Branding Small & Medium Size Chemical Enterprises through Advertising A Case Study for the Fine Chemical Industry MY LAST ARTICLE FOR CHEMICAL INDUSTRY DIGEST / JANUARY 2012

1. Promotion
Promotion
Branding Small & Medium Size Chemical
Enterprises through Advertising
A Case Study for the Fine Chemical Industry
Dan St. Andrei
Yesterday, branding was a prerogative of large chemical companies. Today, small and medium
size chemical companies MUST include branding in their activities or risk being wiped out by
the globalization tsunami. This article provides an insight into the relationship between posi-
tioning, branding and advertising for SMEs.
Introduction est CPhI-Paris 2010 edition. e.g., there were approxi-
mately 1900 companies offering their products and ser-
G
lobalization has changed the rules of engagement
vices to a market where the top ten pharmaceutical com-
in B2B markets and yet few executives involved
panies cater to roughly 75% of the total global demand.
in the chemical industry seem to acknowledge
In the post-industrial era, many have the product or the
this. Countless small and medium size enterprises con-
service and clearly that the offer is overwhelming the de-
tinue to focus their resources on developing better tech-
mand.
nologies and purer products, increasing manufacturing
capacities or enhancing their regulatory and analytical The question arises how can a SME stand out in
capabilities. Little, if any attention is being paid, how- the global cacophony of names and logos and capture
ever, to the processes happening at the interface with the the buyer’s attention?
customers.
For a marketing agency this does not come as a sur- B2B Marketing: back to the future
prise. The “manufacturing” culture has its roots in the
The history of B2C marketing offers a great clue on
post-war, blue collar era when the product was every-
how to achieve awareness and acceptance in cluttered
thing. Very few companies had the technology and the
markets. A long time ago, consumers began to be con-
workforce to innovate and manufacture a winning prod-
fronted with an overwhelming number of product
uct or service. THE PRODUCT was the key to commer-
choices. This was when consumer companies realized
cial success in a world of national competition and boom-
that sales and profitability are not determined by the
ing demand.
product itself but also by the marketing behind the prod-
This situation has since changed radically: at the lat- uct.
Author
Dan St. Andrei is an art director and communications consultant specializing in
advertising, branding and rebranding. He is the Creative Director and owner of the
agency Creative Corporation, which is based in Lisbon, Portugal, and has offices in
Canada and Romania.
Chemical Industry Digest. Annual January 2012
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2. Promotion
the physical product made by the plant is ac-
Countless small and medium size enterprises continue to fo- tually translated by marketing activities in pal-
cus their resources on developing better technologies and pable financial assets.
purer products, increasing manufacturing capacities or en- So, what I want to emphasize here is the
hancing their regulatory and analytical capabilities. Little, principle that small investments in branding
if any attention is being paid however to the processes hap- activities can work just as well in a SME en-
pening at the interface with the customers. vironment, lead to market leadership and in-
creased profitability.
In particular, branding emerged as the main antidote In today’s economy, the marketing battle is
against the lack of product differentiation. In their fight a battle of the brands. Companies will recognize that
for the consumers’ mind share, companies branded brands are the most valuable assets and that it is more
pretty much anything from big ticket items (Mercedes important to own markets than the factories, because the
and Frigidaire) to services (Hilton and Hertz) and to bev- only way to own markets is to own dominant brands.
erages (Pepsi and Gatorade) and even to plain water Many marketers struggle to get CEOs to see the value
(Evian and Perrier). Brands command higher prices as in B2B branding. The CEOs see the branding process as
they fulfill consistently a certain expectation in terms of an expense rather than an investment. It is easy to see
functional and emotional attributes. why this thinking has been predominant in recent years
A similar paradigm shift is now afoot in the B2B mar- when you look at their business models. B2B companies
kets as companies are facing a similar situation. With the operating in small vertical markets know most of their
advent of globalization, the company’s message has to customers and competitors by heart. When the customer
break through the hubbub of an increasingly complex relationship is built on personality why would the cre-
market place. Beyond the numerical and geographical ex- ation of a brand help business? Branding, they argue, is
pansion of the competition, a flurry of international and more suitable to a B2C environment than a B2B.
transnational acquisitions, mergers and divestitures Recent economic conditions have shaken these verti-
around the world have only added to the confusion. Es- cal markets. They are no longer a safe haven. As every-
tablished names in the chemical industry disappear, one is looking for an opportunity, those in related fields
morph or shatter continuously in a constellation of new could well make the jump into a relatively naive market
names and complex ownership structures. and make a big splash. The economy has forced compa-
In this context, the power of the brand remains the nies to diversify. This means they have to transcend mar-
prerogative of large organizations such as BASF, DuPont, kets. The only means they have to do this successfully is
Degussa, Dow, Bayer, DSM or Lonza. Moreover, most of by being recognized and having successful B2B brand-
the newer brands have emerged as a result of the M&A ing. Despite having no roots in the market, the brand is
activities of branded companies, e.g. Evonik from strong enough to make the transition.
Degussa, Lanxess and Saltigo from Bayer, etc.
It seems that the value of the brand is understood Branding Penn: a business case
only by the market leaders who know how to build their
brand architecture and use it to boost profitability. As a In 2005, Penn Specialty Chemicals Inc. (a US based
matter of fact, people realize that the brand has a dollar medium enterprise specializing in furan derivatives) ap-
value just like any other physical or financial asset sit- proached our agency to develop the concept for their ad-
ting on the balance sheet: e.g. the 3M brand value was $ vertising campaign. This advertising campaign coincided
3.1 billion in 2010 and was ranked # 90 on the
Interbrand Best 100 Global Brands list. When
brands lose their lustre so does the shareholder It seems that the value of the brand is understood only by
value! Merck’s brand was valued at $ 9.1 billion the market leaders who know how to build their brand ar-
in 2001 but was worth less than $ 3 billion in 2010 chitecture and use it to boost profitability. As a matter of fact,
after the Vioxx debacle. people realize that the brand has a dollar value just like any
other physical or financial asset sitting on the balance sheet.
