INSIGHT: Leveraging the power of the brand

17 March 2006 15:48  [Source: ICIS news]

By Nigel Davis

ZURICH, Switzerland (ICIS news)--Chemical companies have tried to better market their products in recent years with patchy success but now, picking up on lessons learnt in other industries, they are working to establish brand recognition.

Industry marketers have sought to drive greater segmentation and to hold on to existing customers longer in their search for value. The results have been apparent in stronger sales growth for some through difficult times but by no means all. Received wisdom suggests that the specialty chemicals players have performed best.

But marketing practitioners in the sector still point to significant shortfalls. Chemical producers have never rated highly in terms of their marketing expertise. That is because they are largely run by engineers and predominantly product focused.

But times are changing. The big companies, in particular, have become convinced of the power of the brand and how they can squeezes a lot more from commodities as well as semi-commodities and specialties. Others are beginning to follow.

A couple of the majors have realised they need to get serious about marketing, says Phil Allen who runs the marketing excellence practice MarketAbility here. He mentions BASF, which has adopted the slogan ‘help our customers to be more successful’ and Dow Chemical.

His star performer in the sector is Dow Corning which has effectively developed a separate brand with its low cost and commodity oriented on-line service Xiameter. Akzo Nobel is also taking strides towards better marketing, he suggests.

Allen has tried to persuade chemicals companies about the benefits of better marketing for years and been frustrated time and again. But slowly, he is seeing a change.

A key factor has been leadership and the acknowledgment at the highest level that a chemical producer does not have to simply sell its products on the basis of price or even technology.

Even commodity producers can be better service providers or, critically, offer the sort of reliability that sets them apart from the competition. Allen stresses the importance of reputation, the corporate brand perhaps, that sets some firms apart.

There is an inevitability about commoditisation but Allen suggests time and again that you have to look beyond the product. Branding and reputation become vitally important for those firms who want to get out of the commodity trap.

Not so long ago a focus in the sector was on customer service but as this aspect of the package itself becomes commoditised you have to move on.

It is noteworthy that where some companies lead others try to follow. So sector wide we are beginning to see times change and firms thinking more not just about the customer but about value creation and their offerings. “We need to energise more companies to take a lead and be better marketers,” Allen says, and he is right.

With better marketing as part of the mix, chemical producers will have the chance of staying more competitive longer.

By: Nigel Davis
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