Sales and Market


Since WTO accession, competition in China's chemical products
market has become fiercer, and a diversified market has
developed with the co-existence of large state-owned
enterprises, multinational chemical companies and private
enterprises.


  1  Marketing features of chemical products

Marketing of chemical products is very different from other
industrial goods. There are differences in enterprises,
products and marketing targets. Marketing strategies in various
chemical companies are also different.
    1) Characteristics of products - intermediate nature of
products, value addition in processing, substitution in
application, alternatives in production technology, high input
in development, high proportion of fixed cost
    2) Characteristics of the market - manufacturers being major
buyers, large market scale, repeated purchases, derived demand,
existence of mutual substitutes
    3) Characteristics of buyers - stable relationship, special
clients
    4) Characteristics of distribution and service channels -
direct sales for key clients, distributors for common clients,
marketing on the Internet, technical service
    5) Characteristics of sales promotion - technology
promotion, little advertising promotion
    6) Characters of price - bidding, negotiated price, price
elasticity
    There are roughly 5 marketing modes today in chemical
enterprises, both at home and abroad.
    (A) Enterprises - distributors
    Advantages: The sales volume can increase quickly. The cycle
of market entry is short. The market effect is quick. The input
of manpower and materials is small. Partial technical services
can be provided.
    Disadvantages: The transaction cost in establishing stable
relationships with large distributors is high. Distributors
easily turn coats. The management and control of distributors
is quite difficult. There are many sales links and the product
price is high.
    (B) Enterprises - exclusive distributors
    Advantages:  Sales regions are well defined. Exclusive
distributors have great enthusiasm. Exclusive distributors can
help handle related affairs in their regions. Exclusive
distributors have great loyalty to the company. Interests
between clients, distributors and companies are highly
integrated. The market understanding is deeper and marketing
targets have greater accuracy. Competitors can be controlled.
    Disadvantages: When distributors become exclusive
distributors, despite favorable policies it is hard to make sure
that they do not sell products of other companies. Enterprises
give exclusive distributors great favors and support and the
profit in enterprises is reduced.
    (C) Enterprises - agencies
    Advantages: The market share can be expanded. The cost in
the construction of sales networks can be reduced. Agencies have
great enthusiasm.
    Disadvantages: The payment of goods from agencies is not
timely. The technical support agencies can offer is weak.
    (D) Enterprises - offices (direct sales)
    Advantages:  There is deep market understanding and timely
and accurate information feedback. Communication between
enterprises and clients is convenient. It is easy to provide
technical support and service. The price can be easily
controlled and the profit can be increased. A unified marketing
strategy facilitates the upgrading of enterprise image.
    Disadvantages: Enterprises need to apply great quantities
of manpower and materials. Enterprises have to bear risks in
distribution. The cost of supervising marketing systems is
increased.
    (E) Composite channels
    Advantages:  Defects in the above-mentioned four marketing
modes can be removed. Services can be provided to large, medium
and small clients. The market share can be increased.
    Disadvantages: Management is more complicated. "Channel
clashes" may easily appear.


  2  Marketing concepts of multinational chemical companies

2.1 Own chemical marketing systems with specified management
As chemical products have great many varieties and brands and
the properties, applications and client features are also
different from product to product, sales systems in
multinational chemical companies usually have classified
management according to product types. Specified sales systems
are implemented. For example, BP has established six business
divisions including acetic acid, polyolefin, alpha-olefin and
titanium dioxide. Each division undertakes the sales of its own
products. Units offering support to business divisions include
materials flow and logistics management, market development and
product research and development. Each division is responsible
to a business vice president of the company. After its
reorganization of 2003, Bayer has three divisions - material
science and technology, health care, and crop science and
technology. Under the division of material science and
technology there are four units - PC, PUR, TPU and CAS - in charge
of production and sales.

2.2 Provide complete technical services to clients
Multinational chemical companies all highlight technical
services related to products. They set up technical service
departments with clearly defined duties and strict requirements.
Synthetic material and fine chemical producers, in particular,
usually have close relationships with downstream users on joint
research and development of product applications and provide
all-round after-sale technical services. For example, 3M of the
United States requests technical service personnel to reach
clients within 24 hours after clients have raised questions.
Technical service personnel pay regular or irregular visits to
clients to solicit their needs and help them solve technical
problems. Another important task of technical service
departments in multinational chemical companies is to conduct
close coordination with sales departments and jointly develop
markets for new products.
   It has already been more than 40 years since Chevron-Phillips
of the United States first set up the Plastic Processing
Application Technology Center (PTC). PTC has conducted a great
deal of work in processing conditions, application sectors and
processing equipment of new resin products in the company and
has made remarkable achievements. Its staff also visits resin
product clients, conducting technical training and handling
client complaints. PTC has become a bridge between research,
production and sales departments and clients. Technical
services provided by PTC have become one of the most important
factors for the success of the company in occupying market
shares.

2.3 Use material flow services of a third party to handle product
transportation
In advanced countries, multinational chemical companies usually
use material flow services of a third party to deliver products
to clients. They form strategic alliances with material flow
companies to provide quicker transportation and more convenient
services to clients' satisfaction. For examp