MARKETING & INNOVATION
CHANNEL T
Guenther Eberhard and Juergen
Mohrhauer look at enhancing the chemical industry
value chain through the use of an
indirect channel – distributors
he chemical Industry with its value of ca€3,200bn globally is a very significant and important part of the economic system. It supports a multitude of other industries with its base-products, intermediates and solutions. According to Cefic, Europe accounts for nearly 20% (ca€630bn) of the global value. At 26% each, petrochemicals and specialty chemicals make up more than half of European sales, followed by consumer chemicals, basic inorganics and polymers with 22%, 14% and 12%, respectively, according to Cefic. While the industry is having a very high level of direct Business-to- Business (B2B) interactions, nearly 11% of sales (ca€69bn, although estimates vary) go through third-party distribution channels (Source: Boston Consulting Group 2015), which are able to deliver added value to the customers along the supply- chain, beyond pure logistics services.
From place & promotion to value chain The decision on which channel to use to bring a product to the market follows from the point raised about ‘Place & Promotion’ for the offering in the first article of this series (C&I, 2017, 30, 4). In that context, a supplier has two general options: to go ‘direct’ or ‘indirect’. The decision is mainly based on the customers’ service needs and the suppliers’ sales and profit potential at the accounts under evaluation (see Figure 2).
30 10 | 2017
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