After an anemic growth of 2% in 2016, major players in the chemicals industry are struggling to bring profitable expansion to their businesses. In the case of the chemical companies involved in petroleum-based products, the decline in the prices of oil has had a negative effect on their sales. Industry experts believe the next few years too will be rather rough for the chemicals industry, given the changes in the economic structure, the inherent uncertainty in the market, and hyper- competition between the players.
It is in this scenario that established names in the chemicals industry are looking for strategies which can be converted into actionable plans. Strategies which can act as a catalyst for growth in the chemicals industry are:
1. Striking a fine balance between pricing and volume
It is the time that chemicals companies understand that high volume of chemicals sale will not necessarily fetch them higher profits. The structural weakness of the chemical industry provides a limited scope for high demands from consumers. Except for renewable products like biopolymers, the demand for conventional chemicals has rather dipped at a significant pace. Manufacturers will benefit if they shift their focus from increasing the volume of sales, to improving their pricing strategies. Pricing excellence, the most overlooked aspect of sales strategy, has now emerged as a major driver of short-term value-capture benefits.
2. Revamping product portfolio
One of the best ways to stay relevant and competitive in the industry is to revamp and expand one’s product portfolio. Major names in the chemicals industry like Bayer, Dow, and DuPont have already entered into mergers and acquisitions to gain a better position in the market. By expanding the product portfolio, manufacturers are moving into lucrative areas which are sure to enhance the overall profitability of their business.
3. Adoption of digitization
Digitization has emerged as a panacea for many businesses. The chemicals industry too has woken up to the advantages of going digital. Right from operations, to present themselves as solution providers – digitization has touched almost all the aspects of the chemicals industry. It has enabled manufacturers to move ahead from just being ‘product sellers,’ through the integration of manufacturing and business processes, and optimizing the sales and marketing strategies. Machine learning and artificial intelligence have further enhanced the overall functioning of the chemicals industry. Not only has it downsized the workforce, but the entire process of operations, redesigning work strategy, and adding an element of localized control has given a competitive edge to manufacturers in the industry.