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Marketing and CVM in Practice

What's new in Marketing
and CVM ?

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The Marketing Mix

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The China Syndrome: Opportunity, Threat, Enigma

There is much talk today about the emergence of China both as a market and as an economic force in the global economy. So what does China really represent to the rest of the World?

Fact: it is the largest single country in terms of population. Fact: it has a high growth economy. Fact: it has a very low-cost, well-educated workforce. Fact: there is a commercial awareness and capability within the Chinese people.

At the SCI Europe meeting in Barcelona last month, several speakers addressed themselves to the subject of China. Dr. Jürgen Hambrecht, CEO BASF AG, suggested that the risk of not being in China was far greater than the risks associated with being in China, pointing out - amongst other things - that the level of consumer spending in China over the next 10 - 15 years is going to far outstrip that in mature and advanced economies of today. This perspective was reinforced by Dr.Jürg Witmer, CEO Givaudan. Both companies have made significant commitment and investment in China already and both plan to continue to invest for the long term.

The SCI Europe audience also heard reassuring words from China's former negotiator at the World Trade Organisation, Long Yong-Tu, concerning the commitment of the Chinese authorities to protect Intellectual Property of inward investors to China (a big issue still today).

Jan Osterveld, senior Vice-President at Royal Philips Electronics, confirmed the results of his company's research of the Chinese market, that - amongst other interesting findings - there are some 125 million Chinese consumers who purchase more on the basis of product quality and brand than on price and over 13 million consumers looking to buy premium brands. Whilst this should come as no surprise to many marketers (it represents a mere 10% and 1% of the total population respectively), the sheer scale of such customer segments is impressive - the first being twice the size of many leading European country markets. He also pointed out that China today has 180 cities with more than 1 million population.

China is certainly not as backward as some westerners might believe. There is high awareness of commercial principles, very high standards of education, widespread gender equality in the workplace. The pace of change is also rapid.

View China pictures

• What's New in Marketing and CVM

A recent European Chemical News item picked up on Phil Allen's participation in a panel discussion on customer value creation and the supply chain:

Delegates at the European Petrochemical Association's (EPCA) annual logistics meeting heard Phil Allen, CEO MarketAbility, tell of a recent benchmarking study by his firm that showed only 10% of chemicals producers were "doing a good job" in customer value management.

However, Allen said that while the findings highlight opportunity for logistics service providers to add value through the supply chain process, chemicals producers have been failing to capitalise on the benefits they deliver to customers and have squandered value by pricing ineffectively.

Didier Baudrand, head of UK major BP chemicals' European polymers business, told attendees that commodity polymer producers have continued to try to differentiate between their products when it was unnecessary.

Allen suggested that bulk chemical (he does not like the word "commodity") producers should find better ways to work together when their products were not differentiated in order to find ways to create and capture value for clients - for example from smart supply chain management. He said that producers could then concentrate on increasing value for their customers and improve their own profitability without simply trying to remove cost from the supply chain.

A different approach is used at Degussa to better suit the company's diverse product range. Thomas Bode, vice president of logistics at the German chemicals firm, said each of the company's business units has developed its own supply chain management process and all logistics services are outsourced. He said that complexity is taken out of the logistics process through the decentralised system and that the individual requirements of each business unit and their respective customers were better served.

Allen concluded the discussion by noting that developments in information technology (IT) have added a great deal of value to logistics processes over the last decade, but it was not merely a tool for producers to cut costs. He said IT also offered ways to add value and increase profitability.

• MarketAbility News

MarketAbility extends reach of Customer Value Management and Value-Based Marketing workshops to cover broader industrial and B2B markets. MarketAbility is known in the chemicals and plastics industry for its popular and down-to-earth marketing and customer value management workshops.
Responding to popular demand these workshops have now been re-designed to address the needs of a broader base of industrial and B2B marketers.
THERE IS STILL TIME to book a place on the 2004 workshops which will run in three semesters during March, June and November at The Marketing Centre in Zürich, Switzerland.
For more details please use this link or call Phil Allen
directly on +41 1 783 8777

Book your place on a workshop

If you are to capture the true value for your customer value commitments, you must commit to fulfilling the customer value segment's needs and expectations.
Commit includes five major actions:

Define customer value segment strategy
This must be based on choosing the customer value commitments on which you're going to compete in your target customer value segments

Develop superior offering
Your customer value commitments have to embody superior values and benefits for the respective customer value segment and link the customer value commitments to the brand

Create the right organization
This requires assessment of your current capabilities against the capabilities needed to deliver the customer value commitments competitively and effectively to the target customer value segment and a plan to fill the gaps

Define Key Performance Indicators (KPI's)
Include the key measures and benchmarks customers use to track your value performance

Communicate internally and externally
The customer value commitments must be communicated to the target customer value segments and within your own organization. This means managing both the sales, the marketing communications, and the internal communications processes to provide a clear, consistent message

Read further actions and insights in our next newsletter...