INSIGHT: Why chemicals struggle to market

15 October 2008 15:24  [Source: ICIS news]

By Nigel Davis

BRUSSELS (ICIS news)--Get your marketing right in chemicals and you can add considerable additional value to product lines and businesses.

Strategic marketing (SM) is the approach that helps you understand better than anyone else what it is that drives value for your customer.

It helps you respond with a differentiated offering that means you can relate (product) prices to value. For the best practitioners it can add considerably to the bottom line.

But is anyone in Europe practising strategic marketing effectively? And if not why?

The results of a study showcased in Brussels this week indicate that only 25% of European chemical companies are doing SM.

Some 50% are what the authors of the study call “strategic strugglers”. They want to change, but they can’t.

In the current operating environment, and with the threat of an extended sector downturn, the marketing strugglers are likely to find business life just that much more difficult.

A quantitative benchmarking project from GEMS Europe has shown that SM, when it is done right, can add between 5% and 20% to operating profits.

GEM was working in collaboration with the European Chemical Marketing and Strategy Association (ECMSA) and Market Planning International.

But the project has also shown that while many companies say they want to get closer to the customer to generate greater value they often do not.

This is because SM is not being driven from the top, GEMS Europe CEO Phil Allen says.

Senior leaders in the sector simply do not understand the power of SM and what it can bring to an organisation, he adds. An SM workshop on Tuesday highlighted this aspect of the study results.

SM is the driver of innovation in its broadest sense, Allen says. And he suggests that innovation is not just about products, but also about organisations' business models and the ways in which companies approach the market.

The problem is that many chemical companies aren’t working that much more closely with their customers even though they may want to. There are two significant exceptions: BASF and Dow Corning.

The SM effort in both is driven effectively from the CEO down using appropriate metrics and measurement, Allen says.

The companies also pick the right people from within their organisations to run the marketing effort and support them with appropriate training.

The BASF SM push comes under its “Helping our customers to be more successful” banner.

In a challenged operating environment, more effective marketing gives companies another lever to pull to help them generate more cash. It can be an effective parachute, Allen says.

And in a growing market it can be a rocket that keeps a company ahead of its competitors.

Strategic marketing is all about focus on the future and on longer-term growth. Its practitioners believe it to be the main driver of innovation in both technology and business.

To discuss issues facing the chemical industry go to ICIS connect

By: Nigel Davis
+44 20 8652 3214

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