Market Development of New Industrial Chemicals and Plastics

12 Market Development of New Industrial Chemicals and Plastics W. G . KINSINGER Hercules Incorporated, Wilmington, Delaware

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In the 1970's market development will, as always, link the products of industrial chemical research to prospective customers.

Producers of polymeric chemicals will increasingly

conduct research on the fabrication of their polymers and the manufacture of complex structures from them.

This

imposes new challenges on chemical market development in assessing profitability factors and his company's marketing

capabilities

mature chemical

to determine

how far to integrate.

A

industry appears near to an ability to

synthesize at will a product with reasonable property requirements.

Increasing

need for detailed

the technologies of prospective guide such research. relationships

knowledge of

customers is required to

The author foresees increasing formal

on a development

basis between

chemical

producers and selected companies in the consuming industry.

T T 7 e shall attempt to forecast what new challenges shall face market * * development people in the 1970s. W e are concerned here only with market development of completely new chemicals and plastics. Products new to ones company but well established i n the economy will be covered in a later chapter. What Is Market Development? W e should begin by understanding the market development function and its role i n our industrial economy. Perhaps it can be defined as the reactive interface between the creators of a new product—usually technical research—and the future customers for that product. Since to many the word "interface" connotes a barrier, let us emphasize here that the objective of market development is quite the opposite—to minimize obstacles and to stimulate, guide, and expedite the flow of information between markets and research. 88

Bateman; Chemical Marketing: The Challenges of the Seventies Advances in Chemistry; American Chemical Society: Washington, DC, 1971.

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Industrial Chemicals and Plastics

T h e Market Development Function i n the Chemical Industry.

Fore-

casting is a dangerous business.

Many a forecaster has lived to have

his predictions haunt him later.

Recognition of this has led to the

unwritten rule that one should always forecast for a period of one year after his retirement.

Since I hope to be actively involved in market

development through most of the 1970s, this safeguard is not available to me. I fall back, therefore, on a simple rule I learned many years ago as a Boy Scout studying for a Merit Badge in Pathfinding.

This rule, as I re-

member it, went somewhat as follows, "If you're lost in the woods and want to see where you're going, climb the highest tree and see where you Downloaded by TUFTS UNIV on June 12, 2018 | https://pubs.acs.org Publication Date: June 1, 1971 | doi: 10.1021/ba-1968-0083.ch012

have been."

While I've never been lost in a literal woods, this rule has

often helped me get out of a figurative woods.

Thus I shall use it here.

The woods in which we seek our way is, of course, the chemical industry.

The path we seek is that of market development.

climb our 1968 tree and look back, we note several things.

As we

First we see

that the path of market development always follows the outermost borders of the woods of the chemical industry.

It is a meandering, almost

sinusoidal path, wandering frequently into the woods of other industries. W e note too that the path of market development runs very close to another path—that marked Research.

In fact, so close are the two paths

at times, that they sometimes seem to be one.

A t such places the signs

read " R & D . " Finally, we note that the woods of the chemical industry appears to be continually expanding, always touching upon and frequently enveloping portions of other woods of other industries in the economic forest. So much for our allegory, we shall not pursue it further.

It has

served solely to picture the following base points from which we can project the future course of market development: 1. That market development usually functions at the outer borders or frontiers of the chemical industry. 2. That it is one route by which that industry relates to and explores other industries. 3. That market development of new products must necessarily have close relations to technical research. 4. That, as the chemical industry expands and evolves into new areas of technology, market development must keep pace. If we are therefore to predict the future of market development, we must first predict the future of the chemical industry and of the research by which it generates its new products.


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Trends in the Chemical Industry Market vs. Product Orientation.

Despite many attempts to do so, it

is becoming increasingly evident that the chemical industry cannot be defined in terms of its products. If there are those who still long to do so, I remind them that two of the largest volume "chemical" products are not ordinarily considered as products of that industry.

One of the largest

tonnage pure organic chemicals consumed in the U . S. today is crystalline sucrose—more commonly known as sugar. pounds per year.

W e consume over ten billion

Correspondingly, one of the largest volume inorganic

chemicals—over two hundred billion pounds per year—is a solution of


carbon and other chemical elements in iron, more commonly known as steel.

Neither of these come readily to mind when one tries to name the

major products of the "chemical industry," yet both require chemical technology in their manufacture. Most major chemical companies have become aware that their basic business—their raison detre

in our economy—is chemical technology

rather than specific chemical products.

I am indebted to a 1964 speech

by D . Ballman of D o w Chemical for expressing this well. H e suggests that D o w (and I would assume he includes other chemical companies) provide "technical service" to their customers.

Not technical service in

the sense of answering customer complaints on specific chemical products but rather the use of their unique, chemical knowledge and know-how to make

products

industries.

which

meet

certain

customer

needs

in

certain

H e considers a chemical product as the means for this serv-

ice to the customer as opposed to the customers previously designed product.

being a user of a

Saran Wrap, for example, is but the means

by which Dow, using their know-how on ethylene and chlorine chemistry, fills the need of the consumer for household wrapping. This change in the outlook of chemical industry from a productoriented approach to a market-oriented approach has become pronounced only in this decade.

