Marketing Petrochemicals
Abstract
Petrochemicals are a word used to mean all the chemical compounds or products that are obtained from petroleum and natural gas. Petroleum and natural gas are used in making petrochemicals since they are cheap and available. Their processing procedure to obtain the petrochemicals is also easy. Examples of primary petrochemicals are aromatics, methanol and olefins. From the primary petrochemicals, intermediate and derivative products can be obtained through chemical conversions.
The chemical conversion usually varies depending on the desired end product. Petrochemicals, just like any other manufactured or processed commodity has to be marketed well in order to make it popular among the public. The manufacturers of the commodity have to tell the public about the quality of the commodity, its strengths and uses to convince potential buyers to buy the product. The various types of petrochemicals have different uses; the commodities are demanded by both individual households as well as big companies which could use the products to make new compounds for commercial purposes.
Introduction
Petrochemical producers must market their products so that whatever they produce into the market is met by high demand for the goods. Otherwise the product will not be bought by as many people as the producers expect. The producers usually produce petrochemicals based on the market demand. However, through marketing the products, they can then produce more products to the markets because marketing increases the demand. The situation is similar to that of the petrochemical traders. Both traders and producers of petrochemicals must market the product. This is only possible when the producers and traders have knowledgeable and reliable teams that can make informed decisions concerning marketing. The marketing teams should provide expert advice and accurate information to the producer and traders concerning the market. This will enable traders and producers understand the market operations and fundamentals in the ever changing petrochemical industry. Traders and producers should be in a position to identify an ideal market that would meet their supply. They should be able to utilize their strengths and opportunities in that market to maximize their revenues and profits using the minimum expenses possible.
The petrochemical industry has been growing so fast, boosted by the high population in the world which is a ready market for petrochemical products both in households and industries. There are many petrochemical traders and producers, focusing mainly on expanding their downstream integration by expanding their presence in the domestic petrochemical industry as well as the overseas markets. This is done through an organized expansion of the company’s customer base as well as logistics in innovative supply in the emerging market. Many petroleum companies in the world have identified petrochemicals as one of their main growth drivers both in the short and long run. Some companies are both producers and traders of petrochemicals because they own refineries to make petrochemicals and also trade their products with other local and overseas companies.
For effective and productive marketing that would penetrate the petrochemical market, a company has to set up an independent Strategic Business Unit to specifically do market research as well as market the company’s petrochemicals. The petrochemical products are classified in order to meet as many consumer preferences as possible. The marketing department is tasked with the research of the market and to develop strategies of route to the market, develops brands, consumer satisfaction and product marketing.
The positioning of the petrochemical market should be strategic, targeting areas with high population densities such as urban centers. This is definitely is a potentially big market for any trader or producer as long as the right strategies are employed. The position of the petrochemical market also provides a great platform for potential traders and producers of petrochemical products to invest and penetrate into the neighboring towns and even countries. The market should be in a strategic location where other countries in its neighborhood can be accessed both by air, land and sea. A good petrochemical market should have the best infrastructures in that region. There should be good roads, rails, air ports, processing plants and other industries in the major towns of such a market.
Countries with vibrant processing and manufacturing industries make a potentially successful market for petrochemical producers. This is because there is the opportunity of the petrochemical products produced being sold to the other industries as well as the petrochemical firms buying goods and services from the other industries in the Indian economy. This will drastically cut down on the expense costs of importing machinery and other products needed for the producer to produce petrochemicals. The government should also provide incentives for new companies that invest in the country. It is therefore, a great opportunity for any new company trying to set up its base in such a country because they will get tax incentives.
The market should also provide a perfect mix for any company interested in either trading or producing petrochemicals. The petrochemical industry in emerging markets is currently not fully tapped, with a vast potential given the population and the industrial activities in such countries. The market is composed of both industries and households. There are industries that use petrochemical products as their raw materials. These include the industries that manufacture plastics, laboratories in both scientific and colleges demand petrochemical products for different uses. There are households that demand some of the petrochemicals. Products such as lubricants are used by both individual households and industries for lubrication of machinery, vehicles among others. Basic polyolefin which comprises of ethylene and propylene are demanded by industries in the making of intermediate petrochemicals. Plastics and other products made through organic synthesis are used for household purposes. Finally, synthetic rubber is used in making of ropes and other products which are used both by industries and households. Therefore, the Indian market can be said to be a market of a very good mix, considering there are so many industries that will demand petrochemical products just like the millions of households.
