“Understanding your value, driving value, and demonstrating it creates opportunity and creates growth, especially in times of market softness.” – Victoria Meyer
On this episode of The Chemical Show, host Victoria Meyer discusses the importance of getting back to basics and understanding a company’s unique value in order to thrive during market softness. She highlights the story of a materials company that successfully increase sales by emphasizing their value in use to customers. She also discusses the importance of regularly revisiting marketing strategies and market segmentation to adapt to changing market dynamics.
Listen in to this episode to learn about:
- Diving deeper to understand value to your customers
- The importance of demonstrating value to customers
- Customer and market segmentation – why you need to revisit it quarterly
- Considering alternatives including make-v-buy decisions.
This episode serves as a helpful guide for businesses looking to navigate market softness and build resilience by focusing on their unique value and understanding the needs of their customers.
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Have a question or topic you’d like addressed? DM Victoria (King) Meyer or The Chemical Show podcast on LinkedIn.
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Back to Basics: Building Business Resilience in Times of Market Softness
This is Victoria Meyer. Welcome back to The Chemical Show. This is a Thursday Quick Hitter episode, which is a bit more tactical in nature. On these Thursday episodes, I’m addressing topics and questions that I’m hearing from folks in the industry, some relevant news and timely happenings that we’re seeing, and then giving strategic and tactical answers and approaches. The topic of this episode is being resilient during market softness.
So there’s a few things that prompted this topic. One, a business leader told me recently our business is down pretty significantly this year, so I’m helping my think team do different things this year so that we understand our value and that we’re gaining business successfully. Number two, one of the other things that prompted this episode is on episode 102 with John Richardson. We discussed the structural demand slowdown in China, which frankly has global ramifications, as we know, given the impact and the importance of China in the global chemical industry. And thirdly, I am continuing to hear from clients. We hear it in earnings calls and when you read the news reports, demand softness continues in this first half of 2023, largely due to inventory buildup in the supply chain, which still needs to be worked through.
There’s also some inflationary pressures, no doubt, as we’re seeing significant inflation across all regions. And then the other thing I think we’re seeing that affects this is a shift towards services from products. So anyone that’s traveled recently knows that airplanes are full, it is busy, everybody wants to get out and about doing things, not just buying stuff. That has a significant effect on net demand across the industry, at least in the near term. Right? So I would say it’s not necessarily structural changes, although there could be some, and it’s also not necessarily a widespread economic slowdown.
As I record this episode, we’ve got reports of the S&P 500 moving back into bull territory. Cruising, I guess, is what I would say. I’ve talked to somebody just today that said we’re in growth mode. We’ve got a new business and new products, so we’re not comparing it to what we used to be. We’re focused on growth in market. We’re certainly seeing a wide range of economic conditions depending on geography, depending on the specific markets and end uses for products and services. But no doubt there is a market softness on an overall basis.
What I find to be really critical to resilience in these times of market softness is getting back to basics. So, as a former boss of mine was fond of saying, a rising tide raises all ships, but when the tide is out, as it is today, that’s when foundations are built. And I think we can all agree that there was a rising tide, there were some great results and a lot of momentum and changes across the industry in the past two years. But now is the time for resilience and getting back to basics.
So let’s talk about that. First of all, number one, identify your unique value. This is back to basics 101. Understand the value that your company, your products and services are bringing to the table and sell it, right? So a materials company told me recently that they had done some work around this, that they said, you know what, it’s a little bit harder to go out and market and position and sell our products and so we have to do that. They did the work to basically go in and show a customer how their product performed and lasted twice as long as the competition and delivered double the results. Work that maybe they would not have done a year or two ago, even though it was good work to be done. But they were busy. They were busy, they were full, but they said, we need to go do some extra work. So they went back, they understood the value, and they really talked value and use to their customer. The result was, they expanded their orders from two sites to eight sites without lowering price.
In fact, price, as I’ve said before, is a bit of a red herring. It is an easy thing to say, oh, you didn’t win the business because of price, but there is always something else. And in fact, one of the things that came out recently from Grace Matthews, an M&A firm in their recent newsletter, which I’ll attach in the show notes, is that as they’ve studied businesses earnings reports, businesses that they know and that they’ve studied. One of the things they’ve said is, while volumes are down, companies seem to have had more success in maintaining price increases than in prior years, given their increased stickiness of their customer base.
So what leads to stickiness? Great customer experience and a lot of other things. A reshuffling of global supply chains and higher service levels. So getting to value, getting back to basics, understanding your value, driving value, and demonstrating it creates opportunity and creates growth, especially in times of market softness. You can’t assume that people know what the value is. That your company, that your product, that your services bring to the table. You have to identify it, articulate it, and share it. That’s one.
The second piece is diversification of customers and markets. I almost tie this back to classic market segmentation, right? Do you know who your potential customers are? What’s important to them and how they work with you. Have you identified those new opportunities? Have you segmented your markets? In the past several years, many people thought they’ve done that, and maybe given the softness of second half of 2022, you did. You did some of this work. But here we are, almost into the second half of 2023. Market is still a bit softer than we’d like it to be, and it’s time to revisit it.
This is basic Marketing and Business Management 101 understanding your markets, segmenting your market, understanding your customers. And really, you need to be doing this at least twice a year and in times of market softness, quarterly, revisiting it. Going out and getting that information and bringing it back, bringing it back into your models, bringing it back into your segmentation, bringing it back into your understanding of your customers and markets. That’s number two.
Number three, evaluate make-or-buy decisions. This is not always a popular one because it feels in some cases like you’re waving the white flag, right? That maybe you shouldn’t be making this product, but you should be buying it. And in fact, as one leader told me recently, given the low price of materials on the market from China, we were wondering if we should just build our inventory or slow down our production and ride it out. “It” being this time period where demand is softer and the pricing is less than ideal. This is a pretty typical approach, actually. I put it in the back to basics category.
When you think about evaluating, make-or-buy decisions, and we see this a lot in certain markets, right? Certainly Olefins and Polyolefins, we will see idling of assets. We will see slow rolling of turnarounds or repairs and restarts. And in many ways, it’s really about strategically managing market supply and demand, and pricing and profitability, right? It is really an appropriate time. When the market is soft, do you make or do you buy? And understanding what those things are.
Those are the 3 key items. When dealing with market softness, create business resilience by:
- Identify your unique value, communicate it, and sell it to your ideal customers.
- Diversity and segment your customers
- Evaluate make-or-buy decisions.
Your response to market conditions is different today than it was a year ago. You’re making different operating decisions, manufacturing decisions and marketing decisions. It’s valid and it’s legit, and it’s going to help you ride your way through this market softness and build your resilience.
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