The document summarizes DSM, a life sciences and materials sciences company. It provides an overview of DSM's history, transformation over the past century, business areas including nutrition, pharmaceuticals and performance materials. It discusses DSM's vision, strategic focus on life sciences and materials sciences, key financial figures, and sustainability efforts. The document also includes examples of pricing optimization projects and monitoring tools to improve profitability.

1. The Marketing – Finance Interface: Practical Examples Gerben Algra VP Marketing

2. Table of contents Introduction DSM : who we are and what we do Pricing Product Launch Conclusions

3. The Life Sciences and Materials Sciences Company contributing to quality of life

4. Evolution Over a century of successful transformations Technological competences 1902 1930 1970 1950 1990 2000 2010 Life Science Products Coal Fertilizers Petrochemicals Performance Materials Bioterials / Biologics Chemical engineering Polymer technology Fine chemicals Material science Mechanical engineering Biotechnology

5. DSM from 2000 to 2005 : Focus and Value ………… . Second major transformation of DSM ………… Former LSP Petro LSP PM IC 2000 IC PM Divestment Petchem Acq. Roche V&FC Acq. NeoResins IC PM PM LSP Pharma IC Sales € 8.2 bn Sales € 5.6 bn Sales € 8 bn H2’02/H1’03 2005 DNP

6. DSM Vision 2010: Building on Strengths Value Creation Market-driven Growth and innovation Building on Strengths Increased Presence Emerging Economies Operational Excellence

7. Reshaping the Portfolio Carve out and divest Melamine/urea/fertilizers and Energy Elastomers Special Products Maleic anhydride and derivatives Carve out and partner Citric acid Anti-Infectives Reposition Fibre Intermediates Strong leadership provides backward integration DEP Focus on Life Sciences and Materials Sciences 4 core clusters: Nutrition Pharma Performance Materials Polymer Intermediates + 5 th cluster: Base Chemicals & Materials

8. Accelerating Vision 2010 Performance Materials Shared competencies Markets Technologies Functional Excellence Exploiting strong market positions and technology platforms Climate and Energy Health and Wellness Functionality and Performance Emerging Economies Life Sciences Materials Sciences EBAs Nutrition Pharma

9. Portfolio Synergy Creates EBA Growth Platforms First concepts patent-protected Investments in Jurilab, Integragen and Sciona Personalized Nutrition First coating sales Investments in Harland, OPM, Xylos, MicroMuscle Further growth Dyneema Purity ® Biomedical Materials Pharma Performance Materials Nutrition Materials Sciences Chemical Synthesis White Biotech Investment in FQSI Active systems in development, first in food Specialty Packaging Biofuels/ Bio-Based Chemicals Programs Joined € 100 m French Biohub Program White Biotech

10. Key Figures Globally > 200 locations, ca. 23,500 employees Leadership positions in ~75% of the business portfolio R&D spend ca. € 350 million Solid balance sheet * Before exceptional items NB : EBIT expectations 2008 first increased to 970 Mio Euro, recently further increased to 1025 – 1075 Mio Euro + 203 % 355 429 Net profit incl. exceptional items + 24 % 355 558 Net profit* + 23 % + 14 % + 11 %  % 823 1,247 8,757 2007 514 EBIT* 718 EBITDA* 4814 Net sales H1/08 (€ million)

11. Leader in Sustainability, Now & in the Future Internationalization & Diversity Climate & Environment Nutrition Improvement People, Planet, Profit DSM Values: “ We can’t be successful in a world that fails ”

12. DSM Organizational Chart DSM Innovation Center Corporate Staff Shared Competences & Business Support DSM Nutritional Products DSM Food Specialties DSM Resins DSM Engineering Plastics - DSM Dyneema DSM Elastomers DSM Agro DSM Melamine DSM Fibre Intermediates DSM Special Products DSM Pharmaceutical Products DSM Anti-Infectives DSM Energy DSM Nutritional Products Human Nutrition and Health Animal Nutrition and Health DSM Food Specialties Nutrition DSM Pharmaceutical Products DSM Anti-Infectives Pharma DSM Engineering Plastics DSM Dyneema DSM Resins Performance Materials DSM Fibre Intermediates Polymer Intermediates DSM Agro DSM Elastomers DSM Melamine DSM Energy Base Chemicals & Materials Corporate Staff Shared Competences & Business Support DSM Managing Board DSM Innovation Center

14. DSM is everywhere

15. PROGRAM EXCELLERATE PRICING

16. … PRICING IS THE MOST POWERFUL LEVER FOR IMPROVING REVENUE AND PROFITABILITY THE DIRECT IMPACT PRICING HAS ON THE BOTTOM LINE, POSITIVELY AND NEGATIVELY, JUSTIFIES PRICING AS A TOP PRIORITY! Impact of 1% change in a category on company profit Source: Customers of pricing consultant Simon Kucher & Partners Source: McKinsey, Simon Kucher & Partners, BCG and Excellerate

