Basf Marketing Report

In order to be known as â€Å"The† global chemical supplier BASF redefined its image by officially changing its name from â€Å"BASF† to â€Å"BASF the chemical company† in 2004. This bold statement is expressed in their brand, corporate identity and company logo. BASF has lived up to this goal establishing itself as the largest chemical company in the world. (1) BASF, which stands for Badische Anilin- und Soda-Fabrik (Baden Aniline and Soda Factory), has used its image marketing to evoke the concept that We dont make a lot of the products you buy. We make a lot of the products you buy better.  ®. BASF posted sales of 52. 6 billion euro in 2006 (1) placing itself above Dow Chemical, its closest competition, followed by companies Bayer AG and DuPont. BASF the chemical company markets a strategy in all its divisions called the â€Å"Verbund† concept, a German word meaning â€Å"linked†. This concept of total integration is how BASF aligns its businesses internally as well as with customers and suppliers. BASF has realized a competitive advantage by not only integrating but interlocking value chains. In the last three years practicing on the Verbund concept acquisitions like Engelhard Corporation, Degussa AG and Johnson Polymers have allowed BASF to further its vertical integration of its businesses. In 2007 BASF found its place at a rank of 81 on the Fortune Global 500 Companies list, up from 94 in 2006. In February of 2006 Fortune magazine performed a survey of U. S business professionals and BASF earned the distinction of being one of the 50 most admired companies in the world in a global comparison. Introduction When you say â€Å"BASF the chemical company† many people may not know the name but those who do can usually recite the slogan: We dont make a lot of the products you buy. We make a lot of the products you buy better.  ®. Even those that can recite the slogan can be quite challenged to give one example of a product that BASF makes. Given this you would be amazed at some of the everyday products that use BASF chemicals. The additive that thickens your shampoo, the Ibuprofen used in your pain medication, the Legos  ® your kids play with all have components supplied by BASF. The only reason an average person would hear of BASF is through their corporate level image advertising. How is it that a company whose products are never seen by the average consumer ends up as the worlds largest in its industry? How it is a company that many have not heard of could make acquisitions in the 1. 6 billion dollar range? How is it a company can post sales in the 52. 6 billion euro range and the average consumer does not know who they are yet there products are everywhere? The first team discussions on what company to do the report on a team member brought some information to the table. This information is that he works for the world’s largest chemical company and no one knew what the company truly makes provoking the questions from above. The challenge is to understand how a company markets itself to a global position without the normal consumers influence. Our team chose this company to look at a business that would perform its marketing in a different environment than the main stream consumer environment and to better understand how a company markets without being seen. This is a report on business to business marketing observations of BASF the chemical company. Table of Contents †¢Macro-Environment Context †¢Marketing, Research Customer Analysis †¢Segmentation Target Markets †¢Differentiation and Positioning †¢Marketing Decision Levers †¢Recommendations Macro-Environment Context BASF is the worlds leading chemical company. They offer intelligent solutions based on innovative products and top notch services to its customers globally. This is the basis of their mission statement and purpose as a company. Their mission is also to create opportunities for success through trusted and reliable partnerships. BASF visions of success include sustainable profitable performance, innovation for the success of customers, safety health and environmental responsibility, personal and professional confidence, mutual respect and open dialog as well as integrity. Creating a Sustainable Profitable Performance to BASF is the basis for all activities within the company. They are continually committed to the interest of their customers first and foremost. They take pride in rewarding their employees, shareholders and take the same stance with regards to society as a whole to better the environment around them for future generations. BASF takes pride in developing innovation for their customers to add continuous long term partnerships well into the future. Their trade mark statement of We dont make a lot of the products you buy. We make a lot of the products you buy better.  ® clearly states this philosophy. They derive nearly all of their business from Business to Business (B2B) sales. This makes innovation very important in all of their many niches in multiple markets they involve themselves in. Partnerships are valued within BASF and are built upon continually to mutually take advantage of highly scientific and technological advances. Due to the nature of the business, that being a chemical company, the environment must take precedence to ensure success. In this day and age, if your company doesn’t take steps to protect the environment that it is in, it won’t be in business long enough to matter. BASF takes safety, health, and environment responsibility to a level that supersedes that of economic considerations. BASF makes their products environmentally friendly for future generations by supporting the Responsible Care TM initiatives. BASF puts itself among the best in the world by fostering group-wide diversity personal and professional competencies. They feel that diversity leads to global success and