Competition from Smaller and More Flexible Chemical Companies Spur Global Players Continued Investment in Market Intelligence

January 11, 2010. Evolving competition is a top concern for global Market Intelligence professionals within the chemical industry but substantial opportunities lie with contributing to sustainable growth and environmental improvement, according to the 2009 Global Market Intelligence* survey. The chemical sector, from oil, gas, lubricants and plastics to agrochemicals, performance products and biotechnology, is undergoing important changes. How will they use Market Intelligence in 2010/2011?

Conducted by M-Brain (formerly Global Intelligence Alliance), the 2009 Global Market Intelligence survey consolidated the responses of 38 senior Market Intelligence executives at some of the world’s largest global or regional chemical organizations, and provided some interesting insights. (The total number of responses globally reached 724.)

Evolving competition is a recurring threat

Whilst overcapacity, increasing raw material costs and Intellectual Property violations remain a concern, the most prevalent threat lies with emerging and evolving competition.

Market Intelligence executives point out that smaller and more flexible companies are reaching the markets faster while achieving attractive specialties margins. They also see stronger influence from new competitors who have been opportunistic during the recession.

Largest business opportunities lie with environmental changes and development of new products or applications

With its wide range of organic and inorganic primary materials, preliminary products and presence in the manufacture of almost all final products, the chemical industry is a central branch of global structures and has a huge impact on environmental development.

Chemical companies are seeking more process efficiencies and greater integration within their plants, in areas such as the utilization of waste heat or by-products from adjacent processes, energy demand and transportation with more products processed onsite. At the same time, innovative products whose ecological performances are quantified in their development stages are in increasing demand.

Chemical Market Intelligence executives see strong opportunities in delivering on sustainable development and expect more research and understanding around greener technologies and applications, such as sustainable animal protein production or photovoltaic development, and specific ecological requirements from customers and end-users.

Other opportunities pertain to finding new applications by industry or geography, for existing products and developing products that are differentiated and closer to customers’ needs.

The Market Intelligence function is mature and efficient in the Chemical industry

According to the 2009 Global Market Intelligence Survey, the Chemical sector is the second largest user group of systematic Market Intelligence. At 74%, their user base is just slightly behind Technology and Media (75%).

Such leadership is also reflected in the fact that information to support important business decisions is widely available (66% of respondents access important information only after a short delay), that a majority of respondents claim decision-making is largely efficient (53%) and that Market Intelligence is used in most/many key decisions (75%).

GIA_BULLETIN_Competition From Smaller N More Flexible Chemical Companies Spur Global Players Continued Investment in MI_Chart1

Whilst a third of the Market Intelligence teams are organised under the Strategic Planning and Business development functions, the majority of teams are organised under the Sales and Marketing functions. This points towards the operational and tactical nature of the intelligence gathered at Chemicals companies.

Chemical companies see the need for more Market Intelligence during an upturn and will continue to invest in Market Intelligence

The intention to moderately increase Market Intelligence activities in the upturn for Chemical companies is high (75%) and half of the respondents plan to moderately increase Market Intelligence investment over the next 2 years.

Given that the average Market Intelligence budget is already amongst the largest of the industries profiled (USD350,000 to USD700,000 – after Technology & Media and Pharmaceuticals & Healthcare), this sets the Chemical industry to be one of the leading contributors to the Market Intelligence field.

The prevalence of Market Intelligence to the Chemical industry was also demonstrated by the fact that the importance of Market Intelligence to companies had remained the same in the downturn.

Looking forward, Market Intelligence focus is likely to increase for North America and Europe and diminish in the Asia Pacific region, which may have to do with capturing upturn opportunities in regions that were more adversely affected by the crisis.

* Market Intelligence or MI is the discipline where organizations systematically gather, process and analyze information from their operating environment to facilitate decision-making.

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