New Market Offering Leads to Immediate Hundredfold Increase in Operational Margins for Specialty Chemicals Company
Challenge: A specialty chemicals company and supplier of premium additives to the paints and coatings industry was realizing large storage costs for a post-production, excess chemical and found it expensive to dispose. Our client was seeking to monetize this as a new offering and engaged Blue Canyon to help them understand the potential market for this chemical, how large the market will be, if the market is growing, and the keys to success in selling this chemical.
Assessment: Blue Canyon discovered that the market was more than sufficiently large to sell into, and although declining in size, it would still prove to be a very promising opportunity for several years to come. Blue Canyon advised that offering a strong price and other deal incentives would be important to success. In addition, Blue Canyon identified opportunities to differentiate the chemical based on performance, such as environmental factors and specific chemical properties that would be important in certain applications.
Strategic Solution: Blue Canyon recommended that the company enter the market at a price slightly below competitive commodity chemicals, since it had excess inventory and could be profitable at a lower price point. Additionally, since customers experience volatile prices for this commodity, offering price guarantees for an extended period of time would be a key factor to success in convincing potential customers to try this new chemical in their applications. Lastly, Blue Canyon helped the sales organization understand how to lower potential barriers to switching with collaborative account strategies that focus on working closely with potential customers. This strategy better positions the sales organization in a partnership with their clients where they can successfully demonstrate that this new offering will be effective and potentially perform better than the chemicals they were currently using.
Result: After implementing our recommendations, our client experienced a dramatic increase in operational margins with one customer by a hundredfold in less than 12 months.