capitalizes on competition by offering many differing views. They encourage employees to be creative and utilize their potential for common success. In addition they treat everyone fairly and with mutual respect. They try to keep open dialog with all employees, customers, stockholders and relevant groups within society to keep all on a level playing field. The last core value that BASF incorporates is Integrity. The company acts with respect to their words and values. They comply with all laws and respect all good business practices in the many countries that they operate. BASF has a great strategy that includes 4 simple strategic initiatives. They earn a premium on their capital, they help their customer be more successful, they form the best team in the industry, and they ensure sustainable development. All of which are conveyed in the visions for the company same as above. The strategic initiatives are the product of years of providing excellent products at a competitive price to all of its customers. Politically speaking, BASF is globally involved. Based in Germany and intertwined within business all around the world it would be impossible to not be involved in politics. It takes a great stance on political issues to continue its success in business and to show continued enthusiasm in protecting the environment. With regards to the Environment, BASF strives to be the best and let the world know that this is an important issue. Environmental issues in past years have shown light on companies that make their business creating and working with chemicals. BASF cannot escape the microscope of this issue. They comply with all government regulations in all countries it does business to ensure their future. They support the Responsible Care TM initiatives and keep them at the forefront of their values. Environmental issues to BASF ties directly to their social responsibility. The people at BASF value their own lives as much as their neighbors and support this by their integrity. They treat those around the world with the same respect that they feel they would want, regardless of what they are doing. Be it they are selling products to another company or creating a new product, social responsibility is never taken lightly. Technologically BASF prides itself in being the best for themselves and those they do business. They invest millions upon millions to ensure success in the ever changing markets all over the globe. They pass their technological advances on to their customers to ensure continued success and lasting partnerships. Technological advances in the chemical field have undoubtedly kept BASF at the top for so many years. Given a clear SWOT analysis of BASF from any level of the organization, the business unit, the product line or the specific product yields a clear image of their strengths, weaknesses, opportunities and threats all over the globe. SWOT analyses are often used during sales meetings to identify opportunities in the market. They have proven themselves over and over by being a superior company throughout all markets. A tried and true philosophy rooted in the company’s vision and values brings this out in them. They continually identify trends in the industry and counter the changes all the time. In addition they analyze their competition whenever possible to capitalize on those before them. BASF analyzes itself through multiple management channels to ensure continued innovation and profit for its customers, employees and shareholders. Teams all around the globe research the firm’s present and future clients to build lasting relationships and capitalize on hidden opportunities to improve themselves. Their strengths encompass being a globally prestigious brand, a large market share, and universally known for its social and environmental activities. Opportunities lie within possible joint product lines with other companies and customers. Weaknesses of BASF are global spreading in the way of having employees all over the world and keeping focus on attainable goals. They are influential in just about all markets and run the risk of being thin in a small amount of them. Threats within the chemical market could be the continual need to stay environmentally friendly. This can add costs and reduce focus on core assets of the business. While everyone wants to stay â€Å"green†, it comes at a price and that has to be economically accounted for keeping the cost benefit ratio at an equilibrium that is good for all. Marketing Research Customer Analysis BASF being a company that markets its goods and services to organizational firms primarily focuses on the practice of business marketing and being a company that produces no real end product the analysis of normal consumer behavior is not widely used. The success of a business to business marketing plan is in the hands of an organizations purchasing group. These groups that make the purchasing decisions for organizations usually have numerous deliverables that could drive the individual market. One group may see delivery performance as a key factor in their purchasing decisions, the next market segment may see price, value added services or warranty as the key elements. Because of this BASF must continually scan the environment of each of its individual segments and markets using a multidomestic marketing strategy. Being a global provider of chemicals the use a multidomestic marketing strategy helps in the sale of their diverse array of products dependant upon the particular market and the unique region. Marketing research in a commodity based business like the chemical business is primarily based on the use of combination of secondary data analysis and a small amount of primary data gathering and mainly environmental scanning. Scanning the environment and staying on top of the latest social, economic, technological, competitive and regulatory