Strengths and opportunities
The petrochemical market is a vast because the emerging markets have a large population and the population growth is said to be considerably high. The industrial growth of emerging markets has also been impressive in the recent years. Very many industries have been set up in such countries since the turn of the century as part of the efforts to become industrial nations. It is seen that some of the industries deal in petrochemical products which presents a chance for producers and traders to invest.
The fact that there is at least a petrochemical industry in emerging markets makes the market attractive. The presence of a few petrochemical market means the market is still raw and producers can produce as much as the demand will be. Traders also can benefit in a similar manner. The only challenge would be to market the petrochemical products so that the demand increases. Currently, a huge percentage of the emerging market’s demand for petrochemical is met through imports from other countries.
The market’s strategic position presents an opportunity for the traders and producers of petrochemical companies to freely expand their services through the country. Most emerging market nations have improved their infrastructure in the recent past making it possible for industrialization to take place. There are good roads, electricity and a readily available labor market which are the things potential traders or investors consider when making decisions on whether to invest or not. Furthermore, such a market is open to expansion into the neighboring nations. Some countries are considered the hub of their regions where they are used as an entry into the other countries. Such a nation has the best outlets into neighboring countries such as roads, rail and ports. Therefore, investing into the petrochemical industry has extra benefits because of the potential expansion onto the international scene.
The government provides incentives to new companies that want to invest in the country. This is a big advantage that new and potential petrochemical traders and producers can exploit for their own good. The tax incentives and reliefs can help the new firms to reduce and cater for their start up expenses.
Weaknesses and threats
As promising as the petrochemical market is, there are several factors that pose as weaknesses and threats to potential petrochemical traders and producers. The market is still in its youthful stage with so many risks. The marketing teams of the existing and potential petrochemical producers and traders should keenly assess the threats and weaknesses in order to develop serious and practical solutions to each of the challenges in to make the market efficient and easy to penetrate.
The presence of a dominant firm in the petrochemical market makes it hard for new and potential traders and producers to penetrate the lucrative market. A dominant firm is more established than other companies in the industry. It therefore makes those companies with the intentions of joining this market to find it hard to penetrate because it is like a monopolistic market already. However, this can be solved through the use of strong marketing strategies which would ensure the traders or producers who enter the market have a considerable market share.
The fact that in most emerging markets, most petrochemical raw materials have to be imported is a big challenge for any potential traders and producers. Countries with no oil or natural gas deposits are the ones that are affected most. Therefore, any traders or investors have to import the raw material, which is petroleum and natural gas. Importing raw materials usually increases production expenses significantly. Huge production expenses drive some potential investors out of the market. Similarly, importing raw materials drives up the prices of the finished products hence making the product unaffordable to some of the people. This is considering the fact that an emerging market is a country where poverty levels are fairly high. Therefore, the companies and traders should ensure their pricing systems are customer friendly without straining the company’s resources.
Any investors wishing to trade or produce petrochemicals must be ready to incur heavy expenses on transport. Even though the infrastructure in most countries is good, petroleum products are risky to transport. The traders and companies have to invest in transport as well as insurance. This tends to be quite a turn off to many potential investors. However, the transport costs can be cut down by employing economical strategies such as using pipelines to transport petroleum and gas. More so, the companies can set up companies near their market so that they do not incur heavy costs on transport. The companies have to use innovative supply logistics that will minimize costs as well as enhance the company’s chances of expansion and development.
Customer satisfaction is also a big challenge in the petrochemical industry. Many companies do not make quality products hence losing customer approval even before they establish themselves on the market. Therefore, potential traders and producers of petrochemicals should ensure their quality assessment teams help in making strong and durable brands of products that will satisfy consumers and clients.
In conclusion therefore, the marketing teams of the companies that trade or produce petrochemical products in the Indian market should study the market’s position, strength, opportunities, weaknesses and threats. This will help them come up with the most effective and working solutions in helping the companies to make valuable products and make profits. This will ensure that the brands of petrochemicals are of high quality, customers are satisfied, the products are well marketed in a well researched market.
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