In spite of this palpable dollar value attached
In spite of this palpable dollar value attached to the brand,
to the brand, SME executives continue to miss the
SME executives continue to miss the connection between
connection between brands, profits, growth and
brands, profits, growth and company valuation.
company valuation. They fail to acknowledge that
150 Chemical Industry Digest. Annual January 2012
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3. Promotion
Penn had limited marketing resources so
they could not invest in building first this
umbrella brand. They chose to invest simul-
taneously in the marketing of a product
with high market potential. It was hoped
that the successful marketing of the green
solvent would eventually spill over to estab-
Fig 1: Penn’s new logo expresses the shift to a green economy lish Penn as the innovative global leader in
with a global reach (2005) green solvents. The chosen solvent, 2-
MeTHF, was an excellent opportunity to
substitute tetrahydrofuran (THF) with a quarter billion
with the rebranding of the company from a leader in fu-
dollars market.
ran derivatives to a leader in the emerging markets of
green chemicals. Penn’s market research, however, showed that by late
2005 the world was not prepared to pay a premium on
One of the major elements of any brand is creating the
green. The concern for MeTHF’s high price overpowered
brand story. Penn’s long tradition in producing solvents
the environmental benefits of the solvent. Therefore, we
from corn cobs and sugar cane bagasse could be traced
developed an advertising concept emphasizing the over-
back to WWII efforts to diversify chemicals away from
all cost reduction opportunities offered by MeTHF due
petrochemicals. Penn’s history provided, therefore, a
to its superior product attributes. Nevertheless, we did
unique backdrop for its brand repositioning on the green
provide the “green” overtone to the ad concept through
dimension as it was truly a pioneer in chemicals from
the presence of the new logo and tagline. Moreover,
renewable resources.
colour coordination with the logo added to the “green”
As the Kyoto protocol entered into force on February overtone of the ad and established an early claim on
16, 2005, Penn expected that it would usher in an era of sustainability (Fig 2).
a low carbon economy. Penn’s solvents were uniquely po-
Subsequent market research by Penn showed that the
sitioned to capitalize on their bio-origin in corn cobs and
sustainability aspects got increasing traction as the Kyoto
sugar cane.
protocol was seeping through national legislations and
In this strategic context, Penn had to reinvent its com- corporate values around the world. The advertising
mercial persona and capture the strategic position of changed in 2006 to accentuate the green aspects first. Sec-
leader in the green solvent markets. ondary overtones in cost savings were still present as cost
Penn started by abandoning its old logo, (a black and remained a high concern (Fig 3).
white contour of William Penn) that spoke
mainly about the origin of the company in
the Philadelphia area and Quaker Oats
Chemicals. These powerful symbols in the
North American culture meant little to its
global customer base. It also spoke nothing
about the green offering of the company.
Penn’s new logo was a pentagon colored
in shades of green and blue, a hybrid sym-
bol of the five member furan ring and a re-
minder of the green fields, blue skies and
rain water, the three natural forces behind
Penn’s production of furfural (Fig 1).
The heraldic change was further rein-
forced by the modification of the tag line
from a strong positioning on the technical
dimension (The furan chemistry specialists)
to a strong positioning on the green dimen-
sion (Chemicals from renewable resources). Fig 2: Early stage advertising for 2-MeTHF emphasizes cost
savings first (2005)
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4. Promotion
Finally, market research conducted by
Penn at the end of 2006 showed that mar-
ket perceptions shifted even further. By
now, focus groups represented by purchas-
ers, R&D and regulatory professionals
saw the low carbon economy as the way
to the future. Several pharma companies
clearly captured this in their annual re-
ports.
In response to the shift in demand we
repositioned the product as a true agent
of change. The juxtaposition of MeTHF
with Penn’s logo ensured that the green
future is associated with the umbrella
brand of the company (Fig 4).
MeTHF was nominated for the CPhI
Innovation Award in Paris in 2006 and for Fig 3: 2-MeTHF advertises greenness as Kyoto protocol gains
the Presidential Green Chemistry Award market traction (2006)
in Washington DC in 2007. At that point
Penn’s name was firmly established as a leader in green
evolve into.
solvents.
Managing demand is critical in a globalized world.
Marketing is the dedicated function that manages the
Conclusion long term demand. Most chemical SMEs however focus
For many companies, successful branding will only only on sales, which is short term focused. Chemical
come when the concept of having a B2B brand is accepted SMEs should learn from their industry leaders and make
throughout their organization. Everybody needs to know better use of marketing activities such as branding and
that branding, and having a brand, is more than having advertising.
a logo. A brand holds the promise of what the organiza- As if that wasn’t enough to convince you, a quick look
tion represents now, what it aspires to and what it will at the top ten global brands for 2010 will show you that
five of them are primarily B2B brands.
Download the full list of the top 100
brands and you will see many more B2B
companies with mature brands. The old
excuse that branding is a B2C activity
no longer stacks up. B2B branding is
here to stay.
Branding is no longer the reserve of
leading consumer businesses. In order
for an organization, be it B2B, to pro-
mote its uniqueness in a busying field,
it has to distinguish itself by means of
a brand. B2B branding will become more
prominent as more organizations real-
ize this.
So, I am ready to bet that in the 2011
Top 100 brands list you will see more
B2B organizations showcasing success-
ful brand.
Fig 4 Contrast between old and new; Penn becomes a leader in
sustainability (2007)
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