forces help BASF form its global strategy in marketing. This strategy then flows down to the different divisions using more practical marketing research tools to grow the business. Being a business to business company means marketing research is primarily secondary data. BASF globally uses SAP business software. The information gathered in this software is used to formulate sales forecast based off past performance. It is also used to analyze what products are moving and which are not giving key indicators of what products or even divisions are the Stars which are the Dogs, Cash Cows and Question marks. Corporate sales, procurement and logistic systems like WorldAccount or Ensphere ® are also used to gather this data to better service the customer. Trade magazines and publications are used by many of the divisions to gather data in the development of marketing plans. Here is an example from one of the divisions; BASF Industrial Coatings uses trade publications like Metalmag and Construction News to analyze industry trends. Along with trade magazines industry web sites provide information as well. Sites like the one listed below provide valuable information to keep BASF on top of the industry and what’s the voice of the customer. These sites are for the Industrial Coatings division. http://www. coolmetalroofing. org (cool metal roofing coalition) http://www. coolroofs. org (cool roof rating council) http://www. metalconstruction. org (metal construction association) http://www. themetalinitiative. com http://www. designandbuildwithmetal. com (new website lots of pertinent info). Although this is just one division of BASF the same practices reflect across the different divisions. Although not highly used, BASF does a small amount of primary data gathering. In the different divisions web polls, new product or service trials and focus groups have been used to gather information about the voice of the customer. Companies like Ducker Worldwide have performed â€Å"Voice of the Customer Focus Groups† to gather information on the performance of BASF as compared to their competition. Trials include potential new products or services that are either presented or given to a customer to test the markets interest in such goods. These goods or services are run through a customer in the industry to collect information on what the markets tolerance is for such goods or services. Regulatory, social, economic, competitive and technological forces help steer the marketing plan of the various BASF divisions. Through environmental scanning in each of these unique regions BASF collects data. The data is then analyzed to focus on trends in the global market. This data is then used to help direct the company and marketing plan. Canada has had legislation banning/limiting the use and importing of the chemicals such as Isophorone. Isophorone is a distillate of acetone a chemical used in inks, coatings and copolymers. This markets regulatory force led to a change in the components used in coatings sold into Canada. This led to the marketing of â€Å"Isophrone Free† coatings. This information was gathered and then marketed through brochures and fliers as well as the face to face interactions of the BASF sales force with their Canadian customers. With the ever increasing focus on the health of our environment, not only locally but globally, BASF has recognized this social pressure and focused an incredible amount of energy on marketing to the â€Å"Green Movement†. A mere visit to the BASF web site will show the amount of energy being placed upon marketing to the environment. This Green Marketing can be seen in headlines like â€Å"Intelligent solutions for climate protection†, â€Å"Sustainable development†, â€Å"Eco-Efficiency† and â€Å"Climate Protection† on the lead in page of their web site. BASF is currently marketing its association with world wide movement â€Å"Eco- Efficiency Analysis†. Figure 1. Eco-Efficiency Analysis comparing BASF Ibuprofen to competition This term that was coined by the World Business Council for Sustainable Development (WBCSD) in its 1992 publication Changing Course looks at the overall footprint of a product from â€Å"cradle to grave†. Realizing the negative image of chemicals and their effect on the environment BASF uses Eco-Efficiency certification to market and sell the total impact a product will have on the environment. The hope is that their product will stand out as environmentally better than the competitions (Figure 1). This certification is being offered on many of its product lines across the globe. Products like Ultradur  ® high Speed easy flow plastic, Ecoflex  ® biodegradable packaging material carry the Eco-Efficiency seal. Other products like or Ultra-cool  ® paints with UV resistant pigments to reduce heat transfer in buildings carry the Energy Star certification. All these have come from environmental scanning. Ultra cool was marketed well enough that it pre-dated any legislation that followed. California’s â€Å"Title 24 Energy Code† now mandates solar reflective coatings used in construction. In the metal roofing industry BASF was the only company producing â€Å"cool† coatings that could meet this legislation and they were producing it before the legislation was enacted. Since then all major suppliers of paint for metal roofing have developed and now market â€Å"cool† coatings. This market segment did not exist until the development of BASFs Ultra-cool ® coatings. This is a testament to the effects of collecting marketing data using environmental scanning, product development and marketing. In scanning the economic climate BASF has gathered data for years on the benefits of their concept Verbund also known as total integration. The Verbund concept has been marketed through every division of BASF the chemical company. There is a â€Å"Purchasing Verbund†, â€Å"Safety Verbund†, a