Essays on ChemCo - Relationship Management and Network Construction in the Chemical Sector Case Study

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The paper “ ChemCo - Relationship Management and Network Construction in the Chemical Sector" is a potent example of a case study on marketing. In the chemical sector, ChemCo specializes in global chemicals where it produces chemical additives which are then used by other companies or manufacturers to produce and brand other products for the global market. These products include petroleum and oil. Therefore ChemCo acts as a supplier to the global markets as noted by Michel (2003). This company managed to beat its competitors through doing thorough research and development and also by having many branches or suppliers who ensured that customers are well attended to and hence a good customer relationship. Comparison and contrast between the situations in the early decade with the one at the end of the decade in the sector: In the early 1990s, the sector represented an attractive operating environment.

Demand was high and enabled manufacturers and, in turn, chemical suppliers to set premium prices via product differentiation. High demand leads to an increase in prices and then increased the need to supply that good while by the end of the decade, the marketing environment was changing.

Worldwide consumption of chemicals was beginning to plateau, partly due to the fortunes of the Pacific Rim economies, leading to spare capacity amongst manufacturers In the early 1990s, ChemCo had defined three oil market segments which included the global majors’ , the major volume purchasers with an international scale of operation, large nationally-based manufacturers, with dominant positions in domestic markets, known as the nationals’ and comprising about 40 in number, and a remaining tier of hundreds of small, local chemical blenders while by the end of the decade, ChemCo had been able to identify over 300 local business units with whom trade was possible, however this was now reduced to only seven core businesses (known within the sector as the seven Sisters’ ) due to global co-ordination of buying (Dwyer 2002). In the beginning, ChemCo used product differentiation which acts as a competitive strategy where its products were really distinguished its products from the competitors.

According to Michel (2003), differentiation of the product made it more competitive and attractive to its target market like the oil and petroleum sectors which increased the demand for the product from the manufacturers leading to increased sales.

An increase in the demand for a product leads to increase sales and increased national income which then led to favorable economic trends. On the contrary by the end of the decade, the economies of the country were deteriorating due to changes in market trends leading to high prices and reduced consumption of its products which led to price war (Blythe 2005). An increase in the price of products leads to inflation which leads to an economic crisis. Early in the decade, the company and its customers had a good relationship mainly because of the favorable economic trends in the market according to Bowersox, (2002) which made prices to be favorable but later in the decade, the customer relationship began to deteriorate.

ChemCo sold its additive to manufacturers but due to price war manufacturers started negotiating for price reduction from ChemCo while product quality was being ignored which led to a widening gap between the customers and the company.   This made the situation of the company to worsen off product quality is very essential in a business if it has to maintain its customers.

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