Chemicals

Aligning customer needs and product offerings

February 1, 2021

RESEARCH REPORT

In brief

Accenture’s 2020 Global Buyer Values Study for Chemicals found that companies need to better align their portfolio of offerings with customer needs.
This is the fourth in a series of reports that explore the study findings and identify actions for companies to take to be more customer centric.
While chemical companies have invested money and effort to understand how customers view their offerings and what they really value, gaps remain.
Closing the gaps requires companies to reevaluate their offering portfolio, know the true cost to serve customers and refocus product innovation.

In the chemical industry, product and service portfolios have been expanding to support companies’ moves into new markets; to serve changing customer requirements; and to meet the increasing demand for innovative products and services that allow customers to differentiate their own offerings. As companies work to manage these larger, increasingly complex portfolios more effectively, they need to ask two key questions: Are all these efforts worthwhile? And which offerings are really adding value for customers—and which aren’t?

Chemical companies have invested a great deal of money and effort over decades to understand how customers view their offerings, and what they really value. However, Accenture’s Global Buyer Values Study for Chemicals has found that there are still significant gaps in that understanding—with often sizable differences between what customers believe is important and what chemical sellers think that they find important. And dissecting buyers into two groups—converters, who transform chemical products for manufacturing segments and end-use markets, and manufacturers, who produce finished products for industrial sectors and consumers—reveals further disparities. (Figure 1)

Looking at converters, the study found that they value a short time-to-market and leadership in innovation more than sellers think—but beyond that, they are essentially looking for what might be called a “no frills” approach from sellers. For example, sellers overestimate how much importance converters place on value-added services, customer application development and portfolio breadth and depth. Overall, these findings reflect the fact that converters often have significant expertise in modifying materials and don’t look to sellers for help on that front. But they are interested in accessing innovation leadership that can help make their products more competitive.

Figure 1: Perception gaps between sellers and buyers for product offering attributes

Perception gaps between sellers and buyers for product offering attributes - Value added-services, Custom application development, Portfolio breadth and depth, Short time-to-market for new products, Innovation leadership in relevant markets.

The research also suggests that chemical companies’ beliefs about what their customers want are more closely aligned with the preferences of manufacturers than converters. In particular, the responses of sellers and manufacturers were essentially the same when it came to the value placed on the breadth and depth of a seller’s product portfolio. But there are still some important gaps to consider. For example, manufacturers usually have less of a focus on modifying materials and are thus more interested than converters in value-added services and custom application development. Sellers still tend to overestimate that interest, although the gaps here are less significant than they are with converters. And to a lesser extent, sellers overestimate the importance of innovation leadership and short time-to-market for new products among manufacturers.

In general, it appears that chemical companies tend to overestimate the expectations of their customers across many product and service attributes. This can lead them to overdeliver or invest in attributes that are of relatively little importance to the customer, thereby eroding profitability.

Chemical companies have an opportunity to rationalize their offerings in a way that reduces cost and complexity, and better aligns with customer needs.

Moving from insight to action

With these differing seller and buyer perspectives in mind, chemical companies can improve the management of their portfolios by:

Streamlining the product portfolio for converters: Companies should build a set of “no frills” offerings by removing unnecessary SKUs and then focus on developing innovative products that target converters. In doing so, however, they should be careful not to eliminate products that are relevant to manufacturers—an especially important point since manufacturers appear to value access to a broad and deep set of offerings.
Reevaluating the service portfolio: Companies should assess their technical support, joint solutions development, market intelligence, inventory, analytics and other service offerings, and develop a clear understanding of which of their services customers actually value. This is particularly relevant for the manufacturer buyer segment, which places more importance on these offerings. Chemical companies can also increase their use of automation to provide these services at minimal cost. In addition, they can adopt a multichannel approach that allows them to deliver differentiated services to various types of buyers in a targeted fashion.
Developing a deeper understanding of costs: Companies need to have visibility and transparency into the cost of serving customers. This is key to shaping a profitable offering portfolio and avoiding complexity and features for which nobody will pay. To be successful in this effort, companies can benefit from having a widely used CRM system, robust data management and analytics capabilities, and an objective assessment of the company’s offerings versus those of competitors.
Refocusing product innovation: Companies should enhance their product innovation capabilities and invest in reducing time-to-market for new products for converters. To do so, they may be able to move some innovation funding and talent from their businesses that serve manufacturers since they are currently overestimating the importance of these attributes for this buyer group.

Overall, the research points to ways that chemical companies can more closely align their product and service portfolios with what their customers want. That can help them not only better meet customer needs and boost revenue, it can also help them rationalize their portfolios to reduce cost and complexity, and focus often-scarce resources on the things that matter most to customers—and ultimately, to their own bottom lines.

Missing out by misunderstanding customer needs

About the research

The Accenture 2020 Global Buyer Values Study for Chemicals assessed and compared the perspectives of chemical companies (sellers), their customers (buyers, including converters and manufacturers), retailers and end consumers. The study identified areas where seller and buyer perspectives are aligned and where they differ, and where sellers have an opportunity to do a better job of meeting buyers’ needs.

This report covers only a portion of the study’s extensive findings, which can be used to provide an in-depth understanding of a range of factors affecting customer centricity—for specific companies, as well as the industry as a whole. The next report in this series looks at what the research means for the customer service function at chemical companies.

Thank you to Accenture’s David Apel, Bruno Djapanovic, Michelle Ganchinho and Karin Walczyk for their help in executing the study and writing this report.