One is inclined to believe it may be the result of

several influences which have been increasingly at work during that period: ( 1 ) The advent of L o n g Range Planning in the chemical industry. One of the basic principles of Long Range Planning is detailed self analysis—a determination of just what is ones business. (2) T h e encroachment into chemical operations of many companies not previously considered part of the chemical industry. (3) The increasing maturity of the industry. Statements that most of the major chemical products have already been invented or that the chemical industry can synthesize at will a chemical having any required properties lead, if true, to questions regarding how best to use these abilities.


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(4) The increasing concern with structures or systems of chemicals and plastics rather than with their chemical nature alone. W e shall have more to say on this later. Effects of Market Orientation.

In any case, this new market concept

of the chemical industry will undoubtedly continue in the 1970's.

It has

and will continue to have an increasing affect on the objectives of industrial research and on the new products which result therefrom.

Such

products will be predesigned to perform a specific service for another industry.

They will fill a "market need."

Market development also shall have to change accordingly from a product-oriented group to a service-oriented group.

It shall have to


learn to deal less in "product characteristics" with potential customers and more in "market needs" with creative research people.

It shall be

less concerned with finding a market for a product than with finding a product for a market. The Need to Know Other Technologies By

Acquisition.

A chemical

industry long

devoted

to

growth

through the development of new products quickly learned that it had to be aware of the technologies used by other industries if it were to succeed.

While the industry has always been its own largest customer,

eventually its products or the action of its products on other materials had to be used in other industries. One route to such windows in other technologies has been acquisition of small companies employing them.

While many of us may feel that

this is a new route employed by major companies over the past few years, history will not bear this out.

This can be demonstrated by the

testimony in November 1949 of Crawford H . Greenewalt, then president of DuPont, before a Special Senate Subcommittee on Study of Monopoly Power.

The subject on which Greenewalt was being questioned con-

cerned the reasons for his company's thirty or more acquisitions over the period 1915 to 1944.

A few extracts will, I believe, make my point:

These purchases were made because of the need for a broad framework of commercial experience in the chemical field against which to appraise the products of research. W e were seeking diversification and I can assure you—what a painful business it is to synthesize compound after compound, and then you sit back and admire it and you say 'Now what are we going to do with it, now that we have it?' The $64 question in research, sir, is that one: What are you going to do with it now that you have it? The principal reason for the acquisition of those businesses was to get a diversified field—against which to appraise the results of research.


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No doubt the wave of acquisitions by many other chemical companies during the 1960s was motivated in part by similar reasons. It would seem to this author however, that in our modern complex industrial society this cannot be a sole basis on which to exploit the products of research.

I suggest

that even DuPont, our largest

chemical

company, might find themselves sorely pressed financially were they to buy into all possible technologies which might use new chemicals or plastics. By Market Research.

Another route to windows in other technolo-

gies was market research.

In the mid-1950 s chemical companies began ,

to try to guide their research on new products by challenging their reDownloaded by TUFTS UNIV on June 12, 2018 | https://pubs.acs.org Publication Date: June 1, 1971 | doi: 10.1021/ba-1968-0083.ch012

search people with "market needs."

Such market needs were gathered

by surveys of market research people in specified areas. While admirable in its goal, this approach has, unfortunately, fallen far short of success. T h e reasons are many, but I can suggest two from my own experience. In the first place the potential customer usually knows only what he wants—really a solution to his short term problems.

Rarely has he him-

self taken the time to determine what he really needs and then it is more a case of wishful thinking—"Wouldn't it be nice i f — t h a n a practical and achievable goal. Another barrier lies in the fact that the product innovators in chemical research usually think in terms of chemistry rather than in functional performance. —a

In most cases the need is functional rather than chemical

purely mechanical solution is frequently equally possible.

The

translation of a functional need to a synthesis of a chemical having this function appears to be a discipline we shall all have to develop if this method of new product generation is to achieve the success we all expected for it.

A large share of this will be with our market research and

market development people. By Joint R & D Contracts.

Another route for relating customers

technology to new product development appears to be increasingly popular in the last several years. the 1970's.

I suspect we shall find it employed more in

This is a joint research and development program, under

contract, between a selected company in the consuming industry and the chemical producer. This method—which might be considered the ultimate of the team approach to development—can be used either after the new product has made its initial appearance or when there is no product at all—merely a mutual desire to explore a new field. The advantages of having a knowledgeable customer as part of the development team are obvious.

The

disadvantages lie in the price one pays for his participation—exclusivity


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or lead time—and in the fact that members of the "team" have different loyalties. Since the market development man is generally the instigator of such agreements and frequently the implementer of the development program after the contract has been signed, he faces a whole new set of techniques when he engages in this approach.

Space will not permit a detailed dis-

cussion but a listing of some of the new problems involved should indicate his new worries. I.

W h o should the development partner be?


Should it be the largest in the industry so that success would result in the largest volume, or should it be someone smaller and, perhaps, hungrier? H o w capable is the proposed partner—in R & D , in marketing, in production facilities, financially? II.

What price must be paid for cooperation?

