The chemical industry is a sector that has been historically resistant to change. Even in this digital/social media ag, the chemical industry spends a paltry 8% of their revenue on marketing. That doesn’t cut it now a days, and if looming trends are any indicator, it certainly won’t cut it in the future.
Below we look at three major trends that are going to define the chemical industry for the foreseeable future. Identifying them now will allow company owners to shift focus from old sales practices and invest in modern marketing initiatives that leverage these trends for greater brand awareness and increased ROI.
The circular economy
The notion of the circular economy has been getting a lot digital ink in online trade publications precisely because the implications are so far reaching. Raw materials are getting scarce, and with each passing year the impact on the environment due to carbon emissions is more glaring. This goes to the heart of sustainability. That puts many on edge, because the industry response in the face of a scarcity of materials typically means retrenchment and budgetary cuts to offset higher costs.
But there’s a silver lining here. This an opportunity for the chemical industry to take the lead on innovation and establishing end-to-end concepts. Since chemical production at a fundamental level requires molecular-bond modification, this results in changing the very nature of the product in question. It’s an energy-intensive process that leads to waste—the old “take, make, dispose” model that has traditionally defined the chemical industry. However, consulting firm Accenture published a report where they identified five loops for an economy where modules circulate. These are:
- Renewable raw materials
- Mechanical recycling
- Chemical recycling
- Product reuse
- Carbon utilization and energy
Accenture was straightforward in acknowledging that to create and operate circular economy processes would require significant investment; but they also noted that there are great benefits too. The growth potential for chemical products part of this new circular economy are estimated to be at 26%. And this is on top of helping to reduce energy consumption. The European Chemical Industry council (Cefic), in fact, suggest recycled end products can reduce European energy consumption by 37%.
There’s a crucial marketing opportunity here too. If you’re going to be part of this new circular economy, then you should leverage the growth that comes with it for greater brand awareness. Consider this statistic from an Eco Pulse study: half the population considers a company’s environmental reputation before making a purchase. Yes, we’re living in a green world, and to stay competitive in the marketplace you need to promote your green initiatives.
Those who may think that this new reality doesn’t apply to their B2B chemical industry might want to think again. The rise of online and mobile means the lines between B2B and B2B sectors are getting ever more blurred, to the point all industries are becoming consumer-facing ones. So instead of downsizing your chemical production operation because you can’t overcome the reality of diminishing raw materials, embrace the circular economy and promote your new, greener initiatives every step of the way.
Demographics are changing
And that means customers are getting younger. Remember that statistic mentioned above about how these days, customers consider a company’s green reputation before making a purchase? Well the same report states that this is particularly the case with the millennial generation. According to stats this group is twice as likely to choose a product based on the manufacturers environmental record.
Then there’s the issue of what these new, younger customers expect from brands, even in the chemical industry. The internet and mobile technology allow customers to access more options for products faster, and they expect instant communication. What that means is that chemical companies need to invest in the technology to efficiently market to this new audience as well as provide the sales experience they crave. More on this below.
Rapid technological advances mean the chemical industry won’t have any choice but to invest in tech as a business model—if nothing else than to achieve greater output at lower costs. The way chemical companies will benefit most from technology is through digital transformation. That means investing in AI and machine learning to help process ever greater amounts of digital data, as well as cloud-memory computing, the Internet of Things (IoT), and even blockchain technology. This is the essence of Industry 4.0, and it’s the reality of today.
Marketing can also use these technologies to offer the millennial audience the inter-connected, data-driven experience they’ve become accustomed to. AI can facilitate customer service through the use of technology like chatbots, which can answer a potential customer’s question immediately and thus help move them down the sales funnel. IoT sensor technology can allow you to monitor customers’ process parameters in real time. And advanced algorithms can help you better analyze customer buying behavior and adjust product portfolios accordingly.
Taken together, the above three points should prove one fundamental new reality: those who are early adopters of new technologies can be game-changers within the chemical industry. Of course, this all hinges on recognizing your new, younger customer base. Market to them in the language of today, and the sky’s the limit.