This week’s blog post summarizes recent survey findings published by Chemical Week, “Gaining Local Perspectives on a Global Business.” A transcript of the study can be found here.
In Spring 2010, the American Chemistry Council (ACC) and Accenture commissioned a study of about 1300 companies comprising the chemicals value chain: buyers, suppliers, converters, and distributors. Over 400 respondents were from chemical companies and over 500 respondents were from the manufacturing sector, while about half of those surveyed were located in either North America or Europe. Using conjoint analysis, six factors were compared via classic trade-off:
- Quality & Performance,
- Sustainability, and
Just as in other markets, one of the key survey findings was that product quality and performance was 29% more important than price alone. Many customers are willing to pay a premium if the company can deliver quality and supplier reliability better than the competition. For example, customers of chemical companies place a 56% premium on reliability of supply over price and a 49% premium on quality over price.
Note that the focus on quality is at odds with another finding from the study, namely, that 40% of chemical companies and buyers globally agree that the products are not differentiated among suppliers. The difference in perception is even more pronounced in North America where approximately 60% of chemical companies and buyers indicate that products are NOT differentiated from competitors.
Buyers around the globe are also interested in innovation that helps improve reliability and quality, and can reduce costs. Less important to chemical companies and buyers are factors in sustainability relative to cost or price. However, retailers are more concerned about sustainability factors, especially related to social functions, safety, and energy efficiency. Of least importance in the firms surveyed were product features and functions, as well as flexibility, which perhaps is indicative of the perceived indifference between products in the chemical industry.
Thus, companies need to move beyond treating customers as “one-size-fits-all” and instead identify customers with individual needs. A customer-centric approach will utilize market and customer segmentation to assess profitability and higher-value customers in the supply chain. Cross-functional teams will help firms instill deep customer knowledge in the value chain, including R&D, marketing, and branding efforts.
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