Is exclusivity demanded? For how long? Under what conditions? W i l l the development efforts of the partners be equal? III.

Patents

What determines which partner gets patents resulting from the joint effort? What are the cross licensing arrangements? IV.

Legality

Does the arrangement violate any antitrust laws? V.

Program Generation

Who decides the specific programs to be performed? diligence on either partners part? VI.

What is due

Success

Who decides when the program has been completed successfully? When it has been completed unsuccessfully? What responsibilities does each partner have in either case? VII.

The Technical Field

Exactly what is and is not the technical field in which the joint cooperation is to be made? While there are many other questions equally important, these will indicate that the use of this route to development in the 1970's will require a new breed of market development man—certainly one knowledgeable in business and legal lore.

For the right type of technical man this can-

not but be an exciting challenge! The Effects of Polymer

Development

Perhaps no single discovery in the chemical industry has had greater effect on that industry than the discovery in the 1930's of commercial methods for making synthetic organic polymers.

The basic discoveries


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made during that decade by Carothers and other pioneers has led to many of the major products of our industry today. Synthetic Fibers Films Synthetic Rubber Synthetic Detergents Plastics Foams Polymeric Coatings Plasticizers The list could go on.

T o realize how deep an impact polymer science

has made on our industry, one has but to peruse any commercial chemiDownloaded by TUFTS UNIV on June 12, 2018 | https://pubs.acs.org Publication Date: June 1, 1971 | doi: 10.1021/ba-1968-0083.ch012

cal magazine and note how much of the activity described therein fundamentally deals with polymeric materials. But it is another here.

Polymers

construction.

are,

effect on our industry I am concerned with by

their

very

nature,

usually

materials

of

As such, the physical forms in which they are sold and the

methods of achieving those forms become as important to the markets as the chemistry of their manufacture. As a result of this the manufacturers of polymers have found it necessary to exercise leadership in pioneering the methods by which their polymers are formed—sometimes to the extent that the manufacturer has himself often sold the polymer in the fabricated form. ample, resin.

pioneered

in

the

manufacture

and

sale

Hercules, for exof polypropylene

W e soon realized, however, that the conversion of this resin to

fiber and to film and to foam, would have to be done by us because of the complex technologies and large investments involved.

Consequently,

the resin manufacturer now finds himself selling polypropylene fiber, biaxially-oriented film, and foam—successfully too if I may be allowed to add. In the same vein many new polymeric products are not simple polymers but complex structures or mixtures of various polymers. poromeric material, Corfam, is an excellent example. al's expandable A B S sheet.

DuPont's

Another is Uniroy-

Mixtures or alloys of different polymers are

frequently sold—Allied's nylon-polyester fiber, for example. Thus both the need and the desire to carry polymeric chemicals one or more steps further in the industrial chain has opened new areas for market development activity. direction in the 1970's.

I look for even broader horizons in this

F r o m dealing with products essentially chemical

in nature, market development is now concerned with fabricated products up to and including those sold to the public consumer.

Questions

of product design and aesthetic appeal now plague the market development son whose father, only a few short years ago, worried only about product reactivity and purity.


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Solutions to Social Problems Finally, I discern one more trend of the chemical industry and of its research

programs

which shall have important influence on market

development in the 1970's.

The industry has become increasingly aware

that many problems of our modern society not only may be solved by the use of chemical technology, but that there may well be attractive profits in such solutions.

As pointed out by H . D . Doan, president of Dow, in a

speech before the Commercial Chemical Development Association on O c -


tober 28, 1966: W e can't afford to be do-gooders for that purpose alone, and we don't have to. W e should be able to solve the country's social problems profitably. There is opportunity in this area that none of us have yet seen how to handle, but we should and must. A few areas should indicate the type of social problem which might be attacked with our abilities: Water Pollution Air Pollution Saline Water Recovery Synthetic Food Flammability Automobile Safety There are, of course, many others including the broad sweep of pharmaceutical and biological needs. Most of us have little doubt that, given time, the excellent research machine of the industrial chemical industry will provide solutions to these problems, that these solutions will be chemical products, and that such products will return a profit. to market development!

But think, if you will of the challenges

In many cases the market must be created—

nothing exists today but the problem.

Since the first successful product

is rarely the ultimate, here is certainly one area where market development and research must maintain that intimate relation so needed for success. Conclusion The

author has been engaged for over twenty years in market

research and development, yet not once in that period has there been a dearth

of existing challenges.

Looking ahead to the 1970's only

shows larger and more stimulating challenges.

As the chemical industry

loosens its chemical shackles, as it becomes oriented to servicing markets instead of making chemicals, as it joins hands with other industries in de-


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signing new products, as it integrates forward in its polymers and plastics and as it tackles the world's ills with its technology, so must the horizons of market development expand. Should some biologist today discover a process for human regeneration, I would elect this same profession again—happily, avidly.

A young

chemist with a bent for business can assuredly find no more satisfying career today than to participate in the challenging problems of market development facing us.

O u r industry, our country, our society depend

upon his success. July 17,

1968.


RECEIVED


Market Development of New Industrial Chemicals and Plastics

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