The sale of USFilter Water & Wastewater Systems and the Water & Wastewater Services & Products businesses for US$993 million was completed on August 2, 2004. Veolia Environment (VE) and Siemens had signed an agreement regarding the sale in Paris on May 12.

The sale consummates a process that began at the end of September 2003 with the announcement that VE was focusing business efforts on the long-term operating contracts business worldwide and that USFilter would be divested as "non core" to the Veolia business.

The Water & Wastewater Systems business supplies and services water and wastewater treatment systems for municipalities and industries. These systems treat municipal and industrial wastewater, potable water, process water, groundwater, sludge, and odors. The group includes leading brands like Envirex, Zimpro, Wallace & Tiernan, Memcor, Jet Tech, RJ Environmental, and Ionpure.

Pertinent facts about this business:

* $720 million business in 2003

* Approx. 3,400 employees worldwide

* 33 locations worldwide

* 3 major business groups: Industrial Equipment Group, Municipal Equipment Group, Chemical Feed & Disinfection

The Water & Wastewater Services & Products business provides water purification products and services for a wide variety of industrial and institutional applications. The Westates Carbon business is also part of this group, as are the Recovery Services, Ion Exchange, and Hydrocarbon businesses.

Facts about this business:

* $437 million business in 2003

* Approx. 2,500 employees worldwide

* 115 locations worldwide

* President: Chuck Gordon

Together, the Systems and Services & Products businesses had $1.1 billion in revenues in 2003. The groups employ 5,900 people worldwide.

The addition of water treatment to the Siemens portfolio will enhance Siemens total solutions offering. For example, where Siemens has been able to provide an industrial client with a complete manufacturing process, or a municipality with important equipment and solutions, it will now be able to include the management of water in the process. And of course, water is essential to just about every municipal and industrial process there is

Importantly, USFilter will be the sole water business platform in Siemens, and Siemens will be expected to grow that platform on a worldwide basis.

USFilter is the leading water and wastewater systems and services business, and has integrated the industry's top brands and companies over the last 13 years. USFilter has the leading share of the North American water and wastewater markets, and is moving aggressively into global markets. USFilter is technology driven, with a focus on innovation--its business objectives match those of Siemens perfectly.

Siemens had a good year in FY 2005. New orders were up 11 percent over 2004, and sales were up seven percent.

While not all groups performed at targeted levels, the I&S group-where USFilter resides-recorded a 31 percent increase in new orders and a 26 percent increase in sales over the previous year. Much of that was due to USFilter. USFilter hit targets for earnings, bookings and revenues.

Even more encouraging was the fact that the Siemens 2005 report called out USFilter and the water market as an important part of the company's future. Water is one of the four "megatrends" that Siemens has identified as market opportunities driving its infrastructure network and solutions business, and Siemens noted that the global market for