â€Å"Production Verbund† and many more. All of these wide variety of products would make you think that there are a lot of different prices to consider when purchasing from BASF. Because the products they offer are mostly raw materials, the prices of their products change with the economy. When the price of oil goes up, their prices for materials related to that product go up as well. They don’t base their prices off of any index or manufacturer recommendation. This price fluctuation does not affect the quality of their services as there is really no comparison by price to judge whether or not the product is quality. The price that BASF offers for it’s products does not affect consumer perceptions of their company. It seems that along with the business of providing chemicals, they also bring along the feeling of connecting with their customer on a higher level. That overrules the price effect on a consumers decision to go with BASF. BASF does not use the concept of off-peak pricing, which consists of charging different prices during different times of the day, week, or month. This usually reflects the varying demands of the services or products offered. BASF would not benefit from this tactic because the only reason their price changes would be due to the economy and their resources. They do not have a peak time or an off-peak time of demands for their products because they are raw materials and chemicals. The chemicals that BASF offers are in need to make finished products by many different companies at all times of the year. Place BASF uses the e-commerce network widely to reach their customers and suppliers. E-commerce is the electronic handling of business transactions with purchases and production. They conduct most of their transactions through the web in which a customer can log into their personal account and purchase their products through what they call WorldAccount. BASF uses the new internet e-commerce world as a way to make communication faster, more effective, and more direct. It allows customers to have service 24/7, get precise product information, have orders processed faster as well as keep current data on all of your orders. BASF found that the e-commerce way of providing products was the best way allowing more detail and service to be provided to the customer. BASF also has a good representation with production and sales facilities in all of the economic regions. They are located in five continents which are Europe (which is their home market), North America, Asia, Africa and South America. They have more than 100 large sites throughout the world which allows them to be closer to their customers in 170 countries and supply them with their products in a reliable manner. BASF has verbund sites located in Germany (Ludwigshafen), Belgium (Antwerp), Freeport Texas, Louisiana, Malaysia (Kuantan), and China (Nanjing). The term verbund is a German word and means â€Å"linked† or â€Å"integrated†. These verbund facilities make use of integration production processes which makes it less expensive to manufacture the products. This allows BASF to supply a wide variety of different sectors. BASF also operates important production sites which are located in Germany (Schwarzheide), Spain (Tarragona), Port Arthur, Texas, Mexico (Altamira), Brazil (Guaratingueta), China (Shanghai), Japan, (Yokkaichi) and Korea (Ulsan). The use of these multiple locations makes BASF a company that one can rely on almost anywhere you are located. This allows the company to become inseparable from their customers making it more convenient to do business with them in person, as well as through their online stores. Promotion The main idea about BASF’s promotional campaign in Europe is to show that certain things would not exist without their chemicals. It aids you in the course of life and without them, certain things would not be attainable for you. Their main slogan is â€Å"Invisible Contribution. Visible Success. They are aiming to show you that BASF is often working behind the scenes to make their invisible contribution that creates a visible success for their customers through using their chemicals to create the end product. Their image campaign in Europe(which is made up of television commercials and print ads) is directed at the opinion leaders. These are members of society who lead others and shape the views of the general public. The campaign has been covered in Germany, France, Great Britian, Italy, Spain, Belgium and the Netherlands through newspapers and lifestyle magazines (such as business, news and science magazines). Their television ads are broadcast during scientific and sport programs, new bulletins, films and television series and is aimed at a wide target audience in Europe. They feature different ads for each type of chemical that they provide which include television ads for the paper industry, the semiconductor industry, water treatment, house construction, sports and leisure, road construction, agricultural products, extreme sports, automotive industry, bridge construction, sun protection, fuel, and plasticizers. They are making sure that they cover each kind of service that they offer by showing this wide variety of television and print ads. BASF uses a discrete way of creating publicity for themselves. When you are on their website for Europe advertising you have the opportunity to download their several different print ad campaigns and use them how you would like. They also offer the option for you to purchase either a postcard or poster of the ad. Publicity is something that is nonpersonal and an indirectly paid presentation of an organization, good or service. In this case, the customer, or fan of BASF, is paying for the poster or postcard, and in turn when sending that postcard or putting up that poster, they are providing no personal advertising that was not directly paid for by BASF. It is a pretty creative way of getting a profit and recognition while allowing their customer’s to do the advertising for them. In this case, the publicity works for them. When it comes to advertising in America, the rules are a little different than they are in Europe. Their main theme is that they are helping to make products better. Their main focus is to show how their chemicals can make your everyday life better here and around the world by creating remarkable and visible changes in many of the most important industries. Their slogan is â€Å"We dont make a lot of the products you buy. We make a lot of the products you buy better.  ®Ã¢â‚¬ . This slogan, according to BASF, has made them the most recognized of any chemical company in North America. The purpose of the several different TV ads allow you to see that they don’t make the finished product, they just provide the quality ingredients to make the best products. It also allows you to see that there are countless uses of the BASF materials that allows you to enjoy life. Just as their slogan says, in most of their TV ads they tell you that they don’t make the product, they just make the product itself better. For example, â€Å"We don’t make the helmet, We make it tougher† is a slogan used in a commercial about their Ultramid polymide nylon that provides hardness and abrasion resistance commonly used in helmets. Along with their TV and print ads, BASF is moving into a more innovational way of advertising to keep up with the demands of advertising and today’s technology. They offer through their website Podcasts. These podcasts include an audible innovation magazine of BASF that offers monthly topics on how chemistry and chemicals will design and shape our future. The other podcast available through the BASF website is â€Å"The Chemical Reporter†. This podcast is for the curious person that has questions about chemistry in your everyday life. This podcast offers answer in their weekly episodes. You can download this to your iTunes account or as an MP3 file for you MP3 player. Another innovation offered is to receive all news alerts and press releases through a RSS feed free of charge. This allows a customer to receive up-to-date news about BASF in a very quick and comfortable way (at your own computer). The only draw back is that you have to download and RSS-reader, but once you have you can select from several different news topics about BASF available online at their website. I’m sure these new innovations are there to create a buzz and traffic to their website. Recommendations The success of BASF marketing can be seen in there continual growth globally. To make recommendations would be easier if we were to look at one division of the company. Either due to market conditions or poor market strategy planning not all the divisions of BASF can be doing well at any given time. The American auto industry is in a state of flux with ever present pressures from the global market. Although divisionally BASF will feel these pressures globally their affiliation with non-US auto makers absorb some of this industries variation, this allowing time for the US market to be analyzed and adjustments to be made. Pure recommendations would have to come from some direct market analysis based off of the division of the company. BASF has done a great job in their Verbund concept. Being a supplier, the concept of interlocking processes or systems creates a relationship with the customer that is hard, or sometimes inefficient to break. From this alignment with cusotmers long term relationships are established. BASF could draw better on global technologies. In looking through the BASF corporate web site many of the technologies that are seen are from different countries. Online information on the use of these products in a specific country could not be confirmed or denied as a potential customer it would have been nice to know that they are available domestically. One observation is that BASF although a hidden part of many â€Å"name brand† products does not benefit from any of their customers successes. Co-branding could lock in the business through the social pressures felt by dropping BASF as a supplier in favor of an alternative. One flaw of focusing on the Verbund concept to lock in customer loyalty is it makes social pressure less of a final end consumer pressure and more of an industry pressure which in the end may not affect sales. In not hurting sales the decision to drop BASF is less of an issue of end unit sales and more of an internal issue of efficiency. Companies like Dow and DuPont often add their name to products in advertising. One example is LineX. LineX is a truck bed liner that is spray applied. This product uses BASF chemicals yet it is DuPont that benefits from co branding with LineX. LineX advertises on their website the following â€Å"LineX, fortified with DuPont Kevlar†. This co-branding is getting the name DuPont and their product Kevlar out to the end consumer. Thus if the customer is happy with the bed liner they may be happy with a product like â€Å"Suave shampoo with DuPont thickening agent† when it should be â€Å"Suave shampoo with BASF thickening agent†. This co-branding would broaden BASF’s evoked set and lock in customer relationships. BASF should capitalize on their success more publicly. The successes of BASF can only be found through their website. These high points in the story of BASF would help establish the confidence that a purchasing group would have in dealing with a stable successful company like BASF. One last recommendation would be to sponsor more events. Dow and DuPont get much of there brand awareness from the sponsorship of events like racing. BASF does a limited amount of this and mostly on a divisional basis. Sponsoring events would get the BASF name out there making it more of an everyday name than it is today.