17. MOVING TO WORLD CLASS PRICING IS A JOURNEY PROCESS MATURITY LEVELS MATURE PROCESS WORLD CLASS Pricing Solutions Ltd., 2003 © L E V E L Baseline Process is Ineffective 30% of companies 1 L E V E L 2 Internal Process In Place Gain Control 40% of companies L E V E L 4 Optimization Processes In Place Optimization Tools <10% of companies L E V E L 3 Value Processes In Place Price/Value Analysis 20% of companies L E V E L Excellence in Execution <1% of companies 5

18. PRICING MANAGEMENT : 2 ELEMENTS OPTIMIZATION AND EXCELLENCE ACHIEVING THE FULL PROFIT IMPROVEMENT POTENTIAL OF PRICING REQUIRES QUITE A JOURNEY, BUT ALSO SHORT AND FOCUSSED EFFORTS BRING LARGE GAINS Pricing Management Pricing Optimization Pricing Excellence Price Structure Price Level Value Based Pricing Price Consistency Processes Organization Tools & Systems People & Behavior Performance Monitoring

19. Project Approach : Set up Dedicated / Focused Project E.g. Analyze current prices Historic prices Prices competitors Value for customers Own costs Define pricing strategy & Segmentation & Differentiation Develop tools & Make choices & Set targets Implement new customer plans & Monitor / Analyze & Recalibrate / Improve (Deming Cycle) Define implementation program & Training sales force +other depts Detailed Account Plans & Owners & Timelines Key Improvement levers identified In Depth analysis & diagnosis based upon outcome Quick Scan Monitoring Tools & Roles / Responsibilities Your Organization Ready, Willing, Able ……………? Line Responsibility Define Team & Explain context & Clear Objectives Alignment Results Start up/ Kick Off Analysis & diagnosis Option development Prepare for Execution Implement & monitor Quick scan

20. RANDOM EXAMPLE : PROFIT IMPROVEMENT POTENTIAL PCR 0 1 2 3 4 5 6 7 8 9 10 Volume Index Price Index Any correlation ? Any conscious differentiation ? Right Price Level ?

21. RANDOM EXAMPLE : PROFIT IMPROVEMENT POTENTIAL -50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 0.0 Volume Customer profit as percentage of Net Sales PCR Global Cost allocation correct ? Negative customer profits ? Any conscious differentiation ? Profitability Levels OK ?

22. PROFITABILITY ANALYSIS PROVIDES INSIGHTS ….. Graph gives insight into profitability of customers

23. ARE YOU CONFIDENT THAT PRICE LEAKS ARE NOT ERODING YOUR PROFITABILITY? Opportunities to control undesirable price leaks in the organisation Price exceptions Net realised price % of sales List Price Returns Freight Selling <10% volume Incentives Terms Price Leaks By Product

24. MONITORING SALES FORCE PERFORMANCE Average Price And Volume By Salesperson For Product A, Region A Volume Price Median 5% 15% ‘ Excellent’ EBIT Impact Sales- person 1 2 3 4 5 6 7 8 9

25. Project Approach : Set up Dedicated / Focused Project E.g. Analyze current prices Historic prices Prices competitors Value for customers Own costs Define pricing strategy & Segmentation & Differentiation Develop tools & Make choices & Set targets Implement new customer plans & Monitor / Analyze & Recalibrate / Improve (Deming Cycle) Define implementation program & Training sales force +other depts Detailed Account Plans & Owners & Timelines Key Improvement levers identified In Depth analysis & diagnosis based upon outcome Quick Scan Monitoring Tools & Roles / Responsibilities Your Organization Ready, Willing, Able ……………? Line Responsibility Define Team & Explain context & Clear Objectives Alignment Results Start up/ Kick Off Analysis & diagnosis Option development Prepare for Execution Implement & monitor Quick scan

26. Price setting model Price setting based on inside-out and outside-in insights Pricing : Financial model / Internal perspective Customer / Competitor Perspective : Inside - Out Outside - In Reflects Key drivers Aims for consistency Provides Targets Sales Pitch vs. Next best Alternative

27. Account Plans : Key to actions and monitoring Account plan Present account data Sales argumentation Price calculator List prices Standard Format Easy link to reporting Systems Every Account Every Product Value calculator Actions Account Plans : Written by Account Manager Upfront agreed with Line (Up and Down) Transparent Targets and Timelines Basis for regular monitoring / review

28. MONITORING : SPIDER IN THE WEB !! Management & Organisation Adjust roles & responsibilities (RASCI) Steer organization towards price leadership Performance Measurement KPIs Monitoring Infrastructure Implement support structures: Annual Account Plan writing & Account Plan database Monthly price instructions Fast & user friendly tools Processes Implement new pricing process Regular review /calibration Price setting in line wit business dynamics Continuous competitor intelligence (Value calculator) Strengthen pricing capabilities value based selling / pricing Train (new) sales staff Lead by example Align incentives Communicate successes People & Culture

29. Improvement Cycle and making results SUSTAINABLE Formalize Process Define frequency Report and Collect : prerequisite for learning Account Plans Review : External Factors Internal Factors Recalibrate Pricing Model : Price AND Value calculator Monitor Progress

30. Product Launch

31. Innovation : Bigger, faster, cheaper, better Accumulated Losses Opportunity time Revenues € Source: Prof. JP Jeannet, AIM course Business Development Time & Cash Line(s)

32. Key Functional Involvement over the Launch Cycle Legal Manufacturing Marketing R&D Sales Finance IDEA GENERATION BUSINESS FEASIBILITY DEVELOPMENT SCALE-UP & VALIDATION TRANSFER TO RUNNING BUSINESS Screen? Review Launch? Scale-up? Develop?

33. Marketing and Sales Focus Price Place Promotion Product Customer Company Unlimited. DSM Context Price Place Promotion Product Customer Company Unlimited. DSM Context Value for customer Cost base Competition Fit to product positioning Geographic markets Sequential launch vs. big bang Sales channels Product positioning Communication channels Brand relevance Target product profile Time - to - market sensitivity Registration Needs and buying factors Segmentation Market assessment Launch plan Cross - functional teams Resource allocation Sr mgmt sponsor - ship/ involvement Sales force development Value chains Business models Adoption barriers Partnerships Capabilities and assets Value for customer Cost base Competition Fit to product positioning Geographic markets Sequential launch vs. big bang Sales channels Product positioning Communication channels Brand relevance Target product profile Time - to - market sensitivity Registration Needs and buying factors Segmentation Market assessment Launch plan Cross - functional teams Resource allocation Sr mgmt sponsor - ship/ involvement Sales force development Value chains Business models Adoption barriers Partnerships Capabilities and assets Project Management Process Business feasibility Business feasibility Develop - ment Develop - ment Scale - up & validation Scale - up & validation Idea generation Idea generation Launch Launch Price Place Promotion Product Customer Company Unlimited. DSM Context Value for customer Cost base Competition Fit to product positioning Geographic markets Sequential launch vs. big bang Sales channels Product positioning Communication channels Brand relevance Target product profile Time - to - market sensitivity Registration Needs and buying factors Segmentation Market assessment Launch plan Cross - functional teams Resource allocation Sr mgmt sponsor - ship/ involvement Sales force development Value chains Business models Adoption barriers Partnerships Capabilities and assets + Reference to “ Guide to Business Planning ” + Reference to “ Guide to Marketing Planning ” Business feasibility Develop - ment Scale - up & validation Idea generation Launch IN SYNC Project Management Process Price Place Promotion Product Customer Company Unlimited. DSM Context Value for customer Cost base Competition Fit to product positioning Geographic markets Sequential launch vs. big bang Sales channels Product positioning Communication channels Brand relevance Target product profile Time - to - market sensitivity Registration Needs and buying factors Segmentation Market assessment Launch plan Cross - functional teams Resource allocation Sr mgmt sponsor - ship/ involvement Sales force development Value chains Business models Adoption barriers Partnerships Capabilities and assets Business feasibility Develop - ment Scale - up & validation Idea generation Launch

34. Concept Development : POSITIONING Concept # 5 Concept # 4 Concept # 1 Concept # 2 ………… . Creative Part of the Process ……………. Concept # 3

35. Example Claryl ® : Speaking the customer’s language Benefits Description of technical features From... ...To “ is there any glass there?” “ you don’t have to be up close to see what you’re looking at” “ you can just concentrate on the picture” “ (it gives you) freedom to hang the picture where you like” “ you can view your painting uninterrupted, all day long” “ it’s like wearing sun glasses…it’s better” “ if you buy a picture you want to be able to see it” “ sharper and brighter” “ looks closer” “ the color looks better” “ would look great on tapestry” “… it really is impressive…”

36. … also in pictures Appealing to your mind From... ...To Appealing to your imagination

37. SOLUTIONS DESIGN & ACTION PLAN The Fruition … Generate : Business concept Artifact Solution concept Prototype Benefits Etc. Artifact Solution concept Preliminary Business concept Shared Output and Alignment between participants, departments and stakeholders. MAKE FINAL CHOICES !!

38. Product Launch Iterative process Financials : Volumes, Price, Mix, Market Share COGS Costs R&D, M&S, Manuf. Etc Result calculation (NPV, ROI etc)

39. Conclusion : Commercialization is as much of a craft as it is an art Establish minimal DSM standards for mandatory launch and marketing plans Develop set of tools, frameworks and templates supporting plans Establish disciplined process with clear roles and responsibilities Ensure implementation (KPIs, incentives, performance dialog) Craft Foster creativity and breaking of orthodoxies –go beyond the obvious Challenge and enrich plans by bringing in &quot;street-smart&quot;, experienced managers Build commercial judgment in organization, especially through role-modeling Art +

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