There is pressure within the chemical distribution industry for a new approach to strategic marketing to meet the needs of supply networks.
Strategic alliances between companies, partnerships between suppliers and buyers, and cross-organisational logistics management are all increasingly seen as things to consider in the expanded concept of strategic marketing for business development, according to Natalia McDonagh, Head of Strategic Marketing at Surfachem Group.
As more companies within the chemical industry create partnerships with other similar businesses across their regions, in order to increase coverage and purchasing opportunities, a focus on growth via collaboration on innovation and the flexibility of business partners is seen as invaluable.
Bespoke product solutions, co-operation in research and development and joint software in the distribution process can be the result. In the specialty chemicals industry in particular, there is an unmistakable trend toward more innovative solutions, where a higher proportion of companies are co-operating with customers in research and development than in other B2B sectors.
Companies increasingly recognise the value of long-term exchanges with trusted partners. This forms competition between strategic networks. Indeed, the distribution industry can be seen as a series of such networks. For instance, a distributor might work exclusively with a supplier in order to share resources and market knowledge, allowing them to compete effectively with other distributors in similar set-ups. Chemical distributors have the advantage that they have direct access to a large element of the customer base and so already play a critical role in understanding and communicating with customers.
Within individual companies, a successful sales and marketing team can be created through a five-pronged approach. Inter-functional coordination, profit emphasis, competitor orientation, customer orientation and responsiveness are all crucial, she argues. Involving other departments in the marketing process, such as the sales and customer service teams, can also allow marketing teams to tap into knowledge within their organisations, she adds.
“A multiskilled team is best,” says McDonagh. “Ensure you have a strong strategist, a technical and IT expert, and above all, a skilled project manager. A typical innovation project at Surfachem, for example, would involve analysing new technology possibilities by identifying industry trends and "white spots" within the portfolio; brainstorming the concept of formulated solutions by using the ingredients to tackle formulation challenges- but also to inspire our business partners, to "challenge conventions, robustly"; our technical facility will conduct development and testing of the proposed NPD concept / commercialisation, while marketing offer global positioning, specialising according to market needs if necessary. Industries increasingly interlink: we often connect ideas to better address the specific needs of customer industries, for example, food and personal care, or food/pharma/personal care for cosmeceutical concepts, or household/industrial and institutional cleaning. The need for cross-industry and cross-functional skills is on the rise: we successfully pool our skills, expertise, knowledge and capabilities from across Surfachem and 2M businesses.”
In terms of marketing the chemical industry as a whole, McDonagh admits that changing entrenched public opinion is still an uphill battle. Chemical associations encourage companies to team up with universities (Surfachem's own technical facility is located within the 3M Buckley innovation Centre at the University of Huddersfield, UK) and form external partnerships. The CEFIC Responsible Care awards meanwhile are now in their 10th year.
While the European industry works on its reputation at home, more and more companies are also looking to grow their operations in multiple countries. A number of organisational aspects are important within the marketing strategy. The structural location of marketing and sales groups, the cross-functional dispersion of marketing activities, and the relative power of the marketing sub-unit.
“You need to be flexible and open-minded so you can adapt to different people and different approaches to work,” McDonagh explains. “Communication is key and the drive to really want to achieve your goals is essential. The head of marketing also needs to be hands on, as well as a good delegator. Significant time needs to be invested into teaching the overseas teams, mentoring and developing them, while being strict on aspects such as corporate branding, social media policies, and marketing tactics, to name but a few”.
The management of a multiple-supplier model is even more challenging when a distributor targets diverse markets, Service standards are likely to vary across countries, regulatory and legislative norms differ as do ethical and responsible business practices. All this may lead to suppliers not accurately understanding the support, operating standards (sampling, order delivery) and benefits expected from products (price or quality expectations) that their distributors expect of them. Limited knowledge of the market may lead to a supplier being dissatisfied with the short-term performance of a distributor. Due to the complex nature of industrial markets, expectations of supply chain partners are truly multi-faceted, and usually stem from the demands of the market. The company needs to develop the capability to manage the entire supply chain, including import and export management, warehousing solutions and value-added services, such as labelling and invoicing.
Market orientation is not just the domain of a sales & marketing department; it is an ingrained ethos, a culture, an organisation’s approach to business. That is when it is transformed into a dynamic capability. Market orientation is more than just bringing customer needs into the strategic decision-making; it requires a specific organisational culture that focuses on delivering value to customers through the ongoing monitoring of market conditions and the adaptation of organisational responses.
The article is published in FECC Supplement 2015 and is courtesy of www.icis.com