Volatility, innovation, online portal, customer relationship and M & A: These are the five major trends and problems that chemical companies must solve to improve growth, sales and profits in 2019. Challenges for Chemical Companies-
Despite high operational efficiency, the chemical industry will face some obstacles in 2019.
- Fluctuation
Fluctuations in raw material costs, exchange rates and tariffs continue to create a dynamic environment for the chemical industry. Companies that are not flexible enough in contract negotiation or not quick enough in price adjustment will face huge profit pressure. Digital pricing and data analysis will be important tools to significantly accelerate the pricing process. Challenges for Chemical Companies- Flexibility in contract and price management will be key to success in 2019.
- Innovation
The chemical industry is highly innovative. Innovation is an important pillar of China’s competitiveness. However, according to a study by Simon Kutcher, 72% of new products still fail to meet the profit target despite significant investment and good development. Another study shows that enterprises not only think about business too late in the innovation process, but also don’t go far enough. Simon kucher recommended nine steps for successful monetization of innovation, including considering customers’ views and willingness to pay early, evaluating new pricing models and indicators, especially for new digital solutions, and integrating behavioral pricing strategies.
Big data and intelligent algorithms, like the curiosity of BASF supercomputer, further enhance the innovation power of the industry. In the future, it will become more important to gain value through wise profit strategy.
- Portal website
Portal is also becoming a relevant channel to sell chemical products. Customers are also looking for suitable products and suppliers online. Chemical companies have traditionally maintained direct relationships with their customers. Online portals will change these relationships. Contact points with customers will be new and, in some cases, non industry market participants such as Alibaba and Amazon business.
Companies need to ask themselves who should be in direct contact with customers, which products should be in direct contact with whom, and who can access important customer information. Which customers should be served through specific sales channels? Which products are meaningful online? Which new customer groups can be developed in a low-cost way? How to distinguish prices through channels? How to deal with purchasing platforms? These are just some core questions that chemical companies need to answer.
- Customer relationship
Digitalization can also achieve high-quality interaction in the whole customer journey and provide competitive advantages for enterprises. The chemical industry has been focusing on Digitalization for a long time, but so far, enterprises have not made any breakthrough in customer relationship. A study by Simon Kutcher found that 70% of chemical companies are not satisfied with their customer relationship management system (CRM) because of their limitations in providing some basic functions. Without a fully functional and comprehensive customer relationship management system, it is difficult to identify and utilize the untapped potential in the customer journey. This technology will be the key to opening new sales opportunities, but only if it works. To a new level of digital customer relationship. Companies that don’t have a close relationship with customers are losing important information and may lose these customers in the long run.
see also- Industry-challenges-and-solutions-for-chemical-suppliers
- Merger and acquisition | Challenges for Chemical Companies
The industry is facing structural changes. Competitors from China and the Persian Gulf are coming to Europe, putting pressure on chemical companies. In addition, capital market pressures are leading to the breakup of business groups into smaller, application specific entities, such as Dow DuPont. In this context, M & A activities will be another factor affecting the chemical industry in 2019. Over the past few years, we’ve seen the trade multiplier soar to new heights. Expectations of future sales growth are the main driver of this trend. That’s why a reliable assessment of the market is more important than ever in these transactions. As a result, many companies are conducting extensive commercial or market due diligence to gain additional market insight. In the aspect of M & A, more attention will be paid to the commercial aspect, so as to avoid endangering the business continuity with customers and fully release the growth potential